Bastiat USA, Inc. v. Shein Distribution Corp. et al.

Opinion

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8 United States District Court 9 Central District of California

11 BASTIAT USA, INC., Case № 2:25-cv-05701-ODW (DMKx)

12 Plaintiff, ORDER GRANTING IN PART AND

13 v. DENYING IN PART MOTION TO DISMISS [22] 14 SHEIN DISTRIBUTION CORP. et al.,

15 Defendants.

16 17 I. INTRODUCTION 18 Plaintiff Bastiat USA, Inc. d/b/a Brandy Melville brings this copyright and 19 trademark infringement action against Defendants Shein Distribution Corp.; Shein 20 Technology LLC; Shein US Services, LLC; and Roadget Business Pte., Ltd. (Compl., 21 Dkt. No. 1.) Defendants now move to dismiss Bastiat’s second and third causes of 22 action pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6), and to strike the 23 contributory and vicarious false designation of origin allegations in Bastiat’s fourth 24 and fifth causes of action pursuant to Rule 12(f). (Mot. Dismiss (“Motion” or 25 “Mot.”), Dkt. No. 22.) For the following reasons, the Court GRANTS IN PART and 26 DENIES IN PART the Motion.1 27

28 1 Having carefully considered the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 II. BACKGROUND2 2 Brandy Melville is one of the most popular worldwide fashion and lifestyle 3 brands for girls and young women. (First Am. Compl. (“FAC”) ¶ 19, Dkt. No. 21.) It 4 markets and sells clothing online and in retail stores across California, the United 5 States, and international markets. (Id. ¶ 20.) To promote its clothing, Brandy 6 Melville advertises its products on its website and social media platforms. (Id. ¶ 23.) 7 Its Instagram account has over three million followers, and its TikTok account has 8 over 123,000 followers. (Id.) Several major publications, including Cosmopolitan, 9 Elle, and Vogue, feature Brandy Melville in their coverage. (Id. ¶ 22.) 10 Brandy Melville holds copyrights of various clothing designs and photographs. 11 (Id. ¶¶ 26–35.) Bastiat is the assignee of Brandy Melville’s copyrights. (Id. ¶ 9.) 12 Roadget is a Singapore-based company. (Id. ¶ 11.) It conducts business under 13 the name “Shein” and owns the Shein website and mobile application (collectively, 14 “Shein.com”). (Id.) Roadget identifies consumer trends across the internet and uses 15 those insights to develop new products for sale in the United States. (Id.) 16 Shein Distribution Corp., Shein Technology LLC, and Shein US Services, LLC 17 (collectively with Shein.com, “Shein”) assist with the operation of Shein.com and the 18 distribution of items in the United States. (Id. ¶¶ 10–13.) Shein has a vast online 19 presence, with millions of monthly active customers, more than 250 million social 20 media followers, and over 500 million mobile application downloads. (Id. ¶ 41.) 21 Customers in more than 150 countries, including the United States, purchase 22 fast-fashion clothing items from Shein.com. (Id.) Brandy Melville and Shein cater to 23 the same customer base on social media. (Id. ¶ 42.) 24 Shein produces clothing items in small batches and restocks items based on 25 customer demand. (Id.) In 2023, Shein launched “Shein Marketplace,” which allows 26 27 2 All factual references derive from Bastiat’s First Amended Complaint or attached exhibits, unless 28 otherwise noted, and well-pleaded factual allegations are accepted as true for purposes of this Motion. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 1 third-party sellers to sell their products on Shein.com. (Id. ¶ 44.) Shein Marketplace 2 now includes many gray-market goods.3 (Id. ¶ 47.) 3 Shein and third-party sellers on Shein Marketplace sell, distribute, or profit 4 from counterfeit Brandy Melville goods. (Id. ¶¶ 49, 51.) Shein and its third-party 5 sellers display the “exact same photographs and images” appearing on Brandy 6 Melville’s website and social media platforms to sell similar goods at lower prices on 7 Shein.com. (Id. ¶¶ 50–51.) Neither Shein nor any third-party seller on Shein 8 Marketplace obtained Bastiat’s permission before displaying Brandy Melville’s 9 photographs and images on Shein.com. (Id. ¶ 48.) 