According to reports, the Eastern Division of the Northern District Federal Court of Illinois recently issued Temporary Restraining Orders (TRO) against 31 merchants to halt their infringing activities against SHEIN and freeze their account funds. Most of these merchants are located on the Temu platform.
The High Court of Justice in England and Wales and the Commercial and Property Courts issued a temporary injunction requiring Temu to stop using all images copyrighted by SHEIN.
SHEIN VS Temu Transnational Litigation
As early as December 2022, SHEIN filed a lawsuit in a U.S. court, accusing Temu of trademark and copyright infringement and related false and deceptive business practices.
In August 2023, SHEIN obtained a temporary restraining order against Temu from the Eastern Division of the Northern District Federal Court of Illinois, forcing it to stop the continued infringement of SHEIN’s copyrights. Court documents revealed Temu’s repeated plagiarism of SHEIN’s clothing designs in its infringing activities, ignoring SHEIN’s copyright notices (DMCA notices), and even relisting the infringing products with minor adjustments.
In December 2023 and January 2024, SHEIN won several temporary restraining orders from U.S. courts, covering hundreds of its products that were infringed upon, mainly appearing on the Temu platform, across multiple categories, including menswear, casual wear, sportswear, and children’s wear.
While SHEIN continued to protect and assert rights over its brand, Temu attempted a legal counterattack.
In July 2023, Temu filed a lawsuit in a federal court in Boston, accusing SHEIN of using its market dominance to hinder suppliers from cooperating with Temu, an act alleged to violate U.S. antitrust laws.
By October of the same year, SHEIN and Temu withdrew the ongoing related lawsuits in the U.S. However, just two months later, media reports stated that Temu had launched a new round of lawsuits against SHEIN in the U.S., accusing SHEIN of exhibiting monopolistic behavior again.
In response to Temu’s accusations, SHEIN won injunctions in the U.S. and secured legal victories against Temu in the UK.
In the latest judgment, the UK court clarified that the injunction applies to all images of SHEIN, including those taken by SHEIN, its suppliers, and photography agencies, allowing SHEIN to file complaints. This ruling supported SHEIN’s claims to the rights of supplier images and emphasized the consistent stance of the UK and the U.S. judicial systems on protecting copyright.
Behind SHEIN’s Victory
Although SHEIN and Temu are cross-border e-commerce platforms, SHEIN’s platform, apart from third-party seller products, also has many of its brand products. Its 11 proprietary brands include the eponymous clothing brand SHEIN, which has surpassed ZARA and H&M in popularity among consumers in Europe and America. On the other hand, Temu’s platform consists entirely of third-party seller products.
The dispute between SHEIN and Temu involves only the products of SHEIN’s brands. SHEIN accuses Temu of consistently copying its proprietary brand products.
The legal dispute between SHEIN and Temu reflects the challenges cross-border e-commerce platforms face during their global market expansion. With the rapid development of platforms like SHEIN and Temu, they have engaged in fierce competition in multiple global markets, including the United States, the United Kingdom, Europe, Southeast Asia, and Latin America.
These legal battles extend beyond business competition and highlight compliance’s importance in the cross-border e-commerce industry. Compliance is a legal requirement and key to protecting a company’s long-term development.
Compliance in Going Global
In mature Western markets, compliance is becoming increasingly granular. For Chinese companies going overseas, the focus is still on the Western markets, especially for brand-exporting merchants, who face more detailed compliance issues than purely trade-oriented sellers.
For example, opening offline brand stores and establishing a distribution system in North America means aligning with local concepts of origin, tax compliance, social responsibility, and after-sales service. As a result, sellers need to obtain after-sales qualifications in each state where they open stores to address various consumer needs directly.
Companies venturing overseas must ensure compliance, and there are steps to follow.
Firstly, an analysis of the applicability of target country laws, platform rules, product quality, intellectual property rights, consumer rights protection, and customs regulatory rules is needed to identify differences in compliance requirements.
Secondly, in line with the company’s current status, business process risk scenarios should be identified to form a compliance risk framework. For e-commerce companies, this mainly focuses on company establishment, registration, qualification acquisition, product listings, store operations, stock preparation and shipping, cross-border tax handling, receipt of payments, and regulatory data reporting.
Thirdly, if the company has encountered compliance issues, analyze the risks and develop a plan for compliance rectification. Reviewing company compliance documents, conducting departmental interviews, etc., assessing the company’s compliance, identifying risks and determining risk levels, forming a compliance risk list and rectification plan.
With the surge of Chinese companies going global, more professional overseas law firms and compliance teams are involved in Chinese enterprises’ overseas affairs.