Nike sued StockX, a major online sneaker reseller, in February for introducing a non-fungible token (NFT) series based on Nike’s shoes. Last month, it accused StockX of deliberately selling counterfeits, which shouldn’t be conceivable given that StockX claims to validate the shoes offered on its website. StockX is now retaliating. Nike’s complaint, according to the shoe reseller, is “nothing more than a futile attempt to reinforce its still meritless allegations.”
In January, StockX launched its Vault NFT series. According to the company, the goal was to allow customers to purchase NFTs attached to tangible goods, similar to a digital receipt. The result, according to the corporation, would be more efficient trading because a buyer would not have to wait to resale a shoe. Eight of the inaugural nine limited-edition Vault NFT series were related to Nike shoes.
Nike sued, claiming that the NFTs infringed on its trademarks and would confuse buyers. Then, in an amended complaint, Nike stated that it purchased four pairs of counterfeit sneakers between December and February. Nike is basically asking how StockX can utilize NFTs to certify footwear when it can’t even detect if a sneaker is real or phony.
Nike’s portrayal of its authentication method is disputed by StockX. Unlike other resellers, StockX earned a name for itself by promising that every sneaker sold on its website is authentic. According to the petition, each sneaker is hand-inspected and uses “AI-enhanced machine learning technology.” It also mentioned that Nike had previously lauded StockX’s certification procedure and efforts to combat counterfeits.
The whole thing boils down to Nike and StockX disagreeing on what the Vault NFTs are. According to StockX, the Vault NFTs are “definitely not ‘virtual things’ or digital footwear” because they are linked to a physical good. StockX claims it cannot be offered as a separate product because it serves as a digital receipt. The problem is that when you purchase the Vault NFT, the sneaker itself remains in StockX inventory until someone chooses to claim the physical commodity. Meanwhile, the NFT can be resold several times. According to Nike, this distinguishes the Vault NFTs as a different product rather than a digital receipt.
Whatever the outcome of this case is, it could have far-reaching repercussions for how an NFT is defined and whether NFTs in the resale market is considered trademark infringement.