10 Based on these allegations, Bastiat initiated this copyright and trademark 11 infringement action against Shein. (Compl.) Bastiat brings five causes of action 12 against Shein, for (1) copyright infringement under the Copyright Act; (2) trademark 13 infringement for false designation of origin under the Lanham Act; (3) common law 14 unfair competition; (4) common law contributory copyright infringement; and 15 (5) common law vicarious copyright infringement. (FAC ¶¶ 57–89.) 16 Shein now moves to dismiss counts two and three and to strike the allegations 17 of false designation of origin in counts four and five of Bastiat’s First Amended 18 Complaint, pursuant to Rules 12(b)(6) and 12(f). (Mot.) 19 III. LEGAL STANDARD 20 A court may dismiss a complaint under Rule 12(b)(6) for a lack of a cognizable 21 legal theory or insufficient facts pleaded to support an otherwise cognizable legal 22 theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). To 23 survive a motion to dismiss, a complaint need only satisfy the minimal notice pleading 24 requirements of Rule 8(a)(2)—a short and plain statement of the claim. Porter v. 25 Jones, 319 F.3d 483, 494 (9th Cir. 2003). The factual allegations in the complaint 26 “must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. 27 3 “A gray-market good is a foreign-manufactured good, bearing a valid United States trademark, that 28 is imported without the consent of the United States trademark holder.” K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 285 (1988). 1 v. Twombly, 550 U.S. 544, 555 (2007). That is, the complaint must “contain sufficient 2 factual matter, accepted as true, to state a claim to relief that is plausible on its face.” 3 Iqbal, 556 U.S. at 678 (internal quotations omitted). 4 Determining whether a complaint satisfies the plausibility standard is a 5 “context-specific task that requires the reviewing court to draw on its judicial 6 experience and common sense.” Id. at 679. Generally, a court limits its review to the 7 pleadings and must construe “[a]ll factual allegations set forth in the complaint . . . as 8 true and . . . in the light most favorable” to the plaintiff. Lee v. City of Los Angeles, 9 250 F.3d 668, 679 (9th Cir. 2001). However, a court need not blindly accept 10 conclusory allegations, “unwarranted deductions of fact, or unreasonable inferences.” 11 Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). 12 When a district court grants a motion to dismiss, it should generally provide 13 leave to amend unless it is clear the complaint could not be saved by any amendment. 14 Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). 15 Leave to amend may be denied when “the court determines that the allegation of other 16 facts consistent with the challenged pleading could not possibly cure the deficiency.” 17 Schreiber Distrib. Co. v. Serv-Well Furniture Co., Inc., 806 F.2d 1393, 1401 (9th Cir. 18 1986). Thus, leave to amend “is properly denied . . . if amendment would be futile.” 19 Carrico v. City & County of San Francisco, 656 F.3d 1002, 1008 (9th Cir. 2011). 20 IV. DISCUSSION 21 Shein moves to dismiss counts two and three pursuant to Rule 12(b)(6), and to 22 strike the allegations of false designation of origin in counts four and five of Bastiat’s 23 First Amended Complaint pursuant to Rule 12(f). (Mot.) 24 A. False Designation of Origin (Count 2) 25 In its second cause of action, Bastiat asserts a false designation of origin claim 26 under the Lanham Act, invoking trademark law protections against confusion as to the 27 origin of the goods. (FAC ¶¶ 65–66.) Shein argues that Bastiat’s false designation of 28 origin claim is preempted under Dastar Corp. v. Twentieth Century Fox Film Corp., 1 539 U.S. 23 (2003), because Bastiat is merely recasting its copyright infringement 2 claim as one for false designation of origin under trademark law. (Mot. 1.) 3 The Lanham Act prohibits any person from using (1) “any false designation of 4 origin” (2) in connection with any goods or services (3) in commerce that (4) “is 5 likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, 6 connection, or association of such person with another person, or as to the origin, 7 sponsorship, or approval of his or her goods, services, or commercial activities by 8 another person.” 