Patent Poetry: Nike Sues Platform Over NFTs | AEON Law

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Nike is suing StockX,

Allegations that sales of NFT

Infringe its trademarks

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Nike sued the StockX platform for trademark infringement because the platform minted, marketed and sold non-fungible tokens (NFTs) using Nike trademarks.

As The Verge reported,

StockX is a retailer of streetwear, bags, and sneakers, among other things. Unlike some market places, it is also an intermediary who collects the objects and verifies their authenticity. StockX built on this system in January by launching NFTs tied to physical assets. The announcement promises that these “Vault NFTs” can be exchanged for physical items, but also instantly exchanged as digital goods.

As The edge remarks, Nike shoes are very popular on StockX. In fact, the site boasts that Nike products generate more sales on its e-commerce platform than any other brand.

NFT Vaults are sold with the name and image of corresponding products, such as Nike shoes.

As The edge Explain,

The case hinges on whether StockX’s NFTs are an extension of its normal resale process (like a digital receipt of ownership) or are products in their own right, with potentially significant implications for NFTs in general.

As we explained in a previous blog (quoting the New York Times),

An NFT is an asset verified using blockchain technology, in which a network of computers records transactions and gives buyers proof of authenticity and ownership. The current boom mainly concerns digital assets, including images, GIFs, songs or videos. More importantly, NFTs make digital artworks unique, and therefore salable.

An NFT itself is not generally considered a form of intellectual property (IP). It is more like a receipt for a unique digital asset held in a blockchain-based vault.

As Nike’s complaint describes them,

Non-fungible tokens or “NFTs” have quickly become ubiquitous in their use by brand owners seeking to enter the nascent market for virtual or digital products connected to a token on the blockchain. NFTs are generally understood as blockchain-based virtual goods that can be collected, sold, and traded on the market. They are an exciting way for brands to interact with their consumers in and out of the ‘metaverse’, and various business applications of NFTs have emerged over the past couple of years. Much more than a passing trend, NFTs are part of the future of commerce.

However, according to Nike,

Unfortunately, new product offerings, burgeoning technologies and gold rush markets tend to create opportunities for third parties to capitalize on the goodwill of reputable brands and create confusion in the marketplace. . NFTs are, unsurprisingly, no exception to the rule, and this new frontier has quickly become a virtual playground allowing infringers to usurp the customer base of some of the world’s most famous brands and use those brands without permission to market their virtual products and generate ill-gotten profits.

According to Nike,

without Nike’s permission or approval, StockX “mints” NFTs that prominently use Nike’s trademarks, markets those NFTs using Nike’s goodwill, and sells those NFTs at heavily inflated prices at unsuspecting consumers who believe or are likely to believe that these “digital investable assets” (as StockX calls them) are in fact authorized by Nike when they are not.

StockX even advertises that its Nike-branded NFT Vaults are “100% genuine” – whatever that means in this context.

Nike itself has filed trademark applications for use in connection with “[d]downloadable virtual goods, namely, computer programs featuring shoes” (i.e. digital sneaker NFTs) and “[r]retail store services featuring virtual goods, namely shoes” (i.e. an NFT digital sneaker trading platform).

If the case makes it to a judge – rather than settling – it will be interesting to see how the court decides on this matter.


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