NFTs are becoming increasingly popular, and Nike is safeguarding its brand in this growing mark. NFT, which stands for Non-Fungible Token, refers to digital assets such as images, audio clips, or animated GIFs stored on the blockchain, a decentralized digital ledger. StockX, a Detroit-based sneaker and apparel exchange, has been accused of selling NFTs that bear Nike's trademarks without the company's authority or approval, according to a complaint filed by Nike on February 3 in the United States District Court for the Southern District of New York.
According to the filed lawsuit, "StockX has opted to compete in the NFT industry not by taking the effort to build its intellectual property rights, but by openly free-riding on the back of Nike's iconic trademarks and reputation." StockX has refused to comment on "pending legal concerns," according to a company representative, while Nike spokesperson referred to the filing when reached for comment. The market for NFTs has exploded in recent years, with one NFT selling for up to $69 million in 2021. It has made NFTs more popular among celebrities and companies.
Nike's lawsuit is simply the latest example of firms and well-known people using legal tactics to safeguard their domain in the nascent NFT and metaverse industries. According to the complaint filed in the United States District Court for the Southern District of New York on January 14, Luxury French fashion brand Hèrmes sued Mason Rothschild, a digital artist based in Los Angeles, in January for "seeking to get rich quick by appropriating the brand METABIRKINS for use in generating, advertising, selling, and enabling the exchange of digital assets known as non-fungible tokens ("NFTs")." NFT versions of the company's Birkin bag named "MetaBirkins." were made and marketed by Rothschild.
StockX's NFTs are part of the project dubbed "Vault NFTs," which was introduced last month and allows users to purchase an NFT photo of a shoe while also gaining complete control of a physical replica of the shoe a later point in time for an extra charge. According to StockX's website, the service is not yet accessible. Nike claimed in court that most of StockX's NFTs are Nike-branded goods. And Nike claims buyers will think these NFTs are Nike-approved, which is untrue.
"Nike did not authorize or promote StockX's Nike-branded Vault NFTs," the lawsuit states. This release could mislead customers, and Nike's well-known trademarks may be weakened due to unauthorized merchandise.
Nike has recently increased their presence in the NFT and metaverse spaces. According to the company, it has purchased an NFT studio "RTFKT" that "combines the latest in gaming engines, NFT, blockchain authentication, and augmented reality with manufacturing skills to produce one-of-a-kind shoes and digital artifacts." RTFKT was created in January
2020, and although Nike hasn't said how much it paid for the firm, it's reasonable to conclude that the founders fared well considering its youth. FEWOCiOUS, an adolescent artist, helped create a line of "digital sneaker" NFTs that allegedly hauled in $3.1 million in just 7 minutes.
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