Shein Lawsuit Alleges E-Commerce Giant Uses AI to Steal, Sell Copyrighted Designs

A proposed class action lawsuit alleges that Chinese e-commerce heavyweight Shein uses artificial intelligence to find copyrighted designs, art pieces and other works online and then sells the protected works without credit or compensation to the original artists.

According to the 42-page Shein lawsuit, the global fashion and lifestyle company uses proprietary online surveillance technologies—including data mining and AI programs, various algorithms and other automated methods—to track consumer trends in real time, especially on social media, and identify existing products, designs or other works that it thinks will be commercially successful for Shein.

This digital surveillance system, the suit says, once focused solely on tracking popular online trends so that Shein could produce products based on those trends. However, the complaint claims that the company has progressed to tracking users’ behavior on its own web pages and elsewhere on the internet, vacuuming up popular, copyrighted works in the process.

“[...] Shein’s core business model is based on the systemic theft of intellectual property,” the class action lawsuit charges.

In its own privacy policy, the filing says, Shein admits that it tracks users’ personally identifying information, such as device and IP details, names, phone numbers, email addresses, network and browser activity, browsing data and payment information. The lawsuit alleges that Shein uses the data it collects from consumers to identify the products that users view on other platforms so that it can then manufacture and offer counterfeits on its website and app.

“[U]nlike apparel companies and brands that let fashion trends inspire their own designs,” the lawsuit says, “Shein’s systems duplicate the work of other designers, stealing those designs for Shein’s use and benefit.”

Shein’s business model relies on copyright infringement, lawsuit alleges

Per the lawsuit, Shein uses copyrighted works scraped from the internet by its AI and data tracking programs to produce and offer thousands of “new” products on a daily basis without ever obtaining proper licensing to do so or offering compensation—or even credit—to original creators and copyright owners.

The filing relays that Shein has a long history of copyright infringement and related lawsuits from both independent designers and major fashion retailers, such as Oakley and Ralph Lauren. According to the complaint, the defendant’s apparent practice of copyright infringement is such that Shein “treats the costs of litigating and settling copyright infringement claims as a necessary business expense, which it builds into its financial models.”

Per the lawsuit, small or independent designers, businesses and artists are most vulnerable to Shein’s alleged intellectual property theft and copyright infringement, given that they are often the ones creating the pieces that define or are on the cutting edge of the trends Shein’s algorithms determine will be profitable.

Additionally, per the lawsuit, independent designers often do not have the means to comb through the entire internet, or even just Shein’s massive catalogue, for instances of infringement. Even in cases where artists do discover Shein’s alleged infringement, the filing claims, it is often difficult or impossible for them to front the costs of individual litigation. As such, they are frequently unable to combat Shein’s allegedly illegal use of their work, the suit says.

Further, the case contends that Shein’s alleged copyright infringement also diminishes the value of the original works and makes it more difficult for artists to profit, both in their own independent sales and in the potential to sell a genuine license to use that art to other buyers or retailers, from what is rightfully theirs.

The Shein class action lawsuit alleges that not only is the multi-billion-dollar fast-fashion giant aware that its products are created from theft or copyright infringement, and that its catalogue contains a vast amount of counterfeit items, but that it knows exactly which products, designs and other works it has copied or otherwise stolen because its business relies on the careful identification and categorization of such works.

“Accordingly, Shein has experienced massive growth in annual revenue, from about $3 billion in 2019, to nearly $10 billion in 2020 (as the global pandemic set in), to more than $30 billion in 2023,” the complaint states.

Case claims Shein intentionally attempts to skirt liability

The lawsuit alleges that Shein and its parents and subsidiaries, in spite of the allegedly systematic, willful and serial nature of its supposed copyright infringement, have regularly attempted to avoid any legal consequences or accountability.

According to the complaint, Shein has previously attempted to blame its suppliers for its pervasive copyright infringement, claiming that, “[suppliers must] certify their products do not infringe third-party IP.” However, the filing alleges that Shein gives its suppliers the designs it wants them to manufacture based on data from its surveillance and scraping programs, and the manufacturers do not independently choose the products they create for Shein.

Furthermore, the lawsuit claims that, in order to operate at the pace and level of success it has enjoyed, Shein must have some form of electronic record or database of stolen or infringed works, including the original sources, the time at which Shein sent the work to its suppliers for manufacturing, how much Shein paid for the manufacture of the item and each instance of the sale of an infringed, counterfeit or otherwise illegally produced work, including customer and order data.

Shein also attempts to evade legal accountability, the class action contends, by operating through a complicated corporate network the suit describes as “designed to obfuscate responsibility for intellectual property theft and avoid liability.”

Per the complaint, the name “Shein” refers to a large, international conglomerate, whose entities each play a very specific role in the Shein business, structured in such a way that victims of the defendant’s copyright infringement and IP theft are impeded or prevented from identifying exactly which entity in the chain can be held responsible for the theft or infringement.

Who can join the Shein lawsuit?

The Shein class action lawsuit seeks to represent any individuals or entities who owned a U.S. copyright that was used in a Shein product or products within the applicable statute of limitations period.

How can I sign up for the Shein lawsuit?

Generally, you don’t need to do anything to sign up for or join a class action lawsuit when it is first filed. In the event of a class action settlement, the settlement class—meaning the people covered by the deal—will likely receive notice from the court by mail and/or email, along with instructions on the next steps and information about their legal rights.

It is important to remember that many class action lawsuits can take months or years to resolve.

If you think your work has been stolen or infringed upon by Shein, or you just want to stay in the loop with similar class action lawsuit and class action settlement news, sign up for ClassAction.org’s free weekly newsletter.

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