Shein v Temu, and what it means for anyone whose business is built on IP.
Last week we were valuing bins. This week, we’re looking at valuing something rather more sensible: a copyright. Except, as it turns out, that’s not straightforward either. A recent High Court ruling against Shein provides a good backdrop.
Shein sued Temu, accusing it of “industrial-scale” copyright infringement – letting merchants flog clothes using photos lifted straight from Shein’s own website. Exhibit A was a “Strawberry Nightdress,” delisted by Shein for underperforming, that later turned up on Temu with the exact same photography. Shein lost. Mrs Justice Bacon found Temu hadn’t authorised the infringement and had no reason to think the photos breached anyone’s copyright. Temu, for good measure, won a counterclaim over takedown notices it says were wrongly issued against it. Even Shein’s own case wobbled along the way: the judge noted its position on who actually owned the copyright had “changed significantly” as the trial went on, leaving her with, in her words, submissions of “quite extraordinary complexity.”
You don’t need to run a fast-fashion empire to find a lesson in that. You just need to own something that someone else might copy.
Why we, at Athla, care about any of this
Copyright sounds like a lawyer’s problem, not a valuer’s one. But increasingly it’s both, because so much of what a company is worth now lives in its intangibles rather than its assets. Ocean Tomo, which has tracked this for decades, reckons intangibles now make up something like 90–92% of the S&P 500’s total value, up from 17% in 1975. The ONS puts UK business investment in intangibles at £244.7bn in 2023 – some £85bn more than was spent on plant, machinery and buildings. The stuff that used to sit outside the balance sheet is now rather a lot of the balance sheet.
How much of that value sits in copyright specifically depends entirely on what the business does. A fabric or homeware brand whose whole pitch is “you can’t get this print anywhere else” is, in effect, charging a copyright premium on every sale (a UK court agreed as much back in 2020, ruling that a jacquard “wave” fabric design was protectable as a work of artistic craftsmanship, in a dispute between a fabric supplier and Edinburgh Woollen Mill). A haulage firm holds copyright too – in its marketing brochure, say – but nobody is paying extra for the privilege of that brochure.
What happens if you never bother enforcing it?
Nothing dramatic, at first. That’s the problem.
First, copying invites more copying. Once it’s obvious nobody is going to chase you for lifting a design or a set of product photos, why would anyone stop? The EU’s own IP office reckons counterfeiting and design piracy cost the EU clothing sector something like €12bn a year in lost sales – 5.2% of the sector’s turnover – and around 160,000 jobs. That’s an EU figure rather than a UK one, but the direction of travel is the same wherever you’re standing.
Second, sitting on your hands for long enough can genuinely weaken your legal position, not just your commercial one. English courts have entertained the argument that a rights holder who knowingly lets infringement carry on, without ever objecting, can end up being unable to do anything about it later. A spare-parts maker tried exactly that defence against Dyson in the early 2000s – arguing Dyson’s inaction should stop it suing – and lost, because the judge found no evidence Dyson had actually known about and encouraged the copying at a senior level within the business. Dyson’s case survived because the facts simply weren’t there for the other side. A business that really has said and done nothing for years might not be so fortunate.
Third – and this is really Shein’s cautionary tale – even having a case doesn’t mean you’ll win it. Courts pick infringement claims apart in forensic detail, and a case that’s been thrown together, or where your own story keeps shifting, can fail expensively, complete with a costs bill and somebody else’s counterclaim attached. None of which is an argument for doing nothing. It’s an argument for keeping the paper trail: registration where it exists, dated files, licences, and an actual track record of chasing infringers – so you’re not trying to build that evidence from scratch on the day it finally matters.
Where this bites, from where we sit
We see the consequences play out in three predictable places:
Shein and Temu aren’t done yet – damages are still to be worked out, and Shein says it disagrees with the ruling. But the underlying point stands regardless of how that ends: a copyright nobody defends isn’t worth what it says on the label.
If you’ve got a business – or a client’s business – where the IP has never really been tested, and you’re heading towards a sale, a scheme, or a succession event, it’s worth finding out what it’s actually worth before someone else finds out for you. We’d be delighted to help.
