Overview
In a collision between a global sneaker behemoth and an online sneaker resale marketplace, Nike sued StockX in the Southern District of New York in February 2022, asserting claims including trademark infringement, unfair competition, and dilution. Nike, Inc. v. StockX, LLC, 1:22-cv-00983-VEC.
In its Complaint, Nike accused StockX, an online sneaker retailer, of using Nike’s famous trademarks without authorization to market non-fungible tokens (NFTs). Specifically, Nike alleged that StockX bundled NFTs bearing Nike’s trademarks with additional StockX services and unspecified benefits which Nike does not sell. Nike contended that the NFTs were branded assets that could be traded, collected, and displayed. Nike questioned whether StockX’s NFTs can be readily traded in for the associated physical shoes, contradicting StockX’s claims that the NFTs are simply authentication tokens for physical shoes.
In its Answer, StockX argued that Nike fundamentally misunderstood its business model. StockX explained that the NFTs in question are used merely to authenticate actual product; they “are absolutely not ‘virtual products or digital sneakers’.” StockX further contended that its NFTs have “no intrinsic value,” functioning effectively as a “claim ticket” to access the underlying physical item. Arguing that each NFT and product page prominently displays the StockX trademark, StockX claimed that its use of Nike’s trademarks and sneaker images in its NFTs constitutes nominative fair use, functioning like product pages or advertisements on any other e-commerce site depicting and describing a good for sale.
In May 2022, Nike amended its complaint to add claims for counterfeiting and false advertising. Nike pointed to changes that StockX made to its site and to the fact that Nike itself had begun marketing NFTs. Nike further alleged that it purchased counterfeit sneakers from StockX, one pair of which corresponded to the NFTs at issue. StockX answered in June 2022. The case remains pending.
As one of a handful of ongoing cases involving trademark infringement claims with respect to NFTs, this case has the potential to shape key intellectual property issues surrounding digital assets, especially the scope of a brand owner’s right to regulate unauthorized uses of its trademarks in NFTs.
