Nike intensifies NFT dispute with StockX
Nike has escalated its lawsuit against StockX centring on non-fungible tokens (NFTs), alleging that the online reseller has also been marketing counterfeits of its footwear products.
The company filed the updated complaint at US District Court for the Southern District of New York on Tuesday, May 10, expanding its existing case accusing StockX of trademark infringement.
Back in February, Nike sued online reselling storefront StockX for listing non-fungible tokens (NFTs) of Nike-branded shoes without its permission.
According to the complaint, StockX minted NFTs that prominently feature Nike’s trademarks and has marketed them at “heavily inflated prices” to customers who “believe or are likely to believe” that the digital assets are authorised by the sneaker giant.
‘Desperate tactics’
StockX has since countered by describing the allegations as "baseless" and dismissing Nike’s "panicked and desperate" tactics.
StockX claimed that the “100% authentic” Nike-branded “Vault NFTs” it has sold are no more than “claim tickets” for specific physical Nike shoes StockX has purportedly authenticated.
The company also argued that Nike’s own brand protection team had adopted the StockX authentication programme, and that hundreds of Nike employees continue to use StockX to buy and sell products.
In this week’s complaint Nike held that a continuing investigation into StockX’s conduct revealed that the e-retailer has been and is currently dealing in counterfeit Nike goods.
To back this argument, the sports apparel giant claimed that it had obtained four confirmed pairs of counterfeit “Nike” shoes, which were bought within a two month period on StockX’s platform.
Nike requested that it be allowed to add a counterfeiting claim against StockX, alongside an allegation that the platform falsely advertised its authentication process
Nike, which launches its own NFT collection this month, also argued that it had encountered incidents of consumer confusion due to the actions of StockX.
Looming questions
Speaking at the International Trademark Association Annual Meeting last week, lawyers agreed that the case could be a landmark one in terms of determining the legal parameters governing the metaverse.
Monique Couture, partner at Gowling WLG, said this case raises questions such as: “Do a trademark holder’s rights extend to virtual goods and services? Does the first sale doctrine provide a defence? Would the public be confused? And can NFTs be the subject of a delivery up and destruction order?”
“We’re anticipating hybrid lawsuits across trademarks and copyright, and territoriality is a massive challenge,” said Couture. “If you’re in the metaverse, where are you?”, adding that the metaverse had now entered the mainstream, despite the uncertainties that prevailed.
“NFTs have the potential for significant revenue streams. If they’re ignored in settlement agreements, that could be a massive problem,” she warned.
Also speaking about NFTs and existing IP law at the conference, Bonnie Jarrett, counsel, National Football League, struck a note of optimism. “The defendants don’t seem to be arguing that existing law can’t be used to resolve the case. So it's new technology, but we can apply existing laws in cases. An NFT doesn't really change the legal analysis, she said.
“Just because this technology allows consumers to do things in different ways doesn't mean that the technology needs to undermine the business. The brand owner is always going to be able to protect their rights.”
The case is Nike v StockX US District Court for the Southern District of New York, no. 1:22-cv-00983.
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