StockX hits back at ‘baseless’ Nike NFT suit
Online reselling storefront StockX accused Nike of having a “fundamental misunderstanding” of how non-fungible tokens (NFTs) work, as it fired back at Nike’s trademark lawsuit against it.
In a response filed yesterday, March 31, StockX claimed that Nike’s suit “threatens the legitimate use of NFTs not just by StockX, but by other innovators that also use NFTs to track title to physical goods held in a vault, such as fine art, whiskey and wine”.
In February, Nike filed suit at the US District Court for the Southern District of New York, claiming that StockX was listing NFTs of Nike-branded shoes without its permission and that these NFTs were being marketed at “heavily inflated prices” to customers who “believe or are likely to believe” that the digital assets are authorised by the sneaker giant.
Billed as “100% Authentic Nike-branded Vault NFTs”, the assets appear as a digital recreation of Nike shoes, featuring trademarks used “without Nike’s consent”, Nike alleged in its complaint.
StockX, in its response, has claimed that the NFTs are not virtual sneakers, but each NFT is effectively a “claim ticket” that tracks proof of ownership but does not have any intrinsic value.
Those who buy a Vault NFT do not take physical possession of the stored item (in this case, a sneaker), so the sneaker remains in the Vault and the buyer can use the NFT to transfer title to the sneaker in the future.
The storefront said that its Vault NFTs are one of the first NFT applications tied to a physical product and, to date, StockX has released Vault NFTs associated with 28 different types of physical products, including sneakers, trading cards and collectibles.
“Nike’s complaint is nothing more than a baseless and misleading attempt to interfere with the application of a new technology to the increasingly popular and lawful secondary market for the sale of its sneakers and other goods,” claimed StockX.
The storefront went on to claim that Nike’s position is that “resellers of products are legally prohibited from accurately describing the physical products they seek to trade in a digital world, contrary to trademark law”.
According to StockX, its use of images of Nike sneakers and descriptions of re-sale Nike products in connection with the Vault is fair use, and that it’s no different to major e-commerce retailers and marketplaces who use images and descriptions of products to sell physical sneakers.
In its response, StockX raised multiple defences, arguing that Nike failed to state a claim and that the storefront’s acts constitute fair use. StockX has asked the court to dismiss the complaint with prejudice.
