Headquartered in Singapore, the online fashion retailer Shein has been under legal scrutiny for its apparent knockoff items that look exactly like the creative works produced by known fashion designers.  Three US designers have filed a lawsuit, accusing the company of committing copyright infringement at such a remarkably destructive rate that it embodies racketeering.  Although the amount of compensatory damages sought has not formally been disclosed to the public, the designers are asking for an injunction to cease the infringement and prevent the business activity from continuing.  They claim that Shein is in violation of the RICO Act.

Passed in 1970, the Racketeer Influenced and Corrupt Organizations Act (RICO) was initially signed to combat alleged mob-related organized crimes.  Based on Shein’s routine and continued business decision to allegedly steal copyrighted fashion designs, recreate and mass produce them, and sell them on its marketplace, the RICO Act may extend to this circumstance.  The rate of production is so rapid that the company develops about 6,000 new designs per day.  Although the company is based overseas, the marketplace reaches a US audience.  If US consumers benefit from the company’s designs, US statues may apply to fight the apparent crime.

The US Shein marketplace has grown exponentially profitable and has contributed to the company’s record success in the first half of 2023.  The company has jumped from $22 billion in sales in 2022 to about $66 billion in 2023.  A large factor that impacts this increase in profit is Shein’s ability to churn new designs and pump out fresh items, relative to the current fashion styles.  The claim presented in the lawsuit challenges this growth and attributes it to the easy accessibility to fashion trends.  While copyrighted fashion may be protected by intellectual property laws, the Internet makes it fairly simple to view new designs and craft exact copies.  The claim was filed in the U.S. District Court for the Central District of California.