Nike has filed a lawsuit against StockX for making unauthorized use of its sneakers as NFTs. The suit, which was filed Thursday in a New York federal court, accuses the resale platform of trademark infringement and trademark dilution; it comes two weeks after StockX unveiled its first NFT offerings.
StockX’s initial lineup of NFTs consisted of nine virtual sneakers, eight of which were made by Nike, tied to real-life shoes kept in a vault. Prices for the tokens are significantly higher than it would cost to buy the actual sneaker, and owners of the NFTs will at some point be able to redeem them to take possession of the shoe with additional fees.
Nike’s lawyers accuse StockX of “blatantly freeriding, almost exclusively, on the back of Nike’s famous trademarks and associated goodwill” in its sale of more than 500 NFTs. The suit says these sales are likely to cause confusion amongst customers who believe Nike has authorized use of its sneakers. Further arguments suggest that StockX’s actions harms Nike’s reputation because of the “inflated” prices of the NFTs and “murky terms of purchase and ownership.”
Nike’s own plans for the metaverse —
Last year, Nike acquired RTFKT Studios, a brand that specializes in making NFTs out of virtual sneakers. The lawsuit reveals that Nike and RTFKT plan on releasing their first collection of virtual products this month and suggests that StockX’s unauthorized use of Nike trademarks will jeopardize its own efforts in the metaverse.
Nike has requested for the court to “swiftly and permanently” bar StockX from continuing to sell NFTs featuring Nike’s marks. The company is also seeking damages in addition to “any and all profits” derived from the use of Nike’s sneakers as NFTs. Input has reached out to StockX for comment on the lawsuit and will update if a response is given.
Even prior to Nike’s suit, StockX had been widely criticized for the nebulous terms of its NFTs. The company still hasn’t given any indication of when token holders will be able to exchange them for sneakers, and its initial terms of service specified that StockX would be able to "automatically redeem your NFT for an Experiential Component, at its sole discretion, in which case StockX may remove the NFT from your portfolio and you will cease to own the NFT."
StockX later updated its terms to say that it wouldn’t remove ownership without a user making an explicit exchange or until the NFT expires, if applicable. No longer does the grift seem quite as bad, but there’s still little justification for why you should buy an NFT from StockX while you still can.
