Shein Sues Temu for Copyright Infringement (Again): Here Is What the Feud Is All About

Shein Sues Temu: Key Insights

• Current Copyright Infringement Lawsuit: On August 19 2024, Shein filed a lawsuit criticizing Temu's business practices. The complaint includes allegations of copyright infringement, defamation, and deceptive advertising.

• One Event in a Series of Lawsuits: Temu and Shein have accused each other of practices for which they themselves have been widely criticized. The feud is a prime example of how two very similar platforms are likely to try eliminating the other for their own benefit.

Shein is suing Temu for alleged copyright infringement. It is just one occurrence in a chain of events in the rivalry between the two eCommerce platforms with Chinese origin. The lawsuit was filed in the United States District Court of Colombia on August 19. The 80-page document, filed by Shein as plaintiff, begins with accusations against Temu’s business model, calling its marketplace model to be deceptive and controlled in every aspect of its operations.

Shein's Accusations Against Temu

Shein’s complaint calls out several aspects of Temu’s practices: Citing a widespread presumption that Temu loses approximately US$30 on every order placed on its platform, Shein goes on to criticize Temu’s imitation of Shein’s products, using the SHEIN brand as a deceptive advertising keyword to drive consumers to temu.com, and stealing Shein’s trade secrets by poaching employees. Shein also claims that Temu is inciting social media influencers to talk negatively about Shein in promotional content on Temu, throwing in some defamation claims on top of the main allegations of copyright infringement.

One Event in a Series of Lawsuits From Both Sides

An earlier lawsuit, filed by Temu in December 2023, accused Shein of using “mafia-style intimidation” to prevent suppliers from working with rival Temu. Before that, Shein filed a lawsuit against Temu with accusations of misleading consumers and engaging in deceptive business practices. 

The feud is a perfect example of how like sometimes repels like: Both companies operate on the low-cost model, have ties to China, and are widely accused of very similar practices. These practices include ripping off designs from small businesses and offering them at dirt-cheap prices, dumping labor costs to maintain low prices, and using toxic materials that can prove harmful if exposed for long periods of time. 

Shein’s self-styled “immensely valuable” platform is being threatened by Temu’s own version of it, as evidenced by the performance of each site:

Because Temu operates on a marketplace model, its sales are measured in GMV, meaning that the revenue Temu makes is only a fraction of its platform activity:

It is questionable whether Temu will be able to sustain its operations in the way it is conducting business now. But ironically, the same fate may await Shein, as it battles U.S. lawmakers who are moving to close the de minimis gap that allows Shein and Temu to import the products under a US$800 value threshold.

Sources: CNBC – Time – The Verge