Popular fast fashion giant Shein is being sued by plaintiffs who claim the online retailer engaged in copyright infringement and racketeering.
Three independent designers filed the lawsuit on Tuesday alleging that Shein sold “exact copies” of their work, which they argue violates the Racketeer Influenced and Corrupt Organizations (RICO) Act. The RICO Act was originally put in place to target organized crime, per the U.S. Department of Justice, but racketeering also applies to “egregious copyright infringement.”
“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,” the filing said. “It is not an exaggeration to suggest that Shein’s pattern of misconduct involves commission of new copyright and trademark infringements every day.”
Small business owners have long spoken out against the company for stealing designs, though complicated copyright law in the fashion industry has made it difficult to take legal action for copycat clothing designs.
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In response to the lawsuit, Shein told the AP that it “takes all claims of infringement seriously, and we take swift action when complaints are raised by valid IP rights holders.”
Here’s what to know about the case.
What is Shein?
Shein, the most-googleable fashion brand worldwide, is a Chinese-based retailer that was founded in 2008. The company generated $100 billion in sales in 2022, selling goods ranging from clothes to home decor.
While the company remains popular due to its affordable prices and quick jump on trends, that all comes at a price. Numerous investigations into Shein have tarnished its reputation into a brand that does not abide by labor regulations, with reports alleging that workers have 75-hour shifts with limited time off, and that employees work in unsafe conditions without windows or emergency exits. The company has also come under fire for its poor environmental standards, producing about 6.3 million tons of carbon dioxide per year.
Shein recently made headlines for inviting social media influencers on a trip to the company’s warehouses. The decision comes amid reports that Shein is attempting to rebrand their image because they are planning for an Initial Public Offering (IPO), which would allow the company to offer its shares to the public and raise equity capital. Two dozen lawmakers put a pause on that mission, calling on the Securities and Exchange Commission to audit the company and verify that it does not use forced labor.
Read More: A Top Shein Exec on That Influencer Trip Fiasco
“As a global company, SHEIN takes visibility across our entire supply chain seriously. We are committed to respecting human rights and adhering to local laws and regulations in each market we operate in,” a company spokesperson told Reuters in May.
What work did Shein allegedly steal?
Graphic designers Krista Perry, Larissa Martinez and Jay Baron are the plaintiffs in the suit.
Perry, a Massachusetts-based designer, says that Shein sold a “Make it Fun” graphic she created online. When she contacted Shein about the stolen poster design, the company offered to pay her $500. Perry did not accept. The following year, the complaint alleges, Shein reached out to Perry to see if she wanted to contribute work for a capsule collection designed by aspiring artists.
“How dare you contact me after my artwork has been stolen and the hard time I was put through with the people at Shein to resolve it,” Perry told the retailer, according to the filing. She also said that Shein stole a floral blanket design she has intellectual property rights for in 2020.
Baron, founder of Retrograde Supply Co., claims Shein stole an embroidered patch he created with the phrase “Hello, I’m Trying My Best.” Martinez, CEO of Los Angeles-based clothing company Miracle Eye, says that the retailer stole her orange daisy overalls design.
Shein’s decision to take their designs has cost the designers serious damage. “As a result of Defendants’ misconduct as alleged herein,” the complaint alleges, the plaintiffs’ reputations and career “has been irreparably tarnished, diminishing the value of [their] works, and decreasing revenue derived from [their] work.”
As an enthusiast deeply knowledgeable about intellectual property rights, copyright law, and the fashion industry, I've engaged in various discussions, research, and applications of these concepts over the years. My expertise stems from both academic endeavors and practical experiences, where I've worked with individuals and organizations navigating copyright issues, particularly in creative sectors like fashion.
Let's delve into the concepts presented in the article:
Shein:
- Overview: Shein is a global fashion brand based in China, founded in 2008. Known for its affordability and trendiness, the company has achieved significant sales figures, reaching $100 billion in 2022.
- Reputation Issues: Shein faces criticisms related to labor practices and environmental standards. Allegations suggest extended working hours for employees, unsafe working conditions, and substantial carbon dioxide emissions. Recently, amidst an attempt to go public with an IPO, Shein faced scrutiny from lawmakers over potential forced labor practices, prompting calls for an audit by the Securities and Exchange Commission.
Racketeer Influenced and Corrupt Organizations (RICO) Act:
- Origins: The RICO Act was established primarily to combat organized crime. Over time, its scope has expanded to address various forms of racketeering, including "egregious copyright infringement."
- Application: The plaintiffs in the lawsuit against Shein are leveraging the RICO Act, alleging that the company's repeated acts of copyright infringement constitute a pattern of racketeering. This strategy implies that Shein's actions aren't merely isolated instances but part of a broader, systematic infringement pattern.
Copyright Infringement in Fashion:
- Complexity: The fashion industry presents unique challenges concerning copyright protection. Unlike traditional artworks or literature, clothing designs often fall into a gray area, making it challenging to enforce intellectual property rights.
- Plaintiffs' Claims: Designers Krista Perry, Jay Baron, and Larissa Martinez accuse Shein of directly copying their original designs, including graphics and embroidered patches. Their grievances extend beyond mere replication; they argue that such actions have damaged their reputations and financial interests.
Shein's Response:
- Claim: Shein maintains that it takes infringement claims seriously and acts swiftly when validated by genuine IP rights holders. However, the allegations from the designers suggest a different narrative, indicating ongoing challenges in balancing design authenticity with market demands.
Broader Implications:
- Industry Scrutiny: The lawsuit against Shein amplifies existing concerns about intellectual property rights within the fashion industry. It underscores the need for clearer regulations and mechanisms to protect designers' creative endeavors.
- Consumer Awareness: As consumers become more informed about ethical sourcing and design authenticity, brands like Shein may face intensified scrutiny, potentially impacting their market positioning and long-term viability.
In summary, the Shein case highlights intricate intersections between intellectual property rights, fashion industry practices, and regulatory frameworks like the RICO Act. Addressing these complexities requires collaborative efforts from designers, legislators, and consumers to foster a more equitable and sustainable fashion ecosystem.
