SHEIN, an online fast-fashion retailer, and Temu, a newer competitor, are competing for shoppers’ attention with their low-cost Chinese-made goods.

Their feud is being waged not only on social media, but also in a US court. The legal squabble is significant for US consumers and rival retailers because it demonstrates how online retailers with Chinese vendors must navigate US intellectual property protections.

In a US federal court, SHEIN accused Temu of hiring social media influencers to make “false and deceptive statements” about SHEIN in their Temu.com promotions.

If Temu loses, it may be forced to abandon what has been a key marketing strategy.

SHEIN seeks to prevent Temu from using SHEIN’s name in marketing and seeks damages for sales that SHEIN can demonstrate were obtained through deceptive or infringing marketing. Temu has requested that the lawsuit be dismissed.

“I think as Temu gets a higher profile, there will just be more and more lawsuits. Including IP, but probably not just IP. I’m sure there will be data-related things as well,” US and China tech analyst Rui Ma said.

SHEIN manufactures clothing in China for sale online in the United States, Europe, and Asia, with items ranging from $10 dresses to $5 tops. SHEIN, which was founded in China, relies on direct drop-shipping from its extensive network of Chinese suppliers.

SHEIN plans to raise around $2 billion in a new funding round this month and hopes to list in the United States in the second half of this year, according to three people familiar with the company’s plans. SHEIN stated that it has no plans for an IPO at this time and declined to comment further.

SHEIN’s lawsuit against Temu, filed in December in the United States District Court for the Northern District of Illinois, claims that Temu instructed social media influencers to make disparaging remarks about the fast-fashion retailer, and that Temu duped customers into downloading the Temu app using “imposter” social media accounts.

TikTok social media influencers frequently mention SHEIN in Temu-related posts, comparing the companies and their merchandise.

“I am not with Shein anymore,” one influencer said in a February post on TikTok. “I am with Temu who has the same and more for less.”

According to screenshots provided with SHEIN’s complaint, the now-deleted @SHEIN DC, @SHEIN USA_, and @SHEIN NYC pages were created in September and displayed SHEIN’s logo and marketing material on their bio pages.

“Temu has also attempted to impersonate the SHEIN brand and trick consumers into believing Temu is associated with that brand,” the lawsuit alleges.

According to SHEIN, links on the imposter pages led shoppers to download Temu’s app, believing the two companies were related. A spokesperson for SHEIN declined to comment on the ongoing litigation.

Temu.com, according to a spokesperson, “strongly and categorically rejects all allegations and is vigorously defending its rights.”

SHEIN has been sued for alleged copyright infringement. Hundreds of independent artists and retailers, including Nike, Deckers’ UGG brand, Luxottica Group’s Oakley sunglasses, and online retailer Dolls Kill, sued under the name Zoetop Business, alleging stolen designs.

PDD Holdings, the parent company of China’s popular Pinduoduo app, launched Temu in September as a new app for American shoppers to buy shoes, jewelry, beauty accessories, and home goods directly from Chinese merchants.

According to data firm YipitData, Temu’s gross merchandise value – total sales before expenses – increased from $3 million in September to $192 million in January. This year, the company intends to launch in Canada, Australia, and New Zealand.

According to job postings by Nanopower, Temu’s marketing agency, the company’s social media efforts began months ago. Temu pays social media influencers $100 to $1,000 per hour in the United States for content promoting the Temu marketplace on TikTok, Instagram, and YouTube.

According to a LinkedIn job posting, Temu is currently looking for a corporate/tax lawyer.

(Adapted from UKDaily.news)

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