A California federal judge has denied Shein’s request to dismiss the RICO charges in a copyright lawsuit filed against it last year.

In July 2023, Shein was sued by a group of independent designers after it allegedly produced, distributed, and sold exact copies of the designers’ work.

“Shein has grown rich by committing individual infringements over and over again, as part of a long and continuous pattern of racketeering, which shows no sign of abating,” the filing said. “It is not an exaggeration to suggest that Shein’s pattern of misconduct involves commission of new copyright and trademark infringements every day.”

The suit also accuses Shein of mail and wire fraud, with attorneys for the plaintiffs saying Shein used mail and interstate wires to deliver alleged infringing designs to customers on Shein’s website, and misrepresented its corporate structure.

Shein moved to dismiss the racketeering charges by saying the plaintiffs’ allegations were insufficient. The court rejected Shein’s request to dismiss the RICO charges on both the copyright infringement and wire fraud charges. 

“Given these allegations and other augmentations to the pleading, Plaintiffs’ pleading gives rise to a reasonable inference that the Shein Defendants participated in a RICO enterprise,” the judge wrote in the decision. Shein had engaged in willful copyright infringement because it allegedly “purposefully created and employed an algorithm that generates exact or close copies of works it does not own.”

A certain amount of copying is both accepted and expected in the fashion industry. But technological advances have allowed fast fashion retailers to copy designs quicker and easier than ever before. For small designers, this can destroy their business. As one designer put it – designing is not like sprinkling fairy dust; it requires years of practice, study and work to develop the necessary skills. It can take months for designers to develop textile prints, design a bespoke item of jewellery or to develop the perfect dress. The basic philosophy behind intellectual property laws is that people will invest more time and energy in developing new and original designs if they can profit from them. This incentive is somewhat diminished if a designer’s work can be stolen the moment it is unveiled. Would you spend months developing something that will be reproduced on the high street and sold for a fraction of the price for no monetary reward or attribution?