Fashion e-commerce giant Shein has been accused of copyright infringement in a class-action lawsuit that alleges the company uses data scraping and electronic monitoring to identify popular designs and steals them to generate its products.
In a complaint filed in the U.S. District Court in the Southern district of New York on April 5, plaintiff and artist Alan Giana accused Shein of using its electronic monitoring system and AI to track what consumers look at online, mostly over Instagram and TikTok, to identify trends and designs it anticipates being popular. The electronic monitoring would be particularly punishing to creators publishing their designs online looking for exposure, the complaint argues: If an artist’s post garners more online attention from users, it becomes a greater target for Shein’s data scraping to co-opt and mass-produce designs.
“Shein does not create many of its products; it certainly does not design thousands daily,” the complaint says. “Instead, it uses sophisticated electronic systems that algorithmically scour the internet for popular works created by artists like Mr. Giana.”
Founded by Chinese billionaire Sky Xu in 2008, Shein is able to turn around products in a matter of days, selling them on an online marketplace with 600,000 listed items at a time—and placing it at the pinnacle of fast fashion.
But this isn’t the first time Shein has encountered copyright-infringement allegations. The company has been hit with dozens of lawsuits alleging theft. In July 2023, three graphic designers in China sued Shein for copyright infringement, saying the company used “secretive algorithms” to identify trends that necessitated copying artists’ designs in order to work. The complaint said the company’s history of copyright infringement was so bad that it amounted to racketeering, or coordinated efforts to make money often only reserved for organized crime. Months later in December, competitor Temu sued Shein for “mafia-style intimidation of suppliers,” allegedly falsely detaining merchants and stealing business secrets.
“It’s incredibly sophisticated and awfully brazen,” internet law and intellectual property lawyer Brett Lewis of Lewis & Lin LLC told Fortune. “And it’s somewhat shocking that they’ve been able to get away with it.”
Along with rampant production associated with concerns over environmental unsustainability and forced labor, Shein’s practices have allowed it to sell products at a fraction of the price of its competitors—including 50% less than H&M—and grow astronomically in just a few years. The private company likely brought in over $30 billion in revenue in 2023, compared to the $23 billion the year before.
Shein did not respond to Fortune’s request for comment, but has responded to previous copyright infringement allegations: “SHEIN takes all claims of infringement seriously, and we take swift action when complaints are raised by valid IP rights holders. We will vigorously defend ourselves against this lawsuit and any claims that are without merit.”
Class-action advantages
Lewis compared Shein’s alleged intellectual property practices to knock-off Coach and Gucci products sold in city street corners, except the use of AI algorithms and data scraping has increased the scope of the practice exponentially.
“Shein’s business model is: If we get sued, we pay, and otherwise, we just keep doing this because it’s so profitable,” he said.
If Shein is indeed infringing on artists’ intellectual property, the practice is particularly harmful to small creators earnestly trying to promote themselves only, as many may not even realize Shein is allegedly using their data or works, Lewis said. The lawsuit represents thousands who were potentially impacted. Shein’s reach may have taken advantage of a vast amount of artists, but if the class-action lawsuit swings in favor of the creators, it has the potential to make a real difference in not only setting a precedent, but also compensating those impacted.
“Many times [in] class actions, the actual people who are harmed get like a coupon for $5 to the Outback Steakhouse or something; you don’t really get meaningful relief,” Lewis said. “In this case, one would hope there would be meaningful relief.”
Philippa Loengard, director of the Kernochan Center for Law, Media and the Arts at Columbia Law School, told the Financial Times that past settlements offer hope for artists looking for justice. Though Shein does not disclose the details of its settlements, the payouts “tend to be handsome to the artists. Possibly more lucrative than a license agreement would have been.”
