Fast fashion retailer SHEIN finds itself entangled in a lawsuit filed on Tuesday, 11 July 2023 which accuses the company of operating an intricate scheme to steal the intellectual property of designers, regardless of their size, while employing a complex corporate structure to evade legal consequences.
Unpacking the SHEIN racketeering lawsuit: Here’s what you must know
As reported by Complex, independent designers Krista Perry, Larissa Martinez, and Jay Baron brought the lawsuit against SHEIN, alleging that the company systematically reproduces and sells exact copies of their creative works.
The plaintiffs argue that such actions are an integral part of SHEIN’s design process and embedded within the company’s organisational DNA.
Central to the allegations is the claim that SHEIN employs a secretive algorithm designed to identify emerging fashion trends and deliberately produces a limited quantity of allegedly stolen items to minimise the risk of infringement allegations.
If accused of copying a design, SHEIN swiftly resolves the matter to mitigate potential legal consequences.
The complaint further asserts that SHEIN relies on a decentralised structure and multiple entities to evade liability for intellectual property infringement.
When faced with cease and desist orders or lawsuits, the plaintiffs argue that SHEIN shifts blame onto independent companies while maintaining connections to the accused entities.
The lawsuit alleges that SHEIN has knowingly engaged in criminal copyright infringement and played an active role with full awareness of the larger criminal scheme in which it participates.
These allegations form the basis for the Racketeer Influenced and Corrupt Organizations (RICO) claim.
According to The Fashion Law, the plaintiffs argue that SHEIN’s coordinated efforts to evade infringement lawsuits are not carried out by a single entity but by a de facto association of entities.
This decentralisation, intended by Congress to facilitate the detection of criminal infringement and other racketeering activities, also renders individual components of the enterprise liable under civil RICO, according to the plaintiffs.
The lawsuit against SHEIN raises significant concerns regarding the protection of intellectual property rights in the fashion industry. It sheds light on the alleged practices employed by the retailer to exploit emerging designs while sidestepping legal consequences.
If proven true, the case could have far-reaching implications for the future of intellectual property rights enforcement in the fashion world.
As the legal battle unfolds, it remains to be seen how SHEIN will respond to these allegations and what potential consequences the company may face if found liable for racketeering and intellectual property theft.