Temu Files Lawsuit Against Shein

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By Published On: December 15, 20231 Comment

Temu has filed a lawsuit against Shein for a series of anti-competitive actions including false imprisonment and mafia-style intimidation in a battle of the budget marketplaces. 

Popular ecommerce platform Temu has filed a lawsuit against fast fashion and fellow ecommerce company Shein in the US District Court of Columbia. 

In the lawsuit, Temu has alleged Shein has taken a range of unlawful and anti-competitive actions including using what they dub “Mafia-style” intimidation tactics to force merchants not to work with Temu and “abusing the DMCA notice process to cripple Temu.”

Earlier this year, the company filed a similar anticompetitive lawsuit challenging Shein’s Exclusive-Dealing Agreements with suppliers and coercive efforts to enforce those agreements under state and federal antitrust and unfair competition laws. However, in late October 2023, the companies voluntarily dismissed their respective litigation against one another without prejudice.

A spokesperson for Temu stated that Shein’s anticompetitive behaviour has not only persisted but intensified and “their actions are too exaggerated; we had no choice but to sue them.”

The lawsuit alleges Shein has brought Temu’s suppliers to its offices in Guangzhou, China under false pretenses, allegedly detaining those suppliers’ representatives in Shein’s office for up to ten hours, seizing these sellers’ phones, searching their phones for Temu sales, commercial, and other financial information without permission, demanding the sellers’ chat histories and log-in credentials for their Temu account, compelling them to sign documents against their will, and threatening them with extensive penalties and termination of their Shein contracts for selling on Temu.

Another allegation against the company claims it “has carried out a multi-faceted scheme to slow Temu’s growth in the United States.which allegedly includes coercing suppliers to sign adhesion contracts allowing Shein to seize the suppliers’ worldwide IP rights, through invalid assignments and often without the suppliers’ knowledge and then relying on the illegally seized IP rights and/or relying on knowingly false information to obtain improper copyright registrations in the United States Copyright Office. This in turn, according to the lawsuit, results in voluminous, DMCA takedown notices to Temu, often alleging that a product sold on the marketplace has infringed the very rights obtained as a result of Shein’s supplier IP seizures.

According to Temu, 63 percent of the copyright takedown requests received by them (around 33,000) were from Shein.

Shein has denied the allegations. “We believe this lawsuit is without merit and we will vigorously defend ourselves,” Shein said in reply to a request for comment on the lawsuit.

About the Author: Rosalea Catterson

Rosalea is the Editor of Power Retail. With a keen interest in consumer behaviour and tech, she covers everything ecommerce and hosts the Power Retail Power Talks Podcast.

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One Comment

  1. basket random January 3, 2024 at 5:37 PM - Reply

    These lawsuits definitely raise big red flags about anti-competitive practices in the fast fashion industry. Both companies should be held accountable for ensuring a fair and balanced market for consumers and smaller businesses.

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