In light of its prospective initial public offering (IPO), Chinese-based fast fashion brand Shein is garnering media attention for various controversies currently plaguing the company. These alleged violations include copyright and trademark infringements, charges of human rights offenses via forced labor, along with concerns related to environmental and health risks. To date, Shein’s alleged infringements have led to over 50 federal lawsuits in the U.S., including a RICO (Racketeer Influenced and corrupt Organizations) lawsuit.
Shein’s copyright and trademark infringement lawsuits stem from the numerous small and large brands alike that Shein is allegedly copying. Companies such as Oakley, Dr. Martens, Ralph Lauren, Stussy, and Chrome Hearts have all filed complaints against Shein. The allegations brought forth include trademark infringement, false designation of origin, and unfair competition.
Chrome Hearts, an American luxury brand, has put forth a complaint against Shein due to Shein’s “marketing, distribution, advertisement, offering for sale, and/or sale of handbags and accessories that bear marks that are identical with, or confusingly similar to one or more of the Chrome Hearts Marks.” Above The Law reports.
In addition to the many alleged infringement cases, a RICO claim was brought against Shein in July by three independent designers. The designers resolutely argue that Shein specifically created, distributed, and sold identical copies of their creative work, constituting copyright infringement on an egregious scale that could qualify as racketeering.
The proprietors perpetrating the purported RICO violations are also under scrutiny for their lack of response to inquiries from 16 state attorneys general about Shein’s business practices. These inquiries come as the company considers an imminent IPO. In a letter directed to SEC Chair, Gary Gensler, the attorneys general accuse Shein of exploiting forced labor and violating the Uyghur Forced Labor Prevention Act (UFLPA), Public Law No. 117-78.
Further concerns emerge as Greenpeace Germany discovered hazardous chemicals like PFAs, phthalates, and lead in 32% of the 47 Shein products it tested last year, with seven items even breaching EU regulatory limits.
Going forward, should Shein desire a successful IPO and global growth, the company must address these serious charges head-on. Legal compliance, fostering trust, and maintaining a reputation consistent with ethical business practice should become paramount to their strategy.