Online fast-fashion retailer Shein recently suffered a defeat in a London court case against rival company Temu. The lawsuit, which was based on allegations of copyright infringement, ended in a ruling that could potentially benefit online marketplaces that host third-party sellers.
Ruling Details
In this first round in a series of legal battles taking place in London, Shein had accused Temu of violating their copyright on a large scale. They claimed that Temu, which is owned by PDD Holdings, had used Shein’s branded clothing images to leverage the reputation of a more recognized competitor. Shein is currently aiming for a valuation exceeding US$30 billion in an upcoming Hong Kong initial public offering (IPO).
Despite Shein’s claims, Judge Kelyn Bacon dismissed the notion that Temu had infringed on Shein’s copyright. Furthermore, she stated that even if there had been any infringement, Temu would not be liable. Initially, Shein had argued that Temu had reproduced its product photos but had not pursued this claim at the trial. The judge noted that this was because Temu’s servers are located outside the United Kingdom, and any reproduction would consequently also be outside the UK.
A representative from Shein expressed disappointment, stating that while there was no question about Shein’s ownership of the photos in question, Temu had managed to avoid liability in the UK because their servers are based in Ireland. Temu has yet to comment.
Global Legal Battle
This case is just one piece in the larger legal confrontation between Shein and Temu. Both companies have experienced rapid international expansion, offering affordable clothing, accessories, and gadgets to consumers.
Judge Bacon’s written ruling rejected the idea that Temu enabled the violation of Shein’s copyright by allowing merchants to upload photos to its website. Instead, she pointed out that Temu “prohibits merchants from uploading infringing content.”
Crucially, she also ruled that had there been any copyright infringement, Temu could have invoked the hosting defense. This is because it serves solely as an “intermediary” and did not possess the necessary awareness of any infringement. She stated that Temu did not have actual knowledge of the infringements or was aware of any facts or circumstances that would make the infringements apparent.
On a final note, Judge Bacon upheld Temu’s counterclaim, which sought damages for the removal of listings when Shein obtained an injunction regarding images for which it did not own the copyright.
Questions & Answers
What was the basis of Shein’s lawsuit against Temu?
Shein accused Temu of violating its copyright on a large scale and claimed that Temu had used Shein’s images to leverage the reputation of a more established competitor.
Did the judge find Temu guilty of copyright infringement?
No, the judge rejected Shein’s argument that Temu had infringed on its copyright and said that even if infringement had occurred, Temu would not be liable.
What are the implications of this ruling for online marketplaces?
This ruling could potentially benefit online marketplaces that host third-party sellers, as it emphasizes the intermediary nature of their role and the potential for the so-called hosting defense.
