U.S. District Court Passes Temporary Restraining Order to Shein Against its Rival Temu in a Trademark Infringement Suit

U.S. District Court Passes Temporary Restraining Order to Shein Against its Rival Temu in a Trademark Infringement Suit

The U.S. District Court for the Northern District of Illinois has granted fast fashion brand Shein’s bid for a temporary restraining order (TRO) against its rival Temu. The TRO will remain in effect until 17th August.

The Judge Franklin Valderrama held that in addition to showing a likelihood of success on its trademark infringement and false designation of origin, and copyright infringement claims against PDD Holdings Inc. and Whaleco, Inc. (collectively, ‘Temu’), Roadget Business Pte. Ltd. (‘Shein’) had also established that it had no adequate remedy at law and will suffer irreparable harm if the Court does not temporarily block Temu’s allegedly infringing activity.

In December 2022, Shein had filed lawsuit against Temu, accusing its rival of willfully and flagrantly infringing trademark and copyright rights and engaging in a scheme to boost its own growth in the American market by impersonating the Shein brand on social media, using the well-known Shein trademarks to deceive consumers, and using copyrighted images owned by Shein to promote its own products.

Temu had opposed to the lawsuit, arguing that Shein fell short on its copyright claims (on the basis that some of the allegedly infringed images are not registered), as well as its false advertising and trade libel claims.

Temu had asserted, among other things, that it ‘never impersonated SHEIN and played no part in the creation of said Twitter accounts,’ and instead, believed the accounts were created by third-parties gaming Temu’s affiliate program, an initiative rewarding users who refer at least five new customers to download Temu.

Delving into Shein’s bid for temporary injunctive relief, Judge Valderrama began his analysis with whether Shein established a likelihood of success on the merits for its:

(1) Trademark infringement and false designation of origin and;

(2) Copyright infringement claims.

With respect to the similarity of the marks, the Court found that the infringing Shein Mark and the authentic Shein Mark were similar enough that a customer could believe that the infringing mark is associated with the authentic mark. As a result, this factor weighed in favor of Roadget, held the Judge.

With respect to the similarity of products, the Court reasoned that because Shein and Temu are competitors and the identical infringing Shein marks appear on Temu Platforms, this factor weighed in favor of Shein.

As regards to the area and manner of concurrent use of the products the Court observed, “Temu and Shein are online platforms targeting the U.S. fashion and lifestyle market. Both platforms sell inexpensive clothing and home goods. Thus, this factor also favors Shein.”

Apropos to the degree of care likely to be exercised by consumers the Court observed, “Because both Shein and Temu offer inexpensive clothing and products, customers are more likely to exercise less care and discrimination in their purchases. Therefore, the likelihood of confusion is greater. This factor also weighs in favor of Shein.”

The Court noted that Temu did not challenge the strength of the Shein Mark. In light of things like its social media following (26 million-plus followers on Instagram, 5.5 million on TikTok, and over 500,000 on Twitter), and app-specific stats (Shein was the most downloaded shopping mobile application in the U.S. in 2021 and the most downloaded mobile application across any category in 2022). This factor also favored Shein.

It was conceded by Shein that there was no actual evidence of confusion, but insisted that because discovery is ongoing, this could change, and the balance of factors still weighs in its favor. The Court stated that this factor favors Temu.

Temu had contended that the first sale doctrine shields it from liability, however, the Court noted that, contrary to Temu’s assertion, the first sale doctrine is not a defence to the presence of infringing Shein Marks on Temu platforms. The major caveat to its protection is that the resold goods must be authentic, trademarked goods, which did not appear in the present case, the Court remarked.

The Court similarly sided with Shein in regards to the likelihood of success on its copyright infringement claims.

The Court elaborately discussed the exclusively on the second element of the copyright infringement test – unauthorized copying by the defendant of the constituent elements of the work that are original – since Shein had already showed that it owned valid copyright registrations for the works at issue.

Therefore, the Court observed, “At this juncture and based on the evidence before the Court, Roadget has shown that Temu is actively involved in the copyright infringement of Shein Marks. Based on the low bar, Roadget is likely to succeed on its copyright infringement claims and the Court need not address Counts X and XI. The Court having found that Roadget has shown a likelihood of success on its Trademark Infringement and False Designation of Origin, and Copyright Infringement Claims, turns to the no adequate remedy at law and irreparable harm factors.”

Accordingly, the Court granted Shein’s request for an emergency temporary restraining order as to its trademark and copyright infringement claims.