Shein in Hot Water

Shein, a fast-fashion clothing and accessories company founded in 2008, is facing a copyright infringement lawsuit with claims so extreme and flagrant that it amounts to racketeering.  While this is not the first time Shein has been accused of infringement, it is the largest and most far-reaching lawsuit.  The court filing claims that Shein and its parent company Zoetop Business Company, Ltd. are in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), a law originally designed to prosecute organized crime.  However, according to the US Department of Justice, racketeering also applies to "egregious copyright infringement." Small business owners and designers have spoken out for years against Shein for stealing designs, although complicated copyright law in the fashion industry has made it difficult for them to take legal action for copycat clothing designs. 

In one example from 2021, the designer behind Elexiay, a Black-owned fashion brand, said that Shein copied the design of its Amelia top, a crochet sweater that was handmade in Nigeria and cost $330.  Shein's shirt offering, which was mass-produced in the nearly identical color scheme, sold for $17 until it was removed from the website.  The designer wrote, "[I] spent hours designing and brainstorming this design and it takes days to crochet each sweater.  It's quite disheartening to see my hard work reduced to a machine made copy."

The current civil lawsuit was filed by three fashion designers - Krista Perry, Larissa Martinez, and Jay Baron - in the US District Court for the Central District of California and alleges that"Shein produced, distributed, and sold exact copies of their creative work.  At issue here, inexplicably, are true exact copies of copyrightable graphic designs appearing on Shein products." The filing continues by saying, "Shein has grown rich by committing individual infringements over and over again, as part of a long and continuous pattern of racketeering, which shows no sign of abating.  It is not an exaggeration to suggest that Shein's pattern of misconduct involves commission of new copyright and trademark infringements everyday."  Some reports estimate that Shein creates up to 6,000 new items per day.

Shein replied to the lawsuit in a prepared statement, saying, "Shein takes all claims of infringement seriously, and we take swift action when complaints are raised by valid [intellectual property] rights holders.  We will vigorously defend ourselves against this lawsuit and any claims that are without merit."

Pursuing Shein on copyright or trademark grounds is complicated because the company produces small runs of designs (sometimes just 100-200 pieces) that its algorithm finds and determines will sell out of relatively few copies, said John Conway, CEO of Astonish Media Group and an attorney whose specialties include intellectual property issues.  Rather than having a creative director or chief merchant, the plaintiffs name "a mysterious tech genius, Xu Yangtian aka Chris Xu, about whom almost nothing is known."  The plaintiff's lawyers argued in court papers, "He made Shein the world's top clothing company through high technology, not high design. The brand has made billions by creating a secretive algorithm that astonishingly determines nascent fashion trends."

Shein's copyright issues extend beyond clothes.  Artists have reported having their original works reproduced without permission, as have designers who create enamel pins and earrings.

This lawsuit has implications for copyright and trademark questions emerging as AI takes off, according to Dr. Shubha Ghosh, Director of the Technology Law Program and professor at Syracuse University College of Law.  

"If it sounds too good to be true, it probably is."  Next week, we will explore the fast fashion industry and the issues common to these companies.