Earlier this week, The Exchange argued that the rivalry between PDD and Shein was one to watch closely. PDD, a Chinese company, owns popular e-commerce business Pinduoduo and discount online retailer Temu, which has experienced significant growth in the U.S. market in recent years.
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Our article was timely. Just two days later, Temu filed a lawsuit against Shein. This isn’t the first time these two companies have gone to court against each other. Earlier this year, they both sued and subsequently dropped their lawsuits in October. Now, Temu has initiated a new lawsuit, accusing Shein of multiple illegal actions.
How did we get to this point? According to the complaint, since dismissing their previous lawsuits, “Temu has discovered that Shein’s anticompetitive behavior has not only persisted but intensified.” It’s important to note that Temu’s parent company, PDD, recently surpassed Alibaba in market cap, and Shein desires to go public in the U.S.
A spokesperson from Shein told TechCrunch+ that they “believe this lawsuit is unfounded and will aggressively defend against it.”
So what exactly is Shein being accused of by Temu?
The lawsuit makes a variety of claims. Some involve Shein’s alleged tactic of constantly filing “questionable copyright infringement lawsuits” against Temu. The lawsuit also claims that Shein is sending an excessive amount of “bad-faith DMCA takedown notices” to their competitor.
But there’s more. Temu also asserts that Shein mistreats its suppliers by leveraging its “monopoly power in the U.S. ultrafast fashion market” to establish “Exclusive-Dealing Agreements with ultra-fast-fashion suppliers” and then unfairly seizing suppliers’ intellectual property rights. This allows Shein to prevent the suppliers from selling similar products on Temu or other retail platforms.
