Nike sues online reseller StockX over the sale of Nike branded sneaker NFTs

Image source: Solesupplier

Nike, this week has filed a lawsuit against the streetwear platform StockX over the sale of Nike branded sneaker NFTs. The complaint largely concerns the sale of NFT’s bearing Nike’s famous (trade) marks, and as per the suit comes from "StockX's unauthorised use of Nike's well-known trademarks in connection with StockX's entrance into the Non-Fungible Token market."

StockX LLC, an online resale marketplace created in 2016 rose to popularity reselling shoes, streetwear, and other coveted products on its platform.  In 2021, the platform was estimated to be worth $3.8 billion, after a funding round last year.

According to its complaint, “Unlike its e-commerce business which caters to buyers and sellers of goods originating from various companies, nearly all the NFTs minted by StockX to date are Nikebranded NFTs, yet none of those NFTs originate from Nike.”

The suit also says: Recognizing firsthand the immense value of Nike’s brands, StockX has chosen to compete in the NFT market not by taking the time to develop its own intellectual property rights, but rather by blatantly freeriding, almost exclusively, on the back of Nike’s famous trademarks and associated goodwill. Specifically, without Nike’s authorization or approval, StockX is “minting” NFTs that prominently use Nike’s trademarks, marketing those NFTs using Nike’s goodwill, and selling those NFTs at heavily inflated prices to unsuspecting consumers who believe or are likely to believe that those “investible digital assets” (as StockX calls them) are, in fact, authorized by Nike when they are not.” argues Nike.

NFT’s incorporating a brands intellectual property, such as its trademark have been increasingly used as a rights management tool to track and guarantee product ownership.

The lawsuit comes less than two months after Nike acquired Rtfkt, a digital art and collectible creative studio that produces NFT collectibles, for an undisclosed sum. Nike Chief Executive John Donahoe said the purchase would help “extend Nike’s digital footprint and capabilities.” As yet, Nike has not released any NFTs.

In the lawsuit, Nike complains that ‘StockX unauthorized and unapproved branding of NFTs with Nike trademarks likely to confuse consumers, create a false association between the parties, jeopardize the capacity of Nike’s famous marks to identify its own digital goods in the metaverse and beyond, and harm Nike’s reputation through an association with inferior digital products’

Comment

Nike lawsuit is the latest example of brands seeking to control how their trademark is used and across what products in the metaverse. The legal complaint Nike v StockX can be viewed here