SHEIN, the China-based fast fashion giant, has been served with a new lawsuit by three designers who claim the company is infringing on their intellectual property by making and selling copycat items.
The complaint was filed on Tuesday in California federal court on behalf of the designers Krista Perry, Jay Baron and Larissa Blintz, who claimed they were “surprised” and “outraged” to see "truly exact copies of copyrightable graphic design" of their products being sold by the Chinese retailer.
The designers stated that SHEIN allegedly engages in a pattern of copyright infringement as part of its effort to produce 6,000 new items each day for its millions of customers, which amounts to a violation of the Racketeer Influenced and Corrupt Organizations Act (RICO) introduced in 1970 as a way to combat the exploitation of legal businesses by organized crime.
More recently, the RICO Act has been used to prosecute white-collar crimes such as the Enron accounting scandal and Bernie Madoff's pyramid scheme, CBS (NYSE:CBS) News reported.
The defendants claim SHEIN “is a loose and ever-changing (though still continuous even as some individual elements might change to be replaced by others) association-in-fact of entities and individuals,” which violates the RICO Act, which is “designed to address the misconduct of culpable individual cogs in a larger enterprise,” the media outlet wrote.
SHEIN was founded in 2012 by Chinese entrepreneur Chris Xu, also known as Xu Yangtian, who is valued at more than $10 billion by Forbes.
According to the lawsuit, SHEIN is the largest fashion retailer in the world with annual sales of almost $30 billion, more than H&M and Zara combined.
Contact Sean at sean@proactiveinvestors.com