Shein Prevails on Trade Secret Claim Brought By Rival Temu

According to a report from Reuters, Shein has prevailed in an antitrust and trade secret case brought by its rival Temu on some of the claims. A federal judge in Washington, DC dismissed a claim that, among other things, alleged that Shein stole legally protected trade secrets from Temu. The trade secret infringement claim was dismissed on jurisdictional grounds as the federal court found that the Defend Trade Secrets Act (DTSA) does not apply to conduct that happens outside of the United States, even if companies later sell in the American market. Here, our South Florida trade secret protection attorney discusses the case in more detail.

Federal Court Dismisses Trade Secret Claim Brought By Temu Against Shein

Temu had alleged that Shein coerced suppliers (especially in China) to turn over login credentials and other proprietary commercial data from Temu’s seller portal. In effect, that led to an alleged misappropriation of trade secrets under the federal Defend Trade Secrets Act (DTSA). However, upon review, United States District Court Judge Timothy Kelly dismissed Temu’s trade secret misappropriation as well as its antitrust claims against Shein.

The court held that Temu’s trade secret claims were barred because the wrongful acts all purportedly took place abroad. In other words, the case was dismissed on jurisdictional grounds. The federal court determined that the DTSA could not apply to conduct that largely happened in China, even if that conduct would otherwise have constituted the misappropriation of a trade secret. The court did not actually review the case on the merits because it was dismissed.

An Overview of the Defend Trade Secrets Act (DTSA)

Passed into law at the end of the Obama Administration, the Defend Trade Secrets Act (DTSA) is a law that created a federal cause of action for trade secret misappropriation claims. It gives companies a powerful tool to protect confidential business information. Before its enactment, trade secret disputes were litigated primarily under state law. The DTSA supplements, rather than preempts, state law for trade secrets. To qualify for protection under the DTSA, the trade secret must relate to a product or service used in, or intended for use in, interstate or foreign commerce.

How is the term trade secret defined under the DTSA? A trade secret is information such as formulas, methods, processes, or data that derive independent economic value from not being generally known and are subject to reasonable measures to keep them secret. Companies could have a claim for trade secret misappropriation under the law. Liability can arise when someone acquires, discloses, or uses a trade secret through improper means, such as theft, bribery, misrepresentation, breach of duty, or electronic espionage.

Contact Our Florida Trade Secret Protection Lawyer Today

At Perkins Law — Brand Protection, our Florida intellectual property lawyer has extensive experience with trade secret law. If you have any questions about trade secret protection, our IP law team is here as a resource. Contact us today for your fully confidential initial consultation. We handle trade secret cases throughout South Florida.

Source:

reuters.com/legal/litigation/shein-fends-off-us-antitrust-trade-secret-claims-temu-lawsuit-2025-10-01/