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Shein Distribution Corp. holds the distinction of being one of the most famous fast fashion brands. Fast fashion is the refuge of those who want to be on the cutting edge…
United States
Intellectual Property
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Here’s What Happened:
Shein Distribution Corp. holds the distinction of being one of
the most famous fast fashion brands. Fast fashion is the refuge of
those who want to be on the cutting edge of fashion trends but are
budget conscious. Fast fashion is cheap and trendy. Fast fashion
brands manufacture clothing quickly to take advantage of the
current market trends.
A group of fabric designers brought suit against Shein for
“purposefully created and employed an algorithm that
generates exact or close copies of works it does not own.”
The plaintiffs included a cause of action under the Racketeer
Influenced and Corrupt Organizations Act (RICO). A cause of action
under RICO requires proof of a pattern of racketeering that
consists of at least two predicate acts.
Shein brought a motion to dismiss the RICO claim. The court
denied the motion. The court held that organized and systematic
instances of copyright infringement could be used as predicate acts
to move the RICO claim forward. Plaintiffs sufficiently alleged
that Shein representatives presented themselves under a unified
Shein brand but instead had a ‘byzantine’ institutional
structure that allowed the participants to avoid or minimize
liability for intellectual property infringement. Further, the
plaintiffs sufficiently alleged that Shein used wire and mail fraud
to conceal its infringing activities.
WHY YOU SHOULD KNOW THIS: This matter is
still at the pleading stage. But the message is clear. If your
business model is based on infringing upon the copyrights of
others, you could find yourself liable under RICO.
Cited Authority: Perry v. Shein Distrib.
Corp., C.D. Cal., No. 2:23-cv-05551 (December 8, 2024)
The content of this article is intended to provide a general
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