UK court decides ISP liability for Chinese businesses

Shein is a Chinese but now Singapore-headquartered, ultra-fast fashion company that designs and directly sources own-brand clothing and accessories. Temu, operated by China’s PDD Holdings, functions primarily as a digital marketplace connecting consumers with third-party merchants offering various low-cost goods including apparel. Shein controls its supply chain to sell proprietary clothing lines, whereas Temu acts as an intermediary platform hosting thousands of independent sellers.  

Last week England’s High Court issued a court ruling dismissing Shein’s copyright lawsuit against Temu. The decision ends the core copyright phase of a legal feud between the two Chinese e-commerce giants.  

Shein initially dragged Temu’s UK operator, Whaleco UK, to court after discovering thousands of proprietary product photos on Temu’s platform. Accusing Temu of systemic copyright infringement on an "industrial scale," Shein claimed that third-party sellers were copying its images to sell cheap knockoffs. 

Temu countered that as a marketplace platform, it was not responsible for content uploaded by its independent vendors and was actively enforcing anti-infringement policies.  The court accepted its notice and takedown policies and speed of response.

Judge Kelyn Bacon ruled in Temu’s favor, concluding that the platform did not authorize the copyright violations nor possess specific knowledge of the infringing photos uploaded by merchants. Crucially, the court said that Temu functioned as a passive intermediary rather than a direct infringer. Further, the court determined that Temu suffered financial losses due to Shein premature takedowns of product listings, without the necessary proof of image copyright ownership opening a door for Temu to seek damages in a separate proceeding.  

This judgment on UK ISP copyright liability for ecommerce platforms shields passive marketplaces. It allows online platform safe harbour protections where they have no notice.  This makes it considerably harder for IP holders, who must invest in technology and people to track individual infringements by merchants, with platforms (despite the fact that they are often tech giants) not required to do more than minimal steps to remove items they are aware of.