US court issues another TRO to stop infringement on Shein, 31 sellers’ funds frozen

Shein's rights protection for its own brand was once again supported by the US court. More than 30 cross-border platform sellers involved in infringement were issued TRO (temporary restraining order). The US court required the above-mentioned merchants to stop infringing Shein and froze the funds in these merchant accounts .

Since December 2023, the US courts have issued four TROs in four months to support Shein's protection of its own brands. Owning its own brand is the biggest difference between Shein and other e-commerce platforms, and its awareness of protecting its own brands has never been relaxed. As the cross-border industry develops more standardized, it is also a general trend for cross-border platforms and sellers to pay more attention to compliance operations to avoid legal risks and business losses.

US court orders more than 30 merchants to stop infringing Shein

On March 5 , the latest temporary restraining order issued by the US court showed that due to suspected infringement of Shein , the Eastern Division of the United States District Court for the Northern District of Illinois issued a TRO (temporary restraining order) to more than 30 sellers, requiring them to stop infringing Shein and freezing all sellers ' accounts.

It is understood that there are 31 seller accounts in total , most of which are located on the Temu platform.

Information shows that Shein filed a complaint on January 23, 2024, and filed a TRO motion on February 1. In early March, the US court supported Shein's protection of its own brand and issued a temporary restraining order against the infringing sellers. In the legal memorandum approving the TRO, the judge accepted and supported Shein's position on every point, including that the sellers were suspected of infringing Shein's design, Shein might suffer irreparable losses, it was necessary to freeze the account property, and serve the lawsuit to the defendant via email.

( The latest TRO issued by the US court against infringing sellers )

Many media outlets, including Financial Times, Hexun, and China Business News, also reported that 31 businesses had infringed on Shein's rights.

According to previous inquiries on public legal databases such as pacer, law360, and westlaw , Shein has successively obtained three TROs issued by the US courts for the protection of its own brands from December 2023 to January 2024. A total of more than 100 Shein products , covering men's wear, casual wear, sportswear, children's wear and other categories, are very wide-ranging, and the vast majority of infringing links come from the Temu platform. The US court believes that if emergency measures are not taken to restrict the interference of the infringing party, Shein may suffer irreparable losses, so it is necessary to freeze the assets of these merchant accounts .

When analyzing TRO, Yao Kefeng, director of Beijing Guobiao Law Firm, publicly stated that TRO injunctions often appear in trademark, patent, and copyright infringement cases. In judicial practice, if the applicant believes that the respondent's behavior has caused damage to him, in order to stop and avoid causing irreparable damage to himself, the applicant may request the court to prohibit or restrict the respondent from performing certain behaviors. The conditions for the court to issue a TRO are relatively strict. As the applicant, Shein must provide sufficient evidence. The most basic thing is to provide substantial evidence that it believes the other party has infringed and proof of the rights of the infringed rights: such as registration certificates of intellectual property rights, losses caused by the infringement, etc.

"Because the court issues a TRO to avoid greater losses, that is to say, the applicant must prove that if an injunction is not taken in time to stop the infringement, it will cause irreparable losses to itself." Yao Kefeng said that if a brand obtains a TRO issued by the court, it means that it has relatively sufficient evidence of infringement.

Pay attention to compliance risks when going overseas , and take a long-term approach when going global

Public information shows that Shein was founded in 2012 and started as a clothing fashion brand " Shein ". It has gradually expanded its business scope to all fashion categories. Its "own brand + platform" dual model covers own brands and third-party merchant products.

Under the private label model, the Shein brand has established its own digital flexible supply chain. It analyzes its own brand product sales and market feedback, extracts popular elements and design insights, and then works closely with the back-end supply chain to launch Shein brand products that consumers need to the market in real time, at a lower price. As a result, it is very popular among overseas consumers. The clothing brand Shein has successfully become one of the world's top four fashion brands along with ZARA, H&M and UNIQLO .

Under the platform model, Shein uses its huge global sales and marketing network to help more third-party merchants sell their products to the world. Recently, the overseas authoritative organization PYMNTS released the global shopping application list for February. Shein topped the list for the seventh consecutive month. AliExpress and the international station under Alibaba ranked second and fourth respectively, and Amazon ranked third.

Owning its own brand can be said to be the biggest feature that distinguishes Shein from other e-commerce platforms, and Shein's rights protection also involves Shein 's own brand products and pictures. As China's manufacturing is accelerating its transformation to high-quality development, insisting on brand innovation and brand overseas expansion is one of the development trends in the past ten years of cross-border overseas expansion.

In January 2024, the General Office of the State Council issued a notice on “Several Measures to Accelerate the Integrated Development of Domestic and Foreign Trade”, proposing to strengthen the protection of intellectual property rights, accelerate the construction of domestic and foreign trade brands, support enterprises to give play to the combination effects of various types of intellectual property rights such as patents and trademarks, and enhance the overall competitiveness of brands.

With the boom in cross-border overseas development, the industry will also develop into a more standardized stage, and compliant operations will become the key to the sustainable development of cross-border e-commerce companies.

For businesses that hope to tap into the international blue ocean market, they should not only pay attention to market size and business opportunities, but also focus on compliant operations, respect local laws and regulations, and avoid legal risks and business losses caused by infringement.

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