My Computer did it! Exploring SHEIN’s latest lawsuit

In the latest of a series of copyright infringement claims, three independent graphic designers - Krista Perry, Larissa Martinez, and Jay Baron, have launched a claim in the California Federal Court  accusing Shein of selling exact copies of their textile and print works – example below. This lawsuit covers a similar territory to H&M’s ongoing copyright infringement lawsuit towards Shein in Hong Kong. While this is not of itself remarkable  there are several interesting aspects to this case.

Left: Krista Perry’s floral bloom textile piece; right: A throw blanket sold by Shein

It is of course commonplace and indeed an important part of the fashion industry take inspiration from others and to follow trends. However, in the case, in contrast to other accusations levied against Shein, this lawsuit claims that the three alleged infringements are exact copies of the original designs, and are driven by an algorithm. This reawakens the question of who can be held accountable when algorithms are automating decision making and the extent to which designs and copyright can be protected in the age of fast fashion. A second aspect to the case is that the nature of the claim is brought under RICO, a US federal law designed to indict mobsters and corrupt officials.

AI. The lawsuit is different to other fashion copyright lawsuits such as H&M’s case against Shein, because despite the designs being allegedly exact copies, there is an allegation that the alleged infringement is driven by an algorithm. With all the recent focus on generative AI, this may seem surprising – why is the AI not coming up with its own designs? While little is known about the exact nature of the AI deployed by Shein – in the US complaint it is referred to as the “secret algorithm” one explanation may be that it is adept at recognising attractive designs which are applicable to clothing, and scraping this into a central database. This complaint therefore seeks to question who can be held accountable when algorithms are automating design creation and seeks to ascribe responsibility for the creation process on those who control these type of AI creations.

In the UK at least, the question of AI and copyright is only partly settled. Ownership of copyright is defined by statute as the person “making the arrangements” which result in the work. But no equivalent provision is made for those who copy. However, in writing the AI/ algorithm, engineers often feed information into the tech tool in order to train it , and it may be that the Court will therefore look to allocate liability with the inventors and owners of such tools. Have they made the arrangements for copying, and should they be held responsible?

RICO. The inclusion of a claim which falls under the US Racketeer Influenced and Corrupt Organizations Act (“RICO”) and creates an unprecedented distinction in this lawsuit. The act targets organised crime, but also applies to “egregious copyright infringement”. The RICO case comes into play because the plaintiffs allege that these infringements are made by a “de-facto association of entities” that are umbrellaed under Shein, with the entity that controls the algorithm at the centre. If the claim that Shein was the 'prize', 'instrument', 'victim', or 'perpetrator' of the racketeers, and a pattern of racketeering behaviour is established, this could have far-reaching consequences for the organisation and claims against fast fashion retailers.

In the UK, certain uses of copyright and registered designs without the owner’s permission can amount to the criminal offence of piracy. Though this historically has not been applied in the fashion world, a similar lawsuit in the UK could potentially bring these issues to a head.

Fast fashion. With the rise of fast fashion and online shopping, designers are facing additional issues in trying to protect their work from copycats. Enforcing IP over designs which are sold by an infringer as fast fashion has a number of challenges. First, the fast fashion retailer typically has a huge assortment which changes daily or even more frequently. This makes infringements difficult to detect. Second, the vast range of products on offer often mean that designs that are infringed are typically sold in quite small amounts, reducing the impetus for a legal claim.

That said, the position of small designers in the face of fast fashion is not hopeless. The very tool that Shein is alleged to use to infringe – AI – can be turned the other way; low-cost, semi-automatic online monitoring of infringements is starting to become a reality. A well-organised approach to substantiating designers’ intellectual property can lead to a streamlined, lower-cost legal demand. Essentially a claim that is too strong to ignore can lead to a fast, sensible compromise. Lastly, since the decision of Oh Polly (read our Law Now on this case here), it is possible in the UK to seek enhanced damages in the case of flagrant or egregious conduct. Although this is not applicable in every case, it can be a useful tool to ensure that the level of damages potentially available to a claimant concentrates a defendant’s minds on the benefits of a pragmatic commercial settlement.

Comment

This case highlights the importance of protecting clothing designs despite the ever-changing nature of fashion trends. The US case at issue may not reach trial, not least since the claimants are small independent designers who are likely to prefer a settlement, but any action which makes “infringement as a business model” less viable is to be welcomed. The distinctive aspect of this lawsuit is the combination of high technology with an older, anti-organised crime approach. Though this case is a creature of US federal law, these are issues with significance for every globalised economy. Judges and brand owners alike are likely to follow the case with interest given it is the latest example of a claimant finding a new way to tackle copycat infringers who use a combination of technology and global trade to benefit from other’s creativity for their own gain.

Co-authored by Bernice Ewetade