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Shein got hit with a RICO. The Chinese retail titan is facing a new lawsuit that accuses the sought-after brand of theft from U.S. designers and racketeering. Read more about the case inside.
The fast fashion retailer faces charges accusations of not only carrying out “large-scale and systematic intellectual property theft from U.S. designers large and small,” but of also engaging in infringement-related racketeering activities in the process.
The Lawsuit
According to the complaint that they filed in a California federal court on Tuesday (July 11), independent designers Krista Perry, Larissa Martinez, and Jay Baron claim that Shein and various related entities, including Roadget Business and Zoetop Business, (collectively, “Shein”) are to blame for copyright and trademark infringement in connection with their practice of “produc[ing], distribut[ing], and selling exact copies of their creative works,” which they allege is “part and parcel of Shein’s ‘design’ process and organizational DNA.”
In the newly-filed lawsuit, Perry, Martinez, and Baron (the “plaintiffs”) assert that “[t]here is no Coco Chanel or Yves Saint Laurent behind the Shein empire. Rather, there is a mysterious tech genius, Xu Yangtian aka Chris Xu,” who has made Shein “the world’s top clothing company through high technology, not high design.” In particular, the plaintiffs claim that Shein has “made billions [of dollars] 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.” That algorithm “could not work without generating the kinds of exact copies that can greatly damage an independent designer’s career,” the plaintiffs assert, noting that “Shein’s artificial intelligence is smart enough to misappropriate the pieces with the greatest commercial potential.”
Shein has become one of the largest and most profitable fashion retailers in the world. The brand is being accused of repeatedly stealing designs, and blaming it on shell companies and third-party vendors it operates from when confronted about the alleged practice.
Algorithmic Infringement
Another phrase that comes up when looking into this particular RICO case is “algorithmic infringement.”
While it is “impossible to say how the Shein algorithm produces its results” without investigation, the plaintiffs claim that what is most evident is the level of infringement being carried out by the retailer, citing the company’s “pattern of misconduct involv[ing] the commission of new copyright and trademark infringements every day.”
Shein’s Business Model
The plaintiffs use the Shein distribution model’s framework as their base argument, sharing that the company intentionally “produc[ing] very small quantities of [its] item for sale.” For each new product sold on Shein’s website, the plaintiffs claim that the initial production run is as low as 100-200 units per SKU, compared to “the thousands of pieces typically produced by traditional peer retailers.” The purpose of this is that it enables Shein to “wait to see if anybody complains that the design was stolen,” and if they do, it can swiftly settle with the company. The plaintiffs cite Nike as an example of a big company that might quickly flag and fight an infringement offered up by Shein.
“When Shein copies a small or independent designer, the most likely outcome (without brand protection specialists and specialized software on the lookout) is that the infringement will go unnoticed,” the plaintiffs state. “Under those circumstances, Shein reaps all the benefits of stealing and featuring the design that its technology had identified as valuable enough to take: it makes sales and keeps it customers’ eyes glued to the Shein site and app for that much longer. And if customer demand justifies it, the item is reordered, and more are sold (now that the coast has been determined to be clear).”
The Designer Suffers
As designers confront the major fast fashion retailer, Shein offers them pity and a lousy few hundred bucks to make it all go away.
One of the designers suing the company, Perry, claimed that after her poster design was stolen, she confronted the company. According to the lawsuit, Shein blamed a third-party vendor, and claimed the product had low sales.
Shein also offered Perry $500, an offer that the lawsuit claimed was consistent with other designers’ experiences.
Tsk tsk tsk! Maybe, consumers will finally rid themselves of fast fashion purchases and shop sustainably with Black and Brown businesses doing the work to keep our planet safe and maintained.
Fast Fashion Retailer Shein Hit With A RICO: Learn More About The Lawsuit Inside was originally published on globalgrind.com
