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Why did SHEIN get a RICO charge?

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Why did SHEIN get a RICO charge?

A recent California lawsuit alleges that SHEIN violated the RICO Act through continuous copyright and trademark infringements.

It may seem strange that the lawsuit brought against SHEIN is based on the racketeering charges under the RICO Act.

But since the lawsuit alleges that SHEIN does not have a single legal entity, this is the only real way to make a lawsuit stick.

Why did SHEIN get a RICO charge?

You may have heard that the artists Krista Perry, Larissa Martinez, and Jay Baron (with the help of their lawyers, Jeffrey S. Gluck, David Alden Erikson, and Antoinette Waller) had filed a lawsuit against the e-commerce giant SHEIN under the Racketeer Influenced and Corrupt Organizations (RICO) Act. You may also have found yourself wondering why this act in particular.

The reality is that while the RICO Act has been most commonly used in the near past to target biker gangs and mafia groups, this act is the only real way for  artists and their lawyers to start a lawsuit against a brand like SHEIN The brand is reportedly  not a single legal entity, but rather, is split into several loose and decentralised conglomerates.

This new lawsuit claims that SHEIN has allegedly displayed enough of a pattern when it comes to these continued copyright infringements that the case falls squarely within the civil legal action provisions of the RICO Act.

It demonstrates that SHEIN was profiting from illegal activities under the guise of being a legitimate business.

What are the charges against SHEIN?

The ‘Perry, et al., v. Shein Distribution Corp., et al’ lawsuit, which was filed in California, alleges that SHEIN is guilty of copyright and trademark infringement.

The lawsuit states that the copies of artists’ work were not near-miss copies which just look similar to the original products. But they are actually exact copies being produced, sold and distributed through the SHEIN platform.

The uncertainties about SHEIN’s founder

One of the main aspects which this lawsuit addresses is questions about SHEIN’s founder, Xu Yangtian (who is also known as Chris Xu).

This Chinese entrepreneur’s background has been called into question before, but the lawsuit goes as far as calling the founder “a mysterious tech genius… about whom almost nothing is known”.

What could the consequences be if SHEIN is found guilty?

If SHEIN is found guilty of the charges brought against it, this could have far-reaching implications.

Not only will SHEIN likely have to pay a multitude of fines, but the reputational damage that this lawsuit could cause may also lead to a serious drop in sales.

There is also a chance that this could open the door for future lawsuits, which means that these damages could easily become cumulative.