The fast-fashion powerhouse Shein is in the middle of a legal dispute. The Chinese store was accused of operating a scheme to steal intellectual property from both new and established designers in a lawsuit filed on July 11th under the Racketeer Influenced and Corrupt Organisations (RICO) Act.
Taking Apart the Charges
Krista Perry, Larissa Martinez, and Jay Baron filed the lawsuit against Shein, Roadget Business, and Zoetop Business in a federal court in California, claiming that these companies infringed on their copyright and trademarks. The designers claimed to have been shocked and outraged to see carbon copies of their work being offered through the fast fashion retailer’s website.
Fast Fashion and Its “Secretive Algorithm” Front
The lawsuit alleges that Shein uses a “secretive algorithm” to spot emerging trends in the fashion industry and then mass-produces knockoffs of those designs. According to the complaint, this preventative action is being done to quickly and easily address any claims of intellectual property infringement. In the event of an accusation, production can be halted immediately, mitigating damage and keeping the situation under control.
Being Familiar with RICO
The RICO Act is an American federal legislation from 1970 that prohibits organised crime from exploiting legitimate enterprises. Racketeering encompasses a wide variety of business deception in addition to its more commonly known associations with illegal gambling and drug trafficking. In this case, the RICO Act would apply since Shein is suspected of engaging in criminal acts through the use of a concerted effort by several separate businesses working together.
Future Effects and Consequences
The repercussions of a guilty verdict under the RICO Act against Shein might be severe. To begin with, they could be subject to severe financial penalties that would have a major impact on the company’s bottom line. Furthermore, permanent harm to their reputation could cause them to lose customers.
Moreover, the fast fashion sector as a whole may be affected by this action. It could lead to an in-depth analysis of how other stores handle their design processes, which could ultimately lead to a shift in industry practises that promote more ethical and transparent operations.
Shein has been silent in the face of these grave charges. The entire fashion industry and its consumers are watching this case closely to see how it unfolds. This lawsuit highlights the risks associated with the fast fashion industry. By purchasing from companies and designers who preserve intellectual property rights, customers can help promote equitable business practises. Only by making educated purchasing decisions as consumers can we help create a more honest and accountable fashion business.
About The Author:
Melanie Jacobs is a leading fashion and beauty writer based in Johannesburg, South Africa. With a decade of experience tracking trends and analysing style evolutions, she offers readers an unmatched insight into the dynamic world of fashion.