Chinese fast-wear retailer Shein is facing a lawsuit alleging that the clothing manufacturer’s copyright infringement is so aggressive it amounts to racketeering.
A filing this week claims Shein is violating the Racketeer Influenced and Corrupt Organizations Act, higher often called RICO, a law originally created to prosecute organized crime.
“Shein has grown wealthy by committing individual violations over and once more in a protracted and continuous racketeering pattern that shows no signs of abating,” the file reads.
In an organized effort to create as much as 6,000 recent items a day, Shein is using the “Byzantine shell game of corporate structure” to defraud designers, a coordinated illegal operation best fought through RICO statutes, in response to the lawsuit.
The lawsuit is barely the last in a series the difficulties faced by Shein.
In May, a bipartisan group of twenty MPs asked the Securities and Exchange Commission to carry Shein’s IPO pending confirmation that he was not using forced labor of the predominantly Muslim Uyghur population.
A lawsuit filed by three fashion designers in the US District Court for the Central District of California alleges “Shein manufactured, distributed and sold exact copies of their creations.”
“Inexplicably, these are truly exact copies of the copyrighted graphic designs appearing on Shein products,” the civil lawsuit states.
The designers are in search of unspecified damages and an injunction to forestall further racketeering activity.
“Shein takes all infringement claims seriously, and we take swift motion when complaints are made by necessary mental property rights holders,” Shein said in an announcement prepared on Friday. “We are going to vigorously defend this lawsuit and any claims which might be without merit.”
Shein didn’t say whether it plans to go public this yr, but there are reports that the corporate is raising money in anticipation of a U.S. listing before the top of the yr.
Shein spokesman Peter Pernot-Day said the corporate takes transparency across its supply chain seriously.
But Last month’s congressional report unleashed heavy criticism of Shein and one other Chinese clothing retailer, Temu.
The report is an element of an ongoing congressional investigation into products offered to US consumers that might be manufactured by forced labor in China.
As part of its investigation, the commission sent letters to Nike and Adidas, in addition to Shein and Temu, in early May, asking for information on their compliance with forced labor laws.
Shein said on the time that “it is corporate policy to comply with the customs and import regulations of the countries through which we operate.”
He also said he has “zero tolerance” for forced labor and has implemented a strong system to make sure compliance with US law.