Fake Pop-Up Stores
At the end of 2024, Shein had already taken action against Brand Outlet over the operation of its fake pop-up stores. When Brand Outlet continued operating its stores despite prior commitments to stop, Shein initiated preliminary injunction proceedings. That move appears to have had an effect. Brand Outlet indicated it would cease the trademark infringement and signed a cease-and-desist undertaking at the end of 2024. The preliminary injunction proceedings were withdrawn and the matter seemed resolved.
Penalty Clause
However, it soon became clear that Brand Outlet had simply continued its activities. Through a series of test purchases, Shein was easily able to demonstrate that the company had completely failed to comply with the terms of the cease-and-desist undertaking. Shein therefore brought Brand Outlet back before the court. The problem for Brand Outlet was that the undertaking included several penalty clauses — and those can add up quickly.
Ouch!
In the end, Brand Outlet must pay €518,000 in contractual penalties for breaching the cease-and-desist undertaking. In addition, it must pay €13,861.03 in extrajudicial costs and €23,799.82 in legal fees. And that’s not all: within six weeks, Brand Outlet must also transfer the net profit it earned from the trademark infringement.
Bas Kist