15 U.S.C. § 1125(a). 9 In Dastar, the Supreme Court cautioned against misusing or over-extending 10 trademark protections, including Lanham Act protections against false designation of 11 origin, into areas protected under copyright laws. Dastar, 539 U.S. at 34. “When [a] 12 claim is more accurately conceived of as attacking unauthorized copying, Dastar 13 requires [courts] to avoid recognizing a ‘species of mutant copyright law’ by making 14 such claims cognizable [as trademark claims] under the Lanham Act.” Slep-Tone Ent. 15 Corp. v. Wired for Sound Karaoke & DJ Servs., LLC, 845 F.3d 1246, 1250 (9th Cir. 16 2017). Thus, if a plaintiff has a remedy under the Copyright Act, their Lanham Act 17 claim is preempted. Lions Gate Ent. Inc v. TD Ameritrade Servs. Co., Inc., 170 F. 18 Supp. 3d 1249, 1264 (C.D. Cal. 2016). 19 Here, Bastiat alleges facts in support of its false designation of origin claim 20 under the Lanham Act that implicate rights protected under the Copyright Act. 21 Specifically, Bastiat alleges that Shein and third-party sellers on Shein Marketplace 22 copied, without permission, photographs and product designs from Brandy Melville’s 23 website and social media to market their own products on Shein.com. (FAC ¶¶ 5, 48, 24 50.) At bottom, these allegations support a claim for unauthorized copying and use of 25 creative works, conduct that falls under the purview of copyright law, not trademark 26 law. See Dastar, 539 U.S. at 34 (quoting Bonito Boats, Inc. v. Thunder Craft Boats, 27 Inc., 489 U.S. 141, 165 (1989)) (rejecting the use of the Lanham Act to limit rights 28 under copyright law). Bastiat also alleges that Shein used Brandy Melville’s 1 advertising materials and photographs on its website. (FAC ¶ 66.) However, the 2 Copyright Act, not the Lanham Act, supplies the relevant source of protection for such 3 works. See 17 U.S.C. § 106 (providing that “the owner of copyright . . . has the 4 exclusive right[]” to “reproduce the copyrighted work”). Accordingly, as Bastiat’s 5 false designation of origin claim rests on the alleged copying or use of its 6 photographs, designs, or other creative content, the claim is preempted by the 7 Copyright Act. Dastar, 539 U.S. at 34. 8 Bastiat’s attempt to avoid preemption by recasting the same allegations in the 9 language of consumer confusion fares no better. (Opp’n 13–16.) A plaintiff cannot 10 avoid preemption by merely repackaging an alleged act of unauthorized copying as a 11 Lanham Act violation. See, e.g., Jones v. Twentieth Century Studios, Inc., No. 2:21- 12 cv-05890-PA (SKx), 2021 WL 6752228, at *9 (C.D. Cal. Dec. 7, 2021) (finding that 13 copyright law preempts a plaintiff’s trademark claim, despite the plaintiff using the 14 phrase “likely to cause confusion”). Although Bastiat recites the elements of a false 15 designation of origin claim, (see FAC ¶ 52 (alleging that Shein knew that “consumers 16 are likely to be . . . confused as to the source of the infringing products”), Bastiat’s 17 Lanham Act claim rests on the same alleged misconduct as its copyright claim: 18 unauthorized copying and public display. 19 Accordingly, the Court finds that the Copyright Act preempts Bastiat’s Lanham 20 Act claim for false designation of origin. Thus, the Court GRANTS Shein’s Motion 21 and DISMISSES Bastiat’s second cause of action for false designation of origin. The 22 dismissal is WITHOUT LEAVE TO AMEND as “the cause of action is preempted 23 and any amendment would be futile.” Lions Gate, 170 F. Supp. 3d at 1266. 24 B. Common Law Unfair Competition (Count 3) 25 In its third cause of action, Bastiat alleges that Shein is liable for common law 26 unfair competition because Shein’s use of Brandy Melville’s advertising materials and 27 photographs on Shein’s website falsely represents an implied association with Brandy 28 1 Melville. (FAC ¶¶ 72–78.). Shein argues that the Court should dismiss Bastiat’s third 2 cause of action because Dastar and the Copyright Act preempt it. (Mot. 6–8.) 