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The explosion of interest in the metaverse is raising all sorts of new legal issues. Nike has this week filed a lawsuit against streetwear resale marketplace StockX over digital renders of the sneaker giant’s footwear sold to StockX customers as NFTs.
The lawsuit, which was filed on Thursday in the southern district court of New York, is the latest in a series of intellectual property legal battles related to the metaverse.
Intellectual property is valuable both physically and virtually. Brands, and their legal teams, are playing catch-up.
In the suit, Nike states that StockX “has chosen to compete in the NFT market not by taking the time to develop its own intellectual property rights, but rather by blatantly freeriding, almost exclusively, on the back of Nike’s famous trademarks and associated goodwill,” and notes that this is without authorisation or approval. A spokesperson for StockX, which today has 76,537 items listed under ‘Nike’, said the company does not comment on legal matters. Nike could not immediately be reached for comment.
In October, Nike became one of the first brands to file trademark applications for its virtual goods. “StockX is ‘minting’ NFTs that prominently use Nike’s trademarks, marketing those NFTs using Nike’s goodwill, and selling those NFTs at heavily inflated prices to unsuspecting consumers who are likely to believe that those ‘investible digital assets’ (as StockX calls them) are, in fact, authorised by Nike when they are not,” Nike said in the lawsuit. “Those unsanctioned products are likely to confuse consumers, create a false association between those products and Nike, and dilute Nike’s famous trademarks.”
Nike is yet to launch NFTs but is planning to release “a number of virtual products” this month with digital art studio Rtfkt (which it acquired in late December), the suit also said.
StockX launched Vault in mid-January as a first NFT project that allows customers to buy and sell like-for-like digital sneakers that serve to certify ownership of the physical item. The NFTs can be exchanged for the physical twin at any time, though the NFT often sells for significantly more than the physical item. The sneaker reseller filed a trademark for its digital goods on 5 January.
StockX’s NFTs function not only as traceable digital receipts, but also as community-building tools that allow customers exclusive access to experiences including StockX releases, promotions and events. “This isn’t just a reseller using the brand’s mark for used goods. Nike is saying that this is unauthorised use of a trademark to sell something else,” says Jeff Trexler of the Fashion Law Institute. “This is a key issue for the future of the NFT market in fashion.”
Sneakerheads have been early adopters of NFTs, with entire communities on Discord dedicated to snagging the most coveted digital assets – similar to the online communities dedicated to securing the rarest physical sneakers. Adidas has introduced two NFT projects, both in partnership with Web 3.0 influencers. Nike has a permanent Nikeland experience in Roblox where people can buy digital goods.
In the luxury sector, Balmain and Dolce & Gabbana have both launched fashion NFTs. Hermès is also currently in the midst of an intellectual property battle and filed a lawsuit last month against artist Mason Rothchild over his ‘MetaBirkin’ NFT project. Unlike Nike, Hermès had not filed trademark applications for virtual goods.
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