Shein accused Temu of using thousands of its product photographs to sell copied versions of Shein-branded clothing on Temu’s platform. 

The company told the court that Temu tried to benefit from Shein’s market position by reproducing images created by Shein employees.

“This was an attempt to steal a march on an existing participant in the market, and Temu has sought to obtain, we say, an unfair advantage,” Shein’s lawyer Benet Brandreth said in court.

The trial is expected to run for two weeks and is part of a case between both companies across several countries, including the United States.

During proceedings, Shein’s legal team said Temu had withdrawn part of its defence covering almost 2,300 disputed photographs. Brandreth compared the decision to “the defendant waiting to see if the witnesses will turn up, only to plead guilty”.

Temu denied the allegations and argued that Shein’s lawsuit was not simply about protecting copyright. Its lawyers said the case was aimed at slowing down a rival that has grown rapidly in global online retail.

Temu, owned by PDD Holdings, has also filed a counterclaim against Shein. The company is seeking damages after Shein secured a court injunction that forced thousands of Temu product listings offline.

At the centre of the counter-claim is Temu’s accusation that Shein tied suppliers into exclusive agreements, making it harder for competitors to access manufacturers. That competition law dispute is expected to go to trial next year.

The court case is happening at the same time that both companies are facing pressure from regulators in Europe and the United States. Authorities have increased investigation over supplier treatment, product safety, labour standards and the flood of low-cost parcels entering Western markets.

Temu is currently under investigation in the European Union over possible breaches of product safety regulations. Shein, meanwhile, is still being questioned about labour practices within its supply chain as it works towards a possible London stock market listing.

The companies have built huge international businesses by selling ultra-cheap fashion, accessories and household goods directly to shoppers online. Their rapid growth relied heavily on customs exemptions for low-value imports, which helped keep prices low.

That advantage has started to get weaker. The United States removed its de minimis customs exemption for low-value e-commerce parcels in 2025, increasing costs for retailers shipping directly from China. 

The European Union is also preparing to end similar exemptions in July 2026, a move that could affect the expansion plans of both companies.

The issue has already spread beyond Britain. Shein sued Temu in the United States last year over alleged copyright infringement, while Temu later filed its own case accusing Shein of disrupting its marketplace through what it described as “unwarranted notices”.

Although the London case focuses on copyrighted photographs and copied designs, the result could stretch further. 

A Financial Times report revealed that both companies are exploring alternative ways to handle the risks associated with how their AI models were trained. Copyright owners, including authors, publishers, and media houses, have filed more than a dozen lawsuits against tech companies including OpenAI, Microsoft, Meta, and Anthropic, accusing them of using protected works without authorisation to train their large language models.

To manage these legal threats, OpenAI has reportedly partnered with Aon, one of the world’s leading insurance firms, to secure coverage worth up to $300 million for emerging AI-related risks. However, some sources told the Financial Times that the actual figure could be lower, and regardless, it still falls far short of what would be required to cover the potential damages from ongoing lawsuits.

Kevin Kalinich, Aon’s Global Cyber Risk Head, explained that the insurance industry itself is finding it difficult to match the scale of risk caused by AI model providers. “The insurance sector broadly lacks enough capacity for (model) providers,” he said.

Because of this gap, OpenAI is reportedly considering “self-insurance”, essentially setting aside investor capital in a protected pool to absorb possible legal costs. Discussions have also surfaced about creating a “captive,” an internal insurance structure used by large firms to manage risks that the traditional market cannot handle.

Anthropic appears to be taking a similar route. According to the Financial Times, the company is using part of its own funds to cover a $1.5 billion settlement that was preliminarily approved by a California federal judge last month. 

The case was filed by a group of authors who alleged that their works were used to train Anthropic’s AI system, Claude, without consent.

The number of copyright claims is forcing AI companies—and their backers—to confront questions about financial accountability and transparency. If investor funds are being used to offset legal risks, governance issues inevitably follow: who decides how much to reserve for potential liabilities, and how are investors’ interests safeguarded?

Analysts believe these developments could change how AI startups raise and allocate capital. Investors may soon demand clearer disclosures on data sources, litigation exposure, and risk management frameworks before funding new ventures.

Meanwhile, the U.S. Copyright Office is still assessing whether training AI systems on copyrighted content amounts to infringement, while the European Union’s AI Act could compel firms to reveal their training datasets, opening another front of legal vulnerability for AI developers.

Neither OpenAI, Anthropic, nor Aon has commented on the report.

The data, which was stored on a virtual machine provided by OpenAI, contained search results of the publishers’ content within the company’s AI training datasets. This deletion has marred proof for the case.

The incident occurred on November 14, when OpenAI engineers accidentally erased the search data, which had been collected over 150 hours of work since November 1. 

Although OpenAI attempted to recover the lost data, it was unable to restore the folder structure and file names, making the recovered data unusable for identifying where the alleged copyrighted content was incorporated into the training models.

As a result, The New York Times and Daily News’ legal teams now face the task of recreating their work from scratch, requiring further hours of labour and additional computer processing time. 

The publishers’ attorneys have stressed that, while they do not believe the deletion was intentional, the event reveals OpenAI’s position as the entity most capable of conducting the necessary searches using its own systems.

The publishers argue that OpenAI’s use of their content without permission to train AI models like GPT-4 constitutes a violation of copyright law. 

OpenAI, however, defends its actions, asserting that training models on publicly available data is covered under fair use, and that it is not required to pay for or license content used in this manner.

Nevertheless, OpenAI has recently entered into licensing agreements with several publishers, including the Associated Press and the Financial Times, though the terms of these deals remain undisclosed. 

Reports disclose that some of these partnerships could be worth millions of dollars annually, with Dotdash Meredith, one of the partners, reportedly receiving at least $16 million a year.

OpenAI has yet to comment on the specific circumstances of the data deletion or confirm whether its AI systems were trained on the publishers’ content without consent.

The case, lodged at the Delhi High Court, centres on allegations that OpenAI utilised ANI’s material to train its AI models, resulting in the generation of fabricated news content falsely attributed to the agency.  

In the court filing, ANI spoke about the misuse of its intellectual property, specifically pointing to instances where OpenAI’s ChatGPT attributed non-existent interviews and false information to the agency. 

ANI argued that such “hallucinations” by the AI platform cause a serious threat to its credibility and could lead to public misinformation.  

During the preliminary hearing on Tuesday, Justice Amit Bansal summoned OpenAI to respond to the assertions but refrained from issuing an injunction. 

The judge noted that the case involves complex legal and technical issues requiring a thorough examination. The next hearing is set for January.  

OpenAI, which is backed by Microsoft, responded by asserting that its AI models are developed using publicly accessible data under fair use principles. 

The company’s counsel, Amit Sibal, further argued that copyright laws do not extend to factual information and noted that OpenAI allows publishers to opt out of data collection. 

Again, the firm pointed out that it has no servers in India and questioned the court’s jurisdiction over the matter.  

ANI’s legal representation, however, countered that public availability does not equate to permission for commercial exploitation. 

The agency cited particular concerns about reputational damage and the possibility of public disorder caused by false content.  

The court has revealed its intention to appoint an independent expert to analyse the copyright implications of AI systems relying on publicly available materials.

The appointed expert will also examine how news content circulates across digital platforms and its relevance to the case.  

OpenAI is already facing several similar lawsuits in countries such as the United States, Canada, and Germany.

ANI’s complaint emphasised that while OpenAI has entered licensing agreements with organisations like the Financial Times and Associated Press, it failed to secure similar permissions from ANI.