StockX strikes back at Nike in NFT lawsuit

The Nike swoosh logo is seen outside the store on 5th Avenue in New York, New York, U.S., March 19, 2019. REUTERS/Carlo Allegri
  • Nike said NFT images of its shoes infringe its trademarks
  • StockX said it only uses NFTs to track sneaker ownership

(Reuters) - Online reseller StockX LLC said in a court filing Thursday that images of Nike sneakers it sells as non-fungible tokens do not violate Nike Inc trademarks, arguing that Nike had shown a "fundamental misunderstanding" of NFTs by suing StockX last month.

StockX in the Manhattan federal court filing called Nike's lawsuit a "baseless and misleading" attempt to interfere with the popular secondary market for its sneakers. It said it was only using NFTs to authenticate its physical shoes and was not selling them as standalone products.

The digital assets called NFTs have recently exploded in popularity, and intellectual-property lawsuits over them have begun to hit U.S. courts, including disputes involving Miramax and Quentin Tarantino, Hermes, and rapper Lil Yachty.

Nike sued StockX in February for selling NFTs of images of Nike sneakers without the shoe giant's permission, arguing they infringed its trademarks by causing consumer confusion. The lawsuit also said StockX's NFTs interfered with Nike's own NFT plans.

StockX countered in its answer to the lawsuit Thursday that its use of NFTs was "no different than major e-commerce retailers and marketplaces who use images and descriptions of products to sell physical sneakers and other goods, which consumers see (and are not confused by) every single day."

According to StockX, its NFTs are merely "claim tickets" to access physical shoes stored in a "vault" after a buyer purchases them, and provide proof of ownership and authenticity.

StockX said the tokens make it easier to trade shoes stored in the vault, and that the NFTs are "absolutely not 'virtual products' or digital sneakers" as Nike claimed.

The NFTs are not likely to cause confusion because StockX makes it clear to buyers that they are tied to tracking the physical shoes, StockX said. It said Nike's lawsuit threatens others who use NFTs to track the ownership of physical goods like fine art, whiskey and wine.

Nike and one of its attorneys did not immediately respond to a request for comment.

The case is Nike Inc v. StockX LLC, U.S. District Court for the Southern District of New York, No. 1:22-cv-00983.

For Nike: Tamar Duvdevani of DLA Piper

For StockX: Megan Bannigan of Debevoise & Plimpton, David Mayberry of Kilpatrick Townsend & Stockton

Read more:

Nike cries foul over virtual shoes, suing retailer that sells sneaker NFTs

Miramax sues Quentin Tarantino over 'Pulp Fiction' NFTs

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Blake Brittain reports on intellectual property law, including patents, trademarks, copyrights and trade secrets. Reach him at blake.brittain@thomsonreuters.com