Luxury brands and sportswear giants are not the only consumer goods brands that are being plagued by counterfeiting and other unauthorized uses of their well-known trademarks. Ultra-fast fashion giant Temu claims in a new lawsuit that it is struggling with counterfeiting and cybersquatting. According to the counterfeiting, cybersquatting, unfair competition, and false designation of origin complaint that it lodged with a federal court in Illinois late last month, Whaleco, Inc. (d/b/a “Temu”) alleges that a group of defendants – identified by domains, such as temuapp.biz, temucouponcodes.com, boujeecoupons.com, etc. – are making use of the Temu brand name to dupe consumers into believing that it is affiliated with an array of “fake apps and websites” amid its eye-watering growth in the U.S. market.
Setting the stage in the new complaint, Temu asserts that since it began operating in the U.S. in September 2022, its online marketplace – which offers up heavily discounted goods, including cosmetics, appliances, and electronics, that are mostly shipped to consumers directly from China – “has become extremely successful,” nabbing the title of “the number one downloaded shopping app in the U.S.” At the same time, Temu asserts that its TEMU trademark “has been widely promoted throughout the globe, including within the U.S.,” with “consumers, potential consumers, and other members of the public not only associat[ing] its marketplace with exceptional quality, style, and affordable prices, but also recogniz[ing] the marketplace in the United States originates exclusively with Temu.”
Against that background, Boston-headquartered Temu claims that the defendants are engaging in a scheme to piggyback on its brand by way of apps and websites that are “not authentic Temu sites,” as well as “unauthorized coupons and promotions.” In particular, a number of the defendants own and operate infringing domains that use the TEMU mark in their domain names without authorization in order to “create a false association with Temu and deceive consumers.”
The remaining defendants – such as those behind domains like fabioduque.com, grabcodesnow.com, couponsky.net, greatparcelswiss.com, and drywink.com – “utilize the TEMU marks to create a false association with and trade on the goodwill of the TEMU marks, and to deceive consumers into believing the sites are legitimately associated with or providing services for Temu.” They do so, according to Temu, by “advertising, marketing, distribution, offering for sale, and selling counterfeit apps or unauthorized coupons and promotions.”
All the while, the defendants “go to great lengths to conceal their true identities, registering domain names using privacy shields, and failing to publish contact information on their websites.”
With the foregoing in mind, Temu accuses the defendants of violating the Anti-Cybersquatting Consumer Protection Act, and engaging in federal trademark counterfeiting and infringement, and unfair competition and false designation of origin. It is seeking injunctive relief, including an order requiring the relevant domain registrars “to place the infringing domains and infringing websites on hold and lock them for the pendency of this litigation.”
Temu is also seeking monetary damages – either “actual damages as a result of the defendants’ acts of infringement and other unlawful conduct alleged herein,” or in the alternative, statutory damages of $100,000.00 for “each and every use of the Temu mark counterfeited by each defendant” and maximum statutory damages for violations of the anti-cybersquatting provisions of the Lanham Act in an amount not less than $100,000 for each of the infringing domains and infringing websites.
TLDR: “Fraudsters are posing as Temu on fake apps and websites to scam consumers. This not only damages our reputation but also hurts consumers who have been deceived into believing that they were engaging with genuine Temu platforms,” a Temu spokesperson told TFL in connection with the lawsuit, noting that “every year scammers get more aggressive, and the rise of retail fraudsters and copycats [continues to] plague the e-commerce world.”
THE BIGGER PICTURE: The lawsuit comes as Temu continues to make waves in the U.S. market, overtaking its closest rival Shein, which it filed an anti-competition lawsuit against earlier this year, as the most downloaded app in the U.S. for the first three quarters of 2023. No small market for Temu (or Shein for that matter), sales in the U.S. were responsible for 60 percent of Temu’s revenue, which reached $5 billion in the third quarter, according to SCMP, which recently reported that as of September, Temu’s had caught up with Shein in terms of sales in the U.S. The same report revealed that Temu had spent more than $300 million on advertising this August in furtherance of its efforts to bolster its rapid stateside growth.
The case is Whaleco, Inc. v. temuapp.biz, et al., 1:23-cv-15424 (N.D. Ill.)
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