China’s Shein hit with lawsuit citing RICO violations
China’s fast fashion retailer Shein is facing a lawsuit that claims the clothing maker’s copyright infringement is so aggressive, it amounts to racketeering.
The filing this week claims that Shein is in violation of the Racketeer Influenced and Corrupt Organizations Act, better known as RICO, a law originally crafted to prosecute organized crime.
“Shein has grown rich by committing individual infringements over and over again, as part of a long and continuous pattern of racketeering, which shows no sign of abating,” the filing says.
In an organized effort to create as many as 6,000 new items per day, Shein uses a “byzantine shell game of a corporate structure” to rip off designers, a coordinated illegal operation that can best be combated through the use of RICO statutes, according to the lawsuit.
The lawsuit is just the latest in a series of difficulties Shein has faced. In May a bipartisan group of two dozen lawmakers asked the Securities and Exchange Commission to put the brakes on an initial public offering by Shein until it verified that it does not use forced labor.
The lawsuit, filed by three fashion designers in the U.S. District Court for the Central District of California, alleges “Shein produced, distributed, and sold exact copies of their creative work.”
“At issue here, inexplicably, are truly exact copies of copyrightable graphic design appearing on Shein products,” the civil lawsuit states.
The designers are seeking unspecified damages and want injunctive relief to prevent further racketeering activity.
“Shein takes all claims of infringement seriously, and we take swift action when complaints are raised by valid IP rights holders,” Shein said in a prepared statement Friday. “We will vigorously defend ourselves against this lawsuit and any claims that are without merit.”
Shein hasn’t said whether it plans to go public this year, but there are reports that the company is raising money in anticipation of a U.S. listing before the end of the year.
Shein spokesperson Peter Pernot-Day has said the company takes transparency across its entire supply chain seriously. MICHELLE CHAPMAN, MDT/AP
