Quick take:
- Nike filed a complaint in federal court on Thursday.
- Nike claims that StockX NFTs of the brand’s sneaker infringe on trademark and cause brand dilution.
- Nike is seeking monetary damages and a block from StockX selling NFTs bearing Nike’s trademarks.
Nike has filed a lawsuit in New York federal court on Thursday claiming that online streetwear reseller StockX is selling unauthorised NFTs of sneakers bearing Nike’s trademark.
While Nike has filed metaverse trademarks, acquired virtual sneaker studio RTFKT, and created a new virtual division, the sportswear titan claims that it “did not approve of or authorize StockX’s Nike-branded Vault NFTs.”
Nike said that the unauthorised use of its branded sneakers for StockX’s NFTs infringes on its trademark and is causing brand dilution and confusion as customers are under the impression that there’s an association between StockX’s sneaker NFTs and Nike’s products.
In the 50-page lawsuit, Nike sets the stage by saying that “NFTs “are an exciting way for brands to interact with their consumers in and out of the ‘metaverse,’ and diverse commercial applications of NFTs have emerged throughout the past two years.”
It goes on to say that “novel product offerings, burgeoning technologies, and gold rush markets tend to create opportunities for third parties to capitalize on the goodwill of reputable brands and create confusion in the marketplace.”
Nike adds that the metaverse has become “a virtual playground for infringers to usurp the goodwill of some of the most famous trademarks in the world and use those trademarks without authorization to market their virtual products and generate ill-gotten profits.”
The lawsuit also says that StockX is “minting” NFTs that make “prominent use [of] 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.”
StockX announced its NFT service, Vault NFTs, in January and offered up NFTs based on a selection of eight Nike sneakers, which the site claims are tied to physical shoes that buyers can collect anytime.
The launch of StockX’s NFT service has drawn criticism over the lack of cross-platform liquidity and personal wallet withdrawals.
Nike is seeking monetary compensation from StockX and a blockage of Nike branded sneaker NFTs on the resale marketplace. The sportswear giant also said that it will be releasing “a number of virtual products” later this month in collaboration with RTFKT.
According to The Fashion Law, Nike is citing existing trademark rights for physical goods to make its infringement claims. The brand has incorporated those marks into virtual products for some time, therefore giving common law trademark those rights when it comes to virtual products.
This might mean that brands could rely on existing rights to bring enforcement actions and may not need to file for metaverse trademarks, even if it has been the trend lately.
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