3 The Copyright Act preempts certain state law causes of action, such as common 4 law unfair competition causes of action, “if two elements are present.” Kodadek v. 5 MTV Networks, Inc., 152 F.3d 1209, 1212 (9th Cir. 1998). “First, the rights that a 6 plaintiff asserts under state law must be ‘rights that are equivalent’ to those protected 7 by the Copyright Act.” Id. (citing 17 U.S.C. § 301(a)). “Second, the work involved 8 must fall within the ‘subject matter’ of the Copyright Act as set forth in 17 U.S.C. 9 §§ 102 and 103.” Id. Thus, “[t]o survive preemption, the state cause of action must 10 protect rights that are qualitatively different from the rights protected by copyright: the 11 complaint must allege an ‘extra element’ that changes the nature of the action.” 12 Grosso v. Miramax Film Corp., 383 F.3d 965, 968 (9th Cir. 2004). 13 Here, Bastiat seeks to vindicate rights that are equivalent to those protected by 14 the Copyright Act and pleads no “extra element that transforms the action from one 15 arising under the ambit of the federal statute” to one arising under state law unfair 16 competition. See id. Bastiat alleges that Shein used Brandy Melville’s advertising 17 material and photographs on its website. (FAC ¶ 74.) However, these allegations 18 arise directly from the unauthorized use, reproduction, and display of copyrighted 19 photographs and promotional images—conduct that falls squarely under the Copyright 20 Act’s subject matter concerning “pictorial, graphic, and sculptural works.” 17 U.S.C. 21 § 102(a)(5). Moreover, Bastiat asserts rights that are exclusive to copyright owners 22 under the Copyright Act, specifically the right to reproduce and to display in public. 23 17 U.S.C. § 106 (providing that a copyright holder has the right to “reproduce” and 24 “display” the copyrighted work publicly). 25 Nor does the allegation of implied association supply the required “extra 26 element” that would transform the nature of the action. Grosso, 383 F.3d at 968. 27 Bastiat alleges that Shein’s unauthorized use of Brandy Melville’s advertising material 28 and photographs on its website suggest an association with Brandy Melville. (FAC 1 ¶ 74.) However, the same factual theory underlies Bastiat’s cause of action for false 2 designation of origin under the Lanham Act and its cause of action for common law 3 unfair competition. For example, to support its cause of action for false designation of 4 origin under the Lanham Act, Bastiat alleges that Shein “falsely used, or permitted 5 others to use, Brandy Melville’s advertising material and photographs” on Shein’s 6 website “to impliedly represent that the product being sold was made by or otherwise 7 associated with Brandy Melville.” (FAC ¶ 66.) Similarly, to support its common law 8 unfair competition claim, Bastiat alleges that Shein “us[ed], or permit[ed] others to 9 use, Brandy Melville’s advertising material and photographs” on Shein’s website “to 10 impliedly represent that the product being sold was made by or otherwise associated 11 with Brandy Melville.” (Id. ¶ 74.) Bastiat’s allegations supporting both causes of 12 action are largely identical and seek to vindicate the same rights. As Bastiat’s 13 common law unfair competition cause of action adds no qualitatively different right 14 beyond those protected by copyright law, the Copyright Act preempts Bastiat’s third 15 cause of action for common law unfair competition. 16 Accordingly, the Court GRANTS Shein’s Motion and DISMISSES Bastiat’s 17 cause of action for common law unfair competition. The dismissal is WITHOUT 18 LEAVE TO AMEND as “the cause of action is preempted and any amendment 19 would be futile.” Lions Gate, 170 F. Supp. 3d at 1266. 20 C. Contributory and Vicarious Copyright Infringement (Counts 4–5) 21 In its fourth and fifth causes of action, Bastiat alleges that Shein is liable for 22 contributory and vicarious copyright infringement for using or permitting others to use 23 the infringing designs and photographs on Shein’s website. (FAC ¶¶ 79–89.) Shein 24 moves to strike paragraphs eighty-one and eighty-seven of these counts, referencing 25 false designation of origin, as “immaterial to the relief sought” in Bastiat’s fourth and 26 fifth causes of action. (Mot. 8–9.) 