Shein, the world’s largest online fashion retailer with almost $30 billion in annual sales, is facing a racketeering lawsuit accusing it of rampant copyright infringement. The lawsuit, filed in California federal court, was brought by three designers who claim Shein is engaging in “egregious” copying of their original graphic designs and artwork.
According to the complaint, Shein’s business model relies on producing fast, cheap copies of other designers’ work, rather than developing original products. The copies were not just inspired by the original works but “truly exact copies” that violated the plaintiffs’ copyrights. The lawsuit alleges this is part of a continuous pattern of infringement by Shein, which churns out 6,000 new items daily for its millions of customers worldwide.
The designers say this amounts to racketeering in violation of the Racketeer Influenced and Corrupt Organizations (RICO) Act. They accuse Shein of building its business and $30 billion in revenue through repeated acts of infringement, showing no signs of stopping.
Shein allegedly follows a pattern when accused of copyright violations – claiming low sales, blaming third parties, and offering small settlements. But the designers say this does not compensate for the damages done through loss of profits and reputation.
The decentralized structure of Shein also makes it difficult to pursue legal action, the lawsuit claims. Shein was founded in 2012 by the mysterious Chinese billionaire Chris Xu, but its operations are spread across various entities.
The RICO charges allow the plaintiffs to target the individual entities engaged in racketeering activities as part of Shein’s operations. Using RICO in copyright cases is well-established when there is a systematic pattern of egregious infringement, the lawsuit states.
This lawsuit comes amid growing scrutiny of Shein’s labor practices. Lawmakers recently urged halting Shein’s planned IPO until forced labor allegations are investigated. Shein claims it has zero tolerance for forced labor. But the company is accused of opacity amid calls for accountability.