Nike’s ongoing legal battle with the StockX online store, called “Sneaker Wars”, will almost certainly affect the way intellectual property laws are applied to NFT. Nike filed a lawsuit in February 2022, saying that StockX had used Nike’s famous brand in an unauthorized and infringing manner in its Vault NFT collection.
What is StockX about?
StockX is a sneakers resale website founded in 2016. Individuals can sell designer clothes, Pokémon business cards, Playstation 5 systems and other items through its subsidiaries.
As of 2021, the company is worth about $ 3.8 billion. Its “reliability guarantee” policy sets it apart from competitors such as eBay. According to court documents, StockX’s multi-step authentication process ensures that items sold on StockX comply with product descriptions and stock standards specified by StockX, that the products offered for sale are what they claim to be and are not counterfeit, defective, or worn. “
When a user purchases a pair of shoes from StockX, the seller sends the shoes to one of the StockX verification centers in the United States or abroad. StockX then provides “factual” shoes to the buyer, while those who fail the value test are returned to the seller and StockX releases all liability.
In January 2022, StockX launched its Vault NFT collection, where each NFT is tied to a real product that StockX sells – in this case Nike Jordan 1 sneakers.
Is it possible that Nike made a mistake?
In its 50-page complaint, Nike makes it clear that StockX is beating NFT, which is abusing the Nike brand, benefiting from Nike’s reputation and misleading customers about the “highly inflated price of unsuspecting customers”.
StockX claims that its Vault NFTs are not “real things” or “digital footwear”, contrary to Hermès International’s decision against Rothschild. Rather, each Vault NFT is related to an actual item that StockX has already confirmed, such as “the style of shows originally created and sold by Nike, Adidas and Puma. It also said that the Vault NFT Museum was nothing more than a “key” to the underlying stored object in the dome, with no other intrinsic value.
StockX claims “fair use” in response to Nike’s allegations of trademark infringement in its March 31 response, stating that this is “no different from major e-commerce and marketplace vendors using images and product descriptions to sell physical sneakers”. and other products that consumers see (and are not confused by) on a daily basis.
According to The Answer, Nike’s complaint is nothing more than a “futile and treacherous attempt” to suppress new technology that Nike does not know, which has established a secondary market for the sale of StockX shoes and other products.
Like the rule of law at the heart of Hermès, the Lanham Act and the Rogers test Second Circuit serve as legal norms that set the traditional boundaries of intellectual property and trademark infringement. According to Rogers, the use of a trademark in a work of art is acceptable only if the mark (1) has no “artistic significance” for the underlying work or (2) is directly misleading as to the origin or content of the work.
Nike has filed two additional lawsuits, one for copying and the other for false advertising
Nike changed its original complaint earlier this month, adding two new allegations: forgery and false advertising. Since December 2021, Nike claims to have received four pairs of fake Air Jordan 1 Retro High OG in the black / varsity red and white color selection from StockX’s Vault NFT collection.
In other words, these fake sneakers bore the “StockX Verified” logo, which indicates that they have complied with the unique “verification guarantee” of the company, which Nike considers to be misleading advertising.
StockX responded on its website, claiming that it takes “customer safety very seriously” and that Nike’s current charges are a “futile attempt” to “revive a failed lawsuit”.
Nike’s internal brand protection team has also praised the company’s authentication plan, saying that “hundreds of Nike employees – including current senior executives – use StockX to acquire and sell shares.”
What does this mean for non-ferrous conversion metals?
The case in question tests the relationship between the retailer and the manufacturer, and raises new questions about the types of NFT that may arise and how arguments can be made for “fair use”. Until recently, it was rare in our sector for a manufacturer to sue a retailer for selling potentially counterfeit products.
The most similar example to Nike’s current fight against StockX is a class action lawsuit in 2011 in which Coach sued a former employee, Gina Kim, who the company said was selling counterfeit Coach bags on eBay (minus the use of NFT). Tiffany sued eBay again in 2004 for trademark infringement for alleged collusion in the sale of counterfeit Tiffany jewelry. (Again, without using NFT).
Finally, our courts will have a second chance to set a legal precedent for how intellectual property applies to NFT.
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