27 Under Rule 12(f), the court “may strike from a pleading . . . any redundant, 28 immaterial, impertinent, or scandalous matter.” The decision on whether to grant a 1 motion to strike is at the court’s discretion. See Fantasy, Inc. v. Fogerty, 984 F.2d 2 1524, 1528 (9th Cir. 1993), rev’d on other grounds, 510 U.S. 517 (1994). The Ninth 3 Circuit has cautioned against the use of a motion to strike as “an attempt to have 4 certain portions of [the plaintiff’s] complaint dismissed or to obtain summary 5 judgment against [the plaintiff] as to those portions of the suit—actions better suited 6 for a Rule 12(b)(6) motion or a Rule 56 motion, not a Rule 12(f) motion.” 7 Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 974 (9th Cir. 2010). 8 To state a claim for contributory or vicarious copyright infringement, the 9 plaintiff must first establish direct infringement. MDY Indus., LLC v. Blizzard Ent., 10 Inc., 629 F.3d 928, 937 (9th Cir. 2010). Once established, the plaintiff may allege 11 contributory infringement by additionally showing that the defendant (1) knows or has 12 reason to know of the infringing activity, and (2) induces, causes, or materially 13 contributes to the infringement. Ellison v. Robertson, 357 F.3d 1072, 1076 (9th Cir. 14 2004). To allege vicarious copyright infringement, the plaintiff must additionally 15 show that the defendant has “(1) the right and ability to supervise the infringing 16 conduct,” and “(2) a direct financial interest in the infringing activity.” Perfect 10, 17 Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d 788, 802 (9th Cir. 2007). 18 Here, to support its contributory and vicarious copyright infringement claims, 19 Bastiat alleges that Shein “used, or permitted others to use, Brandy Melville’s 20 advertising material and photographs” on its website “to impliedly represent that . . . a 21 customer who placed an order for the good depicted would receive the item depicted.” 22 (FAC ¶¶ 81, 87.) At this stage, the Court cannot conclude that, as Shein contends, 23 these allegations are “immaterial to the relief sought.” (Mot. 8–9); Fogerty, 984 F.2d 24 at 1527 (“Immaterial matter is that which has no essential or important relationship to 25 the claim for relief or the defenses being plead.”). These allegations may support the 26 manner in which Shein displayed and promoted the products on its website, 27 particularly in circumstances involving third-party sellers. Whether these allegations 28 ultimately establish Shein’s knowledge, material contribution, supervisory authority, 1 || financial benefit, or willfulness is better resolved on a complete factual record, not on a Rule 12(f) motion. See Colaprico v. Sun Microsys., Inc., 758 F. Supp. 1335, 1339 3 || (N.D. Cal. 1991) (holding that “motions to strike should not be granted unless it is clear that the matter to be stricken could have no possible bearing on the subject 5 || matter of the litigation.”). Thus, the Court declines to strike paragraphs eighty-one 6 || and eighty-seven in the First Amended Complaint. 7 Accordingly, the Court DENIES Shein’s request to strike paragraphs 8 | eighty-one and eighty-seven from the fourth and fifth causes of action in Bastiat’s 9 | First Amended Complaint. 10 Vv. CONCLUSION 11 For the reasons discussed above, the Court GRANTS IN PART and DENIES 12 | IN PART Shein’s Motion. (Dkt. No. 22.) The Court GRANTS Shein’s Motion and 13 | DISMISSES Bastiat’s second and third causes of action WITHOUT LEAVE TO 14 || AMEND and WITH PREJUDICE. The Court DENIES Shein’s request to strike 15 || paragraphs eighty-one and eighty-seven. Shein shall answer the surviving claims in 16 || the First Amended Complaint within fourteen (14) days of the date of this Order. 17 18 IT IS SO ORDERED. 19 20 April 28, 2026

3 OTIS D. GHT, I 4 UNITED STATES DISTRICT JUDGE

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