If you design independently, the thing that keeps you up at night usually isn't one bad actor stealing one piece. It's the machine. It's the idea that somewhere, an algorithm is scanning your Instagram, your Etsy shop, your runway photos, deciding your work is trending, and routing it straight to a factory before you've even sold your first sample. That fear now sits at the center of a live federal class action against Shein, and the case has entered a phase that matters well beyond one company: a court is being asked to decide whether AI-driven copying at industrial scale can be treated as racketeering, not just infringement.

The claim

The case is Giana v. Shein Distribution Corp., brought by artist Alan Giana. Its procedural history is worth knowing. Giana first sued in the Southern District of New York in April 2024 over a single registered image, a seaside work called "Coastal Escape" that he says turned up as a Shein diamond-painting kit. That complaint alleged that Shein "uses sophisticated electronic systems that algorithmically scour the internet for popular works created by artists like Mr. Giana." It raised one claim, copyright infringement, and it never reached the merits. In August 2024 the court granted Shein's motion to dismiss for lack of personal jurisdiction, finding too little connection between Giana's claim and Shein's business in New York. The dismissal was without prejudice, which left the door open to sue somewhere else.

He did. On September 11, 2025, Giana refiled in the Central District of California as the named plaintiff in a proposed class action on behalf of artists and other owners of U.S.-registered copyrights. You can read the complaint here (PDF). According to a footnote in the complaint, Shein conceded at the New York hearing that the case could be refiled in California, where most of the Shein entities are headquartered. And this time, Shein's motion to dismiss doesn't challenge personal jurisdiction at all. The new complaint names four of Giana's registered works instead of one (Coastal Escape, Cape May Light, Rays of Hope III, and Winter Barn III) and alleges that Shein uses "sophisticated algorithmic systems or other standardized methods," including AI and data mining, "to scour the internet for popular works," then copies them onto products sold through its site and apps. It claims that in many instances copies are sent "directly by Shein's algorithm-based design system" to factories "with no human intermediary or compliance process."

The escalation is RICO. Alongside copyright infringement, the California complaint adds two counts under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(c) and (d). The theory rests on criminal copyright law: the complaint alleges the infringement was willful and done for commercial gain, making it criminal infringement under 17 U.S.C. § 506 and 18 U.S.C. § 2319, which RICO counts as a predicate "racketeering" act. It borrows that approach from a related case, Perry v. Shein, brought by independent designers Krista Perry, Larissa Martinez, and Jay Baron, which pressed the same racketeering theory in the same courthouse, survived a motion to dismiss on its RICO claim, and then settled and was terminated on September 9, 2025. Giana flagged Perry as a related case when he filed, but Judge Mark C. Scarsi, who handled Perry, declined to take the new case. On January 26, 2026, Shein moved to dismiss the entire complaint. You can read Shein's motion here (PDF).

Shein's answer: the machine did it

Shein's brief calls the attempt "to equate Shein with a criminal enterprise based on alleged copyright infringement of a handful of works out of the millions on its platform" "fanciful and severely misguided." Its most interesting argument turns the complaint's AI allegations back on the plaintiff. Criminal copyright infringement requires willfulness, which the Ninth Circuit reads as a "voluntary, intentional violation of a known legal duty." Shein points out that the complaint describes copying done by automated systems "with no human intermediary," and argues that means no one at Shein could have recognized Giana's works, known they were copyrighted, or decided to copy them. The industrial scale the complaint emphasizes, Shein says, "negates rather than supports the inference of work-specific knowledge." It makes a parallel argument against the ordinary copyright claim: direct infringement requires volitional conduct, and "automatic copying, storing, or transmission of copyrighted materials is insufficient."

The rest of the motion is more conventional. Shein argues the complaint doesn't describe a RICO enterprise distinct from the Shein companies themselves, doesn't say which of the four entities did what (it lumps them together as "Defendants"), doesn't allege a true pattern of racketeering, and doesn't allege infringement that happened entirely within the United States, which U.S. copyright law requires. Shein also takes on Perry directly, arguing the judge there was wrong to find its willfulness allegations sufficient.

That first argument is the one to sit with. If "the algorithm did it" defeats willfulness, then the more a company automates its copying, the harder it becomes to hold it criminally, or even directly, responsible. Giana filed his opposition in March, and the judge will decide the question on the briefs.

Why it matters

For most independent designers, a copyright claim against a fast-fashion giant is already a long, expensive road. If you win, the payoff is actual damages or statutory damages, which are capped per work (up to $150,000 per work for willful infringement), and statutory damages are only available if you registered in time. RICO changes the math. It allows treble damages and attorney's fees if a plaintiff can show a pattern of racketeering activity, which is a much heavier lift, but a much bigger deterrent if it lands. The theory here is that Shein's AI system isn't just a tool that occasionally produces an infringing result. The allegation is that the system's purpose is to identify and replicate commercially promising designs at a volume and speed no human decision-maker could match, producing "thousands of new products daily," which plaintiffs argue functions less like ordinary business copying and more like a continuous, automated scheme.

What happens to that argument matters far past Shein. Every platform now selling itself on trend-detection AI, whether it's a marketplace, a dropshipping tool, or a design-generation app aimed at small brands, runs some version of the same pipeline: scrape, identify, replicate, sell. If a court accepts that an algorithm executing that loop at scale can constitute a pattern of racketeering rather than isolated infringement, the exposure calculus for anyone building or licensing that kind of tool changes immediately. If courts reject it, designers are largely back to fighting these battles one copyright registration at a time, which is exactly the war of attrition the AI systems are built to win.

What to watch

The California case is before Judge Serena R. Murillo, and the motion to dismiss is the whole ballgame right now. Briefing closed on April 15, 2026, when Shein filed its reply. On April 24 the judge took the April 29 hearing off calendar and said she would decide the motion on the papers. As of the latest docket entries, no ruling has issued, so there is no decision yet on either the copyright or the RICO theory. The same day, the court entered a protective order at Shein's request setting rules for confidential material, including a "Highly Confidential – Attorney Eyes Only" tier. That's routine groundwork, not a sign that discovery is underway. The ruling to watch is whether the RICO counts survive. If they do, the case moves toward discovery, the stage where plaintiffs could press Shein to explain how its design and sourcing systems actually work. If they don't, the fight narrows to the copyright claim, which Shein is also asking the court to dismiss, and a dismissal on these grounds could still come with a chance to amend.

If you're an independent designer worried about your own work turning up on a platform like this, the practical lesson from both the Giana and Perry litigation is the same one it's always been: register your copyrights promptly, keep dated records of when and where you published a design, and document any suspicious near-copies as soon as you see them. The Giana case itself turns on registered works, and the proposed damages class excludes anyone who didn't register. The law around AI-driven copying is still being written case by case, and right now, a well-documented paper trail is worth more than any theory a court hasn't ruled on yet.

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