Earlier this year, Nike sued StockX, an online marketplace selling non-fungible tokens (NFTs) of images containing Nike shoes, claiming StockX was abusing its trademark by minting NFTs that include Nike shoes. Nike’s lawsuit states that NFTs are “an exciting way for brands to interact with their consumers in and out of the ‘metaverse,’ and various commercial applications of NFTs have emerged over the past two years.” Nike is concerned that people who buy these NFTs at StockX may think that Nike has licensed the image. The closing arguments contain photos of custom-made Nike shoes, such as the 2018 Chunky Dunky SB. Nike filed the lawsuit in Manhattan federal court with a request for a jury trial. Nike says the lawsuit aims to protect its brand and its customers, but its approach is flawed. These marketplaces help promote the Nike brand and are a direct result of Nike’s efforts to limit availability.
What is StockX?
StockX is a resale marketplace that sells everything from sneakers to hard-to-find brand-new clothes and toys, though the site is perhaps best known for its sneaker resale marketplace. Nike sneakers make up a big chunk of that resale market, but you can basically find any type of shoe you want on the StockX site. StockX does not actually own or own the shoes, but serves as a platform that connects buyers and sellers – each item has a “lowest ask price” and a “highest bid price”. These prices fluctuate constantly as buyers match sellers. When a sale takes place, the seller sends the item to StockX for authentication before it is passed on to the buyer (with StockX authentication). The lawsuit cites Twitter dialogue and Reddit activity (which appears to have no affiliation with StockX) to show that consumers are unsure whether Nike is allowing authentications (assuming real people are behind those posts). In April 2021, StockX was valued at $3.8 billion.