Fast Fashion Retailer Shein Facing Allegations of Criminal Activity in RICO Suit
The lawsuit comes after Shein faced forced labor allegations.
A lawsuit was filed Tuesday against Shein, alleging the fast fashion retailer runs an elaborate operation that seeks out and steals the intellectual property of designers, big and small, while also utilizing a "confusing" corporate structure that allows the company to circumvent allegations of theft with minimal legal consequence.
Independent designers Krista Perry, Larissa Martinez, and Jay Baron accuse Shein of "produc[ing], distribut[ing], and selling exact copies of their creative works,” claiming its actions are “part and parcel of Shein’s ‘design’ process and organizational DNA,” according to The Fashion Law.
The suit claims Shein utilizes a "secretive algorithm" that is meant to identify growing fashion trends and purposely produces a small amount of an allegedly stolen item in the event of an infringement allegation. If the company is accused of stealing a design, Shein is able to quickly resolve the matter.
"When Shein copies a small or independent designer, the most likely outcome (without brand protection specialists and specialized software on the lookout) is that the infringement will go unnoticed," the complaint reads. If demand for the item remains high, Shein will allegedly produce more, as long as the threat of infringement doesn't exist.
In the event of a cease and desist or lawsuit, the plaintiffs claim Shein relies upon a "multiplicity of entities and [outwardly] decentralization structure…aid in its efforts to avoid liability for intellectual property infringement." The suit alleges the retailer would place the blame on an independent company when in actuality, the entities subjected to these accusations are connected to Shein.
The suit alleges Shein has "knowingly committed criminal copyright infringement, [and] played its role with full knowledge of the overarching criminal copyright infringement it participates in," which is where the RICO claim comes in.
The plaintiffs claim Shein's alleged coordinated efforts to thwart infringement lawsuits are, per The Fashion Law, "committed not by a single entity, but by a de-facto association of entities. And just as intended by Congress, the same decentralization that facilitates Shein’s criminal infringement and other racketeering activity, renders individual components of the enterprise, such as Defendants, liable under civil RICO."
