Law Street Media

Nike Sues Online Shoe Seller StockX for Copyright Infringement Over NFTs Bearing ‘Swoosh’

A finger browsing cryptocurrency prices on a smartphone app.

New york, USA - July 25, 2018: Man checking cryptocarrencies exchange to dollar rate on smartphone display.

Nike Inc. took aim at StockX LLC for trademark infringement, dilution, and related causes of action last Thursday, arguing that its unauthorized use of Nike’s famous trademarks in connection with non-fungible tokens (NFTs) it created and has offered for sale are likely to confuse consumers by creating the impression of a false association between those products and  Nike.

The Southern District of New York trademark complaint is one of the latest to use the Lanham Act as a shield from NFT-related infringement. In one instance, the film studio Miramax claimed against director Quentin Tarantino over his allegedly illegal use of rights to the cult classic motion picture “Pulp Fiction” to sell NFTs. Tarantino answered the complaint contending he did nothing wrong.

In last week’s action against StockX, Nike explains that NFTs are hot and “have  quickly  become  pervasive  in  their  use  by  brand  owners seeking to enter the nascent marketplace of virtual or digital products connected to a token on the blockchain.” However, companies like Michigan-based StockX, an online reseller of sneakers, apparel, luxury handbags, electronics, and other collectible goods, are attempting to “capitalize on the goodwill of reputable brands and create confusion in the marketplace.” 

Examples of StockX’s “Vault” NFTs, reprinted from the complaint.

In particular, Nike claims that StockX is “minting” or creating NFTs that feature Nike’s trademarks, using Nike’s reputation to market those NFTs, and selling those  NFTs  at hugely inflated  prices  to  consumers  who  believe that the so-touted “investible digital assets” are authorized by Nike when, in fact, they are not. As evidence of its claim, Nike points to consumer complaints such as one stating that StockX’s NFTs are “‘just  a  stupid  scam  for Nike  to  make money.’”

The 50-page filing asks that the court permanently enjoin StockX from selling NFTs deceptively bearing Nike’s famous marks. Nike also requests that StockX hand over the NFTs for Nike to destroy and pay damages, including punitive damages, as well as its attorneys’ fees and costs.

Nike is represented by DLA Piper.

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