Shein is urging a federal court in Washington, D.C. not to dismiss the closely watched lawsuit that it is waging against Temu, as the companies continue to fight for marketshare in the U.S. On the heels of Temu-owner WhaleCo Inc. filing a motion to dismiss in an effort to sidestep liability in the headline-making case, SHEIN’s parent company Roadget Business Pte. Ltd. argues that dismissal would be inappropriate, as it has sufficiently pleaded its trade secret misappropriation, false advertising, product disparagement, libel, and trademark dilution claims against its fellow ultra-fast-fashion powerhouse.
A bit of background: Shein filed its lawsuit against Temu in August, alleging that its rival has run afoul of the law by making unlawful use of Shein’s trademarks and advertising materials and by directing influencers to make disparaging statements about it and its products. Beyond that, Shein maintains that Temu has “continuously … used unfair and unlawful means” to compete, including by stealing valuable trade secrets, “egregiously” infringing Shein’s copyrights, and poaching its resources, employees, and suppliers.
Shein v. Temu
In its newly-filed memo, Shein makes a number of arguments as to why the court should toss out Temu’s motion to dismiss in its entirety and keep its complaint in play …
> False advertising & trade libel claims: Focusing first on the false advertising and trade libel claims that it is waging against Temu, Shein states that it has adequately alleged that Temu has disseminated false statements that promote its products as “cheaper” and “higher quality” alternatives to Shein products. Thanks to Temu’s use of influencers, who are “paid to make specific claims about superior quality [of Temu products]” to the detriment of Shein, these “false” statements have reached “at least hundreds of thousands of potential customers,” Shein maintains.
Pushing back against Temu’s argument that the allegedly false statements are not actionable claims, Shein argues that the statements are “false statements of fact, not mere opinions or puffery.” Specifically, Temu (via its army of influencers) makes “specific claims about measurable product attributes that consumers could reasonably understand as factual assertions that [Temu’s] prices for comparable goods are always lower, or that its goods are made from higher quality materials or would last longer than SHEIN’s products.”
> Trade secret misappropriation: According to Shein, Temu “incorrectly” argues that its “Best Seller Data” is not a protectable trade secret, as it is “too vague” and “publicly available,” and Shein has not adequately alleged that Temu misappropriated its trade secrets. Shein alleges that at the core of its “one-of-a-kind business strategy” is its “Best Seller Data,” which includes: “(1) a list of the best-selling styles; (2) the styles’ rankings among the items sold on the SHEIN website; (3) internal pricing information; and (4) photos of each style – among other confidential business information.”
Temu gets this wrong, per Shein, as “courts have made clear that a plaintiff only needs to provide enough information to put the defendant on notice of the trade secret, because, among other things, disclosing too much detail in a complaint will constitute a public disclosure.” Shein states that it “clearly meets the relevant pleading standard.” Moreover, Shein claims that the combination of Best Seller Data “cannot be obtained from any public sources.” And even if some of it was available to the public, this is not a deal-breaker, Shein argues, as “courts have held that a trade secret is still protectable even if some components of it might be available to the public.”
> Trademark dilution: As for its trademark dilution claim, Shein maintains that its allegations are “more than sufficient to plausibly plead the fame of [its] trademarks,” namely, the SHEIN word mark. Arguing that it has, in fact, showed that its name has amassed the requisite level of fame to claim dilution, Shein asserts that …
– It has spent “years building the immensely valuable SHEIN brand,” that it “has invested significant time, effort, and money promoting, advertising, and marketing its business operations across multiple channels,” including by “partner[ing] with thousands of influencers, celebrities, fashion bloggers and contestants on reality shows,” and “start[ing] viral trends to promote the SHEIN brand.”
– It enjoys “a significant presence on social media, with over 33 million followers on Instagram, 9.5 million followers on TikTok, and over 749,800 followers on X.”
– The popularity of the marks has “skyrocketed among U.S. consumers,” with the company nabbing the title of “one of the most popular online fashion and lifestyle brands in the world” and “the most downloaded mobile application in the U.S. in any category” in May 2022.
Temu “cannot escape liability for targeting and tarnishing the [Shein] marks by asking this court to decide, as a matter of law, that the marks are not famous,” Shein argues, stating that “the fame of the marks is precisely the reason [Temu] went to such great lengths to imitate SHEIN, using these famous marks unlawfully in advertising and fake social media accounts.”
PDD’s Motion to Dismiss
In addition to Temu filing a motion to dismiss, its parent company PDD Holdings, which is also named as a defendant in the case, is seeking dismissal. The basis of its motion: Shein failed to plausibly allege personal jurisdiction over it. In addition to attacking Shein on jurisdiction-based grounds, in its own motion to dismiss, PDD maintains that Shein is actually the bad actor in the case at hand. Having “concluded that Temu is an existential competitive threat,” PDD argues that Shein waged this lawsuit as “the latest step in Shein’s numerous efforts to disrupt Whaleco’s operation of Temu in the United States and to stifle competition by a rival.”
According to PDD, “Shein has been attacking [Temu’s] business by sending sham takedown notices under the Digital Millennium Copyright Act, threatening [Temu’s] merchant relationships, infringing on [Temu’s] intellectual property, and stealing [Temu’s] proprietary information, forcing [Temu] to file a complaint to stop Shein’s illegal efforts.”
The case is Roadget Business PTE v. Whaleco, Inc., 1:24-cv-02402 (DC).
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