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Lawsuit against Chinese fast-fashion giant Shein accuses company of racketeering

Three independent designers have brought a lawsuit against the Chinese fast-fashion retailer and alleged it copied original work.
Clothes are displayed on hangers Shein pop-up store in Paris, on May 4, 2023.
Clothes are displayed on hangers Shein pop-up store in Paris, on May 4, 2023.Christophe Archambault / AFP via Getty Images file / Christophe Archambault / AFP via Getty Images file
/ Source: NBC News

Three independent designers have brought a lawsuit against Chinese fast-fashion retailer Shein accusing the company of racketeering and “egregious” copyright infringement.

The complaint, filed by Krista Perry, Larissa Martinez and Jay Baron in the United States District Court for the Central District of California Western Division, also claims the company uses a secret algorithm to rapidly identify and duplicate emerging trends and designs.

“There is no Coco Chanel or Yves Saint Laurent behind the Shein empire. Rather, there is a mysterious tech genius, Xu Yangtian aka Chris Xu, about whom almost nothing is known. He made Shein the world’s top clothing company through high technology, not high design,” the complaint said, referring to the company’s CEO.

A spokesperson for Shein replied to the allegations and said: “Shein takes all claims of infringement seriously, and we take swift action when complaints are raised by valid IP rights holders. We will vigorously defend ourselves against this lawsuit and any claims that are without merit.”

Shein has grown popular in recent years among consumers who are drawn to its cheap, trendy apparel. “The brand has made billions by creating a secretive algorithm that astonishingly determines nascent fashion trends—and by coupling it with a corporate structure, including production and fulfillment schemes, that are perfectly executed to grease the wheels of the algorithm, including its unsavory and illegal aspects,” the complaint said.

The details and methodology of the algorithm are not specified. 

The artists claim that if the algorithm produces designs copying well-known and established companies, such as Nike, the infringed company may be alerted through brand protection specialists and can quickly take action. But when small-scale designers are copied, the design theft may not be readily discovered. 

This is not the first time Shein has found itself embroiled in controversy. In addition to facing other lawsuits alleging intellectual property theft, the company has been sharply criticized over alleged labor rights violations. Shein responded with a statement saying it has “zero tolerance for forced labor.”

Last month, Shein also received online vitriol for sponsoring an influencer brand trip to the retailer’s manufacturing facilities in China. Critics slammed the event as a thinly veiled attempt at goodwill and propaganda. A Shein spokesperson said of the backlash: “Their social media videos and commentary are authentic, and we respect and stand by each influencer’s perspective and voice on their experience. We look forward to continuing to provide more transparency around our on-demand business model and operations.”

In this latest legal recourse, the designers accuse Shein of intentionally using a “decentralized structure” to redirect blame for design theft, obscuring the company’s role in infringement and violating the Racketeer Influenced and Corrupt Organizations Act. The complaint said that act could provide relief to the plaintiffs because the law is aimed at addressing the “misconduct of culpable individual cogs in an larger enterprise.”

According to the complaint, one plaintiff, Perry, created art that appeared in identical form on Shein’s website. The lawsuit included side-by-side comparisons of alleged design theft including Perry’s work. When Perry reached out to Shein about the use of her art without approval, an employee of the company said the design was not produced by their company and was bought from a local vendor, the complaint said. She claimed to be offered a payment of $500.

“In these cases, Shein quickly apologizes, blames an unnamed third party for the misconduct,” the lawsuit said. “Shein made its offer as if it were a mom-and-pop operation rather than one of the richest enterprises in the world.” 

The designers seek an unspecified amount of damages.

The goal of the lawsuit, plaintiff attorney David Erikson said in an email to NBC News, is to “reign in their bad behavior, and require them to stop copying U.S. designers.” He added, “Maybe they have to hire people to look at the designs generated by their algorithm, and compare them to the designs they are taking inspiration from.”

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