Introduction to the Case
Three designers are suing Shein, a fast-fashion business, on the grounds of racketeering and algorithmic copyright infringement. The designers are Krista Perry, Larissa Martinez and Jay Baron, and the suit was filed on 11th July in California, USA.
The Role of Technology in Shein’s Business
This case is particularly interesting due to the involvement of technology. The plaintiffs claim that Shein has a “secret algorithm” that can search for and recognize the latest fashion trends and designs. The claim does not give any further information about the algorithm but states that Xu Yangtian (Chris Xu) plays a central role in Shein’s business, arguing that he helped build the company through technological innovation rather than unique artistic designs.
Accusations and Legal Grounds – Algorithmic Copyright Infringement
The plaintiffs have accused Shein and its parent company Zoetop Business Company, Ltd of “produc[ing], distribut[ing], and selling exact copies of their creative works”. They claim that Shein used “copyrightable graphic designs”. Indeed, Baron’s artwork titled “Trying My Best” is a registered copyright and a trademarked phrase. The artists also argue that Shein’s strategy involves producing “very small quantities” of the stolen designs in order to limit the risk should an artist claim for IP theft. The plaintiffs suggest that large brands, with teams dedicated to protecting IP, are better equipped to monitor cases of copyright infringement, enabling them to act more quickly in response.
The Significance of the RICO Act
This case is also interesting because the plaintiffs have criticized Shein for its use of a “decentralized structure” to evade and deflect infringement accusations. This violates the Racketeer Influenced and Corrupt Organizations (RICO) Act in US Law. The plaintiffs allege that Shein, upon receiving infringement complaints, typically removes the product in question from their website and blames another “Shein entity”, . The company suggests that this entity is independent from Shein when in fact they are connected. For example, Perry stated that when she contacted Shein about their use of her design, she was told that the design had been bought from a third party, a “local vendor” according to NBC News. She was offered $500 compensation.
The use of the RICO Act distinguishes this claim from the other suits against Shein over the past few years. The RICO Act is a US federal law. To successfully claim under the RICO Act, the plaintiff must demonstrate the existence of a criminal evidence, and that this enterprise has a pattern or a history of racketeering. The RICO Act is significant as it allows plaintiffs to bring a civil lawsuit against violators of RICO, meaning that the burden of proof is lower than criminal proceedings would require and that plaintiffs can receive treble damages should they be successful.
The plaintiffs are seeking damages for copyright infringement, legal fee compensation, and injunctive relief to prohibit “further racketeering activity”. The designers’ attorney, David Erikson, has commented that the main aim of the case is to “reign in their [Shein’s] bad behavior, and require them to stop copying U.S. designers”. He proposed that Shein could hire “people to look at the designs generated by their algorithm, and compare them to the designs they are taking inspiration from” as one possible solution. Shein has issued a statement that it would defend itself against the claim.
Recent Developments and Implications
Shein has faced a number of copyright infringement cases. Most recently, in May 2023, artist Maggie Stephenson agreed to settle with Shein in an infringement case. Just days after this, Giuliano Calza accused Shein of copying one of his footwear designs. It has also emerged that Shein is facing accusations of infringement from fashion giant H&M. H&M is claiming that Shein has infringed on their designs in a number of cases, with evidence including photographs of “swimwear and sweaters”, according to Bloomberg. The case was first filed in Hong Kong in 2022, but the filing’s details were only made public in June 2023.
In light of recent developments in AI, it will be interesting to see how the courts deal with the implication of algorithmic copyright infringement.
By Katrina Toner
Sources:
https://www.highsnobiety.com/p/shein-hm-lawsuit/
https://www.independent.co.uk/life-style/fashion/hm-suing-shein-copyright-infringement-b2382001.html
https://www.justia.com/criminal/docs/rico/
