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Chrome Hearts Sues Shein for Trademark Infringement

Post Time:2023-09-01 Source:sourcingjournal.com Author:Jasmin Malik Chua Views:

In a complaint filed in the U.S. District Court for the Central District of California last week, the Los Angeles-based jewelry and accessories brand accused the ultra-fast-fashion juggernaut of trademark infringement and unfair competition, which it said has caused monetary and reputational harm.

The lawsuit named Zoetop Business Co., the Hong Kong-headquartered entity that owned Shein’s website and trademarks Roadget Business’s incorporation in 2021, and Shein U.S. Services, the Chinese-founded e-tailer’s Delaware-registered subsidiary, though Chrome Hearts said that it is “unaware of the names and true capacities of [the] defendants, whether individuals, corporate and/or partnership entities…and therefore sues them by their fictitious names.”

The Laurie Lynn and Richard Stark-owned company, however, is clearer about the cause of its consternation, charging Shein with the “manufacture, production, marketing, distribution, advertisement, offering for sale and/or sale” of handbags and accessories that bear marks “identical with, substantially indistinguishable from or confusingly similar” to one or more of Chrome Hearts’ federally registered marks, including its cemetery cross patch, its CH Plus cross and a dagger design.

“Registrations for the Chrome Hearts marks are valid, subsisting and incontestable,” said the label, which handcrafts most of its products, including clothing and denim, in Los Angeles. “Chrome Hearts was also able to obtain the trademark registrations for the Chrome Hearts marks without proof of secondary meaning and thus they are inherently distinctive. Through longstanding use, advertising, and registration, the Chrome Hearts marks have achieved a high degree of consumer recognition in the United States and the world over and constitute famous marks.”

With the CH Plus cross in use since 1988 and the cemetery cross patch and dagger design since 1989, the Chrome Hearts marks have been a source identifier on various goods for more than three decades, “achieving widespread acceptance and recognition amongst the consuming public and trade throughout the United States,” the complaint said.

But Chrome Hearts said that it has not granted Shein, which in 2016 began hawking branded merchandise after an eight-year run as a seller of third-party products, a license or “any form” of permission to use its intellectual property, including the Chrome Hearts marks. This resulted in products that “very likely” caused confusion for consumers, including Chrome Hearts’ own, it added.

“Chrome Hearts purchased and inspected the accused products and confirmed they did not originate from Chrome Hearts or contain authentic Chrome Hearts marks,” the lawsuit said of Shein, which manufactures most, if not all, of its products, in China. “Defendants used the Chrome Hearts marks on the accused products without Chrome Hearts’ permission.”

The new Forever 21 stakeholder’s actions, the lawsuit alleged, are “deliberate” in their intention to “confuse the public,” to “injure” Chrome Hearts and to “reap the benefit of Chrome Hearts’ goodwill associated with the Chrome Hearts marks.” In addition to injunctive relief barring Shein from the use of its marks, plus the destruction of any remaining inventory, Chrome Hearts is seeking three times the profit that the ultra-fast fashion purveyor has derived from using its marks, along with costs and attorneys’ fees to the fullest extent allowed. Alternatively, it will accept up to $2 million per trademark infringed upon per type of good.

“Defendants’ misappropriation of Chrome Hearts’ common law trademarks was intended to capitalize on Chrome Hearts’ goodwill for Defendant’s own pecuniary gain,” the complaint said. “Chrome Hearts has expended substantial time, resources and effort to obtain an excellent reputation for itself and its family of Marks. As a result of Chrome Hearts’ efforts, Defendants are now unjustly enriched and are benefiting from property rights that rightfully belong to Chrome Hearts.”

Shein said that takes all claims of infringement seriously. “It is not our intent to infringe anyone’s valid intellectual property and it is not our business model to do so,” a spokesperson told Sourcing Journal. “Shein suppliers and marketplace sellers are required to comply with company policy and certify their products do not infringe third-party IP. We continue to invest in and improve our product review process.”

Still, the complaints keep coming. In July, a class-action lawsuit filed by three designers, also in California federal court, alleged the Singapore-headquartered firm’s “egregious copyright infringement” constitutes racketeering and is therefore a violation of the Racketeer Influenced and Corrupt Organizations Act, a.k.a. RICO. The same month, H&M Group duked it out with Shein in Hong Kong’s High Court over “multiple cases” of copyright violation, based on a writ of summons that was first filed in July 2021. Last year, Florida artist Maggie Stephenson sued the company for $100 million, alleging that it copied her artwork without permission. Dr. Martens, Ralph Lauren, Stussy and sunglasses maker Oakley have also sued Shein for selling products that they claimed violated their intellectual property. Meanwhile, social media is replete with small designers criticizing the $64 billion company for so-called copycat behavior.

In March, Shein turned the tables on the pervading narrative by suing its rival Temu for copyright infringement. The latter hit back by pointing to its more established adversary’s legal troubles, however.

“Since inception, Temu has been named as defendant in only one lawsuit alleging intellectual property infringement, which Temu strongly and categorically rejects all allegations and is vigorously defending its rights,” a spokesperson told Sourcing Journal at the time. “Coincidentally, this [is the] only case [that has been] brought by Shein, which has been named as [a] defendant in more than 70 intellectual property infringement cases by international rights holders and independent artists since 2019.”