Shein Faces EU Scrutiny Over IP Rights Amid Legal Battles

Shein Faces EU Scrutiny Over IP Rights Amid Legal Battles

Shein, the prominent Chinese e-commerce giant celebrated for its Fast fashion and budget-friendly prices, confronts mounting challenges in Europe as the EU reinforces its Intellectual Property (IP) rights regulations.

Commencing in late August, new EU regulations will compel Shein to bolster its oversight of the extensive array of products it offers to its 108 million monthly active users across the region. This mandate requires Shein to ensure that its broad selection, featuring items like $5 shirts, $20 gowns, and $15 shoes, strictly adheres to trademark and copyright laws, avoiding any infringements.

Shein's European woes coincide with ongoing legal disputes in the United States. Documents obtained by Reuters reveal more than 90 lawsuits filed against Shein, accusing the company of replicating designs or products from other entities. Further intensifying the pressure, 16 US state attorneys general penned a letter to the Securities and Exchange Commission in August 2023, critiquing Shein's approach to intellectual property and urging thorough audits ahead of a potential Shein IPO in London.

Shein vehemently refutes these allegations, asserting that it mandates suppliers and third-party sellers to certify their products are free from IP violations. The company underscores its adoption of Artificial Intelligence (AI) technology since 2020 to detect potential infringements. According to Shein, this AI system has contributed to a notable decrease in infringement claims, integrating a proprietary IP library and other undisclosed databases to scan new products.

However, past incidents cast doubt on Shein's screening efficacy. In a notable 2021 lawsuit, Shein's legal counsel acknowledged shortcomings in their two-step screening process, which allegedly failed to identify a bathing suit design accused of mimicking another brand due to the original product's absence of a registered trademark symbol. These lapses raise concerns about Shein's capability to effectively detect potential infringements amidst its vast product offerings.

With impending EU regulations and ongoing legal challenges, Shein faces a pivotal juncture in its European operations. To sustain its presence and continue delivering affordable fashion to European consumers, Shein must enhance its IP protection measures significantly. This necessitates a robust framework that ensures compliance with stringent EU standards, safeguarding against potential legal entanglements while upholding its commitment to providing accessible fashion choices.