Nike Inc. has sued StockX LLC, saying the Detroit-based online shoe reseller has violated its trademarks as it emerges into the digital product market.
In the lawsuit filed last week in the U.S. District Court for the Southern District of New York, Nike said StockX is "minting" without permission digital assets known as NFTs (nonfungible tokens) that use Nike's trademarks. The digital tokens allow people to trade sneakers without possessing them. The holder of the token can redeem it for delivery when they choose. According to the StockX website, the shoes are stored in climate-controlled, high-security vaults.
Nike alleges that StockX is selling the assets 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."
"The lawsuit filed against StockX lacks merit and is based on a mischaracterization of the service StockX offers through our NFT experience," said Katy Cockrel, StockX vice president of communications. "Our Vault NFTs depict and represent proof of ownership of physical goods stored in our vault that customers can trade on our platform. We undoubtedly have the right to provide our customers with this new and innovative approach to trading current culture products on StockX, and plan to vigorously defend our position."
Nike has requested damages and that the court stop StockX from selling NFTs that have Nike's trademarks.
"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," Nike wrote in its lawsuit.
In the suit, Nike said StockX's use of its trademarks to enter the digital collectible market deprives Nike of its exclusive right to use its marks within the medium.
StockX said the company does not "state or imply" the NFTs are tied to a third-party brand.
"StockX Vault NFTs are not digital or virtual sneakers. We do not state or imply that our Vault NFTs are associated with, sponsored by or officially connected to any third party brand. In fact, we clearly and expressly state the opposite. We are confident that our customers understand the difference between our Vault NFTs and the third-party products to which they correspond.
StockX called the NFTs a "growing part of today's global landscape."
"For years, StockX customers have traded a range of products on our website, trusting StockX to verify their authenticity and shipping products back and forth upon each trade," Cockrel said. "Now, Vault NFTs provide our customers with an exciting new, faster, cheaper and more efficient trading experience.
"Because each Vault NFT is tied to a physical good already stored in the StockX vault, a buyer no longer has to wait several days before they can resell, and they do not have to pay fees associated with multiple legs of shipping and physical authentication. Just as our platform does with physical goods, NFTs provide safe and secure access for our customers to buy and sell in the digital secondary market without costs, delays and risks that can be associated with physically shipping goods upon each trade.
