Nike Inc has initiated the first non-fungible token (NFT) trademark infringement lawsuit against StockX.
NFTs refer to one-of-a-kind digital assets that exist on the blockchain. Unlike other cryptocurrencies such as Bitcoin, each NFT is distinct and cannot be replicated. By existing on the blockchain, NFTs have a proven and recorded ledger of ownership. NFTs first started out as simple images but have now garnered the attention of multinational brands such as Nike as a means of revenue and advertising.
StockX is an online reseller of popular sneakers and apparel. In late 2021, StockX began dabbling into NFTs by providing its customers with digital ownership of physical sneakers, many of which were Nike shoes. In February 2022, Nike sued StockX in the New York Federal Court over trademark infringement and the unauthorised use of images of Nike shoes. The basis for this claim was that consumers are likely to be misled as StockX would permit consumers to redeem the NFTs for physical versions of the shoes in the near future. Nike further claimed that the issue of legitimacy for consumers has hurt Nike’s business reputation.
StockX has recently responded to the case arguing that Nike has a “fundamental misunderstanding” of NFTs and that this lawsuit is “baseless”. StockX claimed that it was only using the NFTs to authenticate its physical shoes but was not selling the shoes as individual products. StockX likened this approach to other online retailers using images and descriptions of products to sell physical shoes. If consumers are not misled by other retailers’ use of images, they should not be confused by NFTs. StockX also noted that NFTs are not virtual products or digital sneakers and instead act as tickets to access physical shoes later on.
This case will surely test the drafting of current intellectual property law and may result in a unique precedent for the future of NFTs and blockchain technology in the US.
For the full reading of the case, see here.