Antitrust and Copyright Law in the Fast Fashion Space
Written by: Caitlin Hamilton
Temu, an online mega-store, has sued fashion company Shein for allegedly trying to monopolize suppliers. Both companies are notable for their discounted prices, as well as their large selection of merchandise which ranges from clothes to home goods. While Shein gained notoriety during the pandemic, Temu has gained momentum since its launch late last year.
This is not the first time the two companies have quarreled. In December, Shein sued Temu for allegedly having their influencers criticize the company. In the new suit, Shein is accused of ‘forcing’ manufacturers to sign loyalty agreements, promising to avoid working with Temu and subjecting manufacturers to fines if they renege. Temu’s lawsuit is rooted in antitrust principles, as it is illegal for companies to control trusts or monopolies to advance competition in business. While Shein has over a 50% share of the fast-fashion industry, Temu achieved the status of the most downloaded app in the U.S. this month.
Objectively speaking, the two companies have many similarities that can make competition inevitable. However, Shein has denied Temu’s claims, refuting their merit, even though Temu insists that there are over 8,000 manufacturers in China that are off-limits to Temu because of Shein. Only time will tell how these suits will conclude. However, Shein is also facing copyright charges filed by H&M and from three fashion designers for racketeering, which in this context, is a more aggressive form of copyright infringement.
In the fashion world, copyright claims can be difficult to win, as clothing is considered a utility item, and thus has less protection, as utility items cannot be copyrighted in their entirety. One of the designers in the suit was offered $500 from Shein after coming forward complaining of a stolen design. The designer refused Shein’s mediation attempt. Larger more established businesses have technology that can detect related designs, whereas smaller businesses often don’t have the same resources.
While these lawsuits are also pending, Shein insists that they take copyright infringement claims seriously and has previously explained how the company produces less than 200 items per-item launch, in case there is a designer that wants to challenge a design. With the widespread success of bargain shopping, e-commerce brands similar to Shein and Temu are now trying to emulate a similar business model.
Stay tuned for news updates following the pending lawsuits and be sure to look out for upcoming businesses that pose a likeness to Shein and Temu, as the fashion industry is constantly evolving and focused on following consumer trends.