Shein has sidestepped key claims waged against it by Temu, which has accused its ultra-fast fashion rival of engaging in “an intricate scheme to disrupt its business and slow its growth” in the U.S. In an order this week, a federal court in Washington, D.C. tossed out trade secret and antitrust causes of action brought by Temu, finding that Shein’s alleged efforts to lock up ultra-fast fashion suppliers did not fall within the reach of U.S. competition law and similarly, that Temu fell short in waging its trade secret misappropriations claims on the basis that such alleged wrongdoing by Shein occurred outside of the U.S.
Not a total loss for Temu, while Judge Timothy Kelly of the U.S. District Court for the District of Columbia dismissed Temu’s antitrust violations, tortious interference, and abuse of process claims, he is permitting its claims for violating the Digital Millennium Copyright Act, copyright and trade dress infringement, fraud on the U.S. Copyright Office, and unfair competition to proceed.
The Background in Brief: Temu lodged a wide-ranging complaint against Shein in December 2023 on the heels of the ultra-fast-fashion retailers settling rival lawsuits. In its complaint, Temu alleged that China-founded, Singapore-based Shein has engaged in a “mafia-style” scheme to intimidate suppliers and abuse the U.S. legal system in order to “illegally interfere with Temu’s business.”
Specifically, Temu alleges that Shein has systematically targeted it by submitting thousands of DMCA takedown requests, with over 33,000 filed in total. According to Temu, Shein’s takedown notices are not just excessive but often baseless, designed to disrupt its business rather than protect legitimate intellectual property rights.
Trade Secrets & Monopoly Claims
Taking on Temu’s trade secret claim, the court addressed allegations that Shein forced suppliers in China to hand over login credentials for Temu’s seller portal, giving Shein access to a “variety” of its commercial and financial info. in violation of federal trade secret law. The court dismissed both the federal Defend Trade Secrets Act and the local D.C. Uniform Trade Secrets Act claims on the basis that all of the alleged misconduct occurred in China.
Temu also argued that Shein’s “exclusive” supplier contracts foreclosed its access to 70–80% of ultra-fast-fashion suppliers, raising costs and limiting its ability to scale. Those claims were packaged as monopolization under the Sherman Act and exclusive dealing under the Clayton Act. Siding with Shein, the court held that U.S. antitrust law does not reach Temu because the alleged misconduct took place abroad and did not directly cause a domestic antitrust injury. The judge applied the Foreign Trade Antitrust Improvements Act, which limits the Sherman Act to domestic effects, and found Temu’s injury flowed from lost foreign supplier relationships, not U.S. consumer harm.
As for the Clayton Act, the exclusive-dealing claim failed outright because Shein was not a seller in the contracts at issue, and the statute applies only to sellers, not buyers.
While these claims were dismissed, Shein still faces narrower allegations – including false DMCA notices, copyright infringement, and trade dress/unfair competition claims.
THE TAKEAWAY: For Shein, the ruling is a strategic victory: it shields the company from potentially devastating liability tied to accusations of industrial espionage and market foreclosure. For Temu, the setback underscores the difficulty of using U.S. law to police global supply-chain disputes – a reality that could shape future litigation between fast-fashion giants.
The case is Whaleco Inc. v. Shein Technology LLC, 1:23-cv-03706 (D. DC.)
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