In a high-stakes legal battle that transcends borders, a group of designers, Krista Perry, Larissa Martinez, and Jay Baron, have taken on Chinese fast-fashion firm Shein, valued at a staggering $66 billion, over claims of repeatedly stealing independent artists’ works and utilizing artificial intelligence (AI) in its design process. The lawsuit alleges a long and continuous pattern of racketeering, which the designers say could greatly damage their careers.
The designers argue that Shein’s sophisticated “design ‘algorithm'” operates in a manner that generates exact copies of original designs, leaving independent artists vulnerable to serious harm. The alleged theft of designs with the highest commercial potential is particularly damaging, with Shein’s AI being smart enough to identify and replicate these profitable pieces.
Though the lawsuit highlights the use of AI in Shein’s design process, the specific methods employed by the company remain unclear. Contrary to generating the alleged copies through AI, the designers claim that Shein’s technology facilitates the replication of their works, leading to an ongoing breach of their intellectual property rights.
At the heart of this legal battle is the Racketeer Influenced and Corrupt Organizations Act (RICO), enacted in 1970 and originally used against the notorious American Mafia. The designers assert that Shein’s practices fall within the purview of RICO, as the alleged misconduct is committed by a de-facto association of entities rather than a single entity. Seeking a jury trial, the designers aim to hold all responsible parties within the fast-fashion giant accountable for their actions.
In response to TechCrunch’s inquiries, Shein issued a boilerplate statement, assuring that the company takes these claims seriously and vows to “vigorously defend” itself. However, if found guilty, the consequences could be severe for the company and its operations.
With an approximate exchange rate of $1 to ZAR 18, Shein’s astronomical valuation places it among the fastest-growing online retailers globally. Despite this, the company has not been immune to allegations of exploiting workers and violating local labor laws. Shein has faced previous scrutiny over its labor practices, which has led to tarnished reputations and calls for greater corporate accountability.
Notably, Shein has endeavoured to market itself as an environmentally responsible and socially conscious firm, attempting to offset its controversial reputation. Nevertheless, a recent marketing campaign aimed at aligning itself with influencers ended up backfiring, amplifying concerns about the company’s practices and intentions.