(Bloomberg) -- Nike Inc. accused the sneaker resale marketplace StockX LLC of minting non-funible tokens that use its trademarks without approval and selling them at inflated prices.
The world’s largest maker of athletic shoes alleged StockX is “blatantly freeriding, almost exclusively, on the back of Nike’s famous trademarks and associated goodwill,” according to a trademark infringement suit filed Thursday in federal court in Manhattan.
“Without Nike’s authorization or approval, 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 believe or are likely to believe that those ‘investible digital assets’ (as StockX calls them) are, in fact, authorized by Nike when they are not,” the sneaker maker said.
The lawsuit is the latest example of litigation over NFTs, which have gained in popularity and become more mainstream, including at Nike. The company agreed in December to buy RTFKT, a business that creates digital products like sneakers and uses blockchain technology. Nike has been filing requests to protect trademarks in “downloadable virtual goods” and related services.
“Given Nike’s longstanding use in this space, StockX’s unauthorized and unapproved branding of Vault NFTs with Nike trademarks is all the more likely to confuse consumers, create a false association between the parties, jeopardize the capacity of Nike’s famous marks to identify its own digital goods in the metaverse and beyond, and harm Nike’s reputation through an association with inferior digital products,” Nike said in the suit.
A spokesman for StockX didn’t immediately return a request for comment on Friday. The company has been working with banks on plans to go public in the first half of 2022 amidst a pandemic boom in collectibles, Bloomberg News previously reported. In April, the company said it was valued at $3.8 billion after a secondary tender offering.
StockXLLC said last month it was starting a service, Vault NFTs, that allows users to trade sneakers without ever taking possession of them. The service uses non-fungible tokens that are tied to physical products stored in a warehouse and can be delivered at any time, allowing traders to buy and sell sneakers instantly.
But those NFTS “are far more than just physical Nike shoes,” according to the lawsuit. They also involve new products that have been combined with other StockX services and benefits including exclusive access to company releases, promotions and events, Nike said.
“Nike does not sell StockX’s services or exclusive access to such benefits,” the sneaker maker said.
StockX has been working with banks on plans to go public in the first half of 2022 amidst a pandemic boom in collectibles, Bloomberg News previously reported. In April, the company said it was valued at $3.8 billion after a secondary tender offering.
The case is Nike Inc. v StockX LLC, 22-cv-983, U.S. District Court, Southern District of New York.
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