The ongoing trial in London is the latest in a series of legal proceedings between the two rapidly growing e-commerce players, who have also sued each other in the US.
Shein claims that Temu has used thousands of its photographs to market copies of Shein's own clothing brands on its website, in order to piggyback on a more established competitor. According to news agency Reuters, reporting from the trial, Shein accuses the competitor of copyright infringement on an “industrial scale”.
This was an attempt to gain a foothold against an existing market player, and Temu has sought, we believe, to obtain an unfair advantage, Shein’s lawyer Benet Brandreth told the court.
Temu denies the allegations, but has, according to Brandreth, dropped its defense regarding copyright claims for nearly 2,300 images taken by Shein.
Temu Responds with Counterclaims
Temu, owned by PDD Holdings, has in turn filed counterclaims. The company is demanding damages after being forced to remove thousands of product advertisements following an injunction previously granted to Shein.
Furthermore, Temu accuses Shein of violating competition law by tying fast fashion suppliers to exclusive agreements. Temu’s lawyers argue that Shein’s lawsuit is not a legitimate attempt to stop copyright infringement, but a strategy to secure competitive advantages. That part of the case relating to competition law is scheduled to be heard in court next year.
The dispute takes place at a time of increased regulatory scrutiny of both platforms. The removal of exemptions for customs duties on low-value e-commerce packages in the US last year, and corresponding changes expected in the EU in July, may affect the companies’ future growth.
Several Ongoing Processes for Shein
For Shein, the current dispute in the UK is one of several ongoing legal proceedings. Ehandel.se has previously reported on e-commerce company Nelly’s lawsuit against Shein, a process where the roles are reversed. Nelly accuses Shein of unauthorized use of the Swedish company’s image material. In a first instance, the Patent and Market Court ruled last year that Shein had unlawfully used over 50 of Nelly’s images, a ruling that is now subject to continued negotiations regarding liability within international groups.
ALSO READ: Shein responds after Nelly’s new lawsuit: "Acted quickly"
In parallel with the copyright disputes, Shein is also being investigated by the Irish Data Protection Authority (DPC). The review, which was formally initiated at the end of April this year, aims to investigate whether the company’s transfers of customer data from the EU to China violate the General Data Protection Regulation (GDPR). Shein has stated that it is cooperating with the authority and that it takes its data protection obligations seriously.