Nike Inc (NYSE:NKE) is taking legal action against a shoe reseller that has the potential to lay the groundwork for the reach of trademark law across the cryptocurrency space.
What Happened: Nike filed a lawsuit against StockX, alleging that the clothing reseller used "Nike’s famous marks" in connection with the company's entry into the non-fungible token market.
Nike said that StockX's recently launched Vault NFT series features nine NFTs, eight of which are associated with Nike shoes.
"StockX almost exclusively used Nike’s marks to launch its Vault NFTs because it knew that doing so would garner attention, drive sales, and confuse consumers into believing that Nike collaborated with StockX on the Vault NFTs," the filing says.
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Nike highlights that StockX calls its NFTs "100% authentic," which it believes is intended to mislead customers into thinking Nike is behind the project. Nike said the misleading information could damage the Nike brand — if it hasn't already.
StockX said its Vault NFTs function as traceable digital receipts.
According to Nike, Vault NFT owners aren't able to redeem the NFTs for physical goods yet, which makes them less like receipts denoting ownership.
StockX responded to some of Nike's claims in a statement on Tuesday, saying the company plans to "vigorously defend" its position.
"The lawsuit filed against StockX lacks merit and is based on a mischaracterization of the service StockX offers through our NFT experience. Our Vault NFTs depict and represent proof of ownership of physical goods stored in our vault that customers can trade on our platform," StockX said.
Why It Matters: StockX isn't just a reseller of items like clothing, bags and sneakers. The company also aims to verify the authenticity of the products on its marketplace. StockX's Vault NFT series builds on the company's authentication model by allowing NFTs to be redeemed for physical items or traded as digital goods.
It remains to be determined whether StockX NFTs are an extension of the company's reselling process and simply denote ownership or if the NFTs are standalone products infringing on Nike's trademarks.
The outcome of the case could have meaningful implications for the NFT space and crypto in general.
See Also: Nike Is Hiring A Metaverse Director
NKE Price Action: Nike shares were down 2.76% at $140.82 Friday afternoon.
Photo: screenshot from StockX Vault.
