Back in February, Nike sued StockX, a popular online sneaker reseller, for launching a non-fungible token (NFT) series based on Nike’s shoes. It then accused StockX last month of knowingly selling counterfeits — a thing that shouldn’t be possible since StockX claims it authenticates the shoes sold on its site. Now, StockX is hitting back. In a court filing, the sneaker reseller says that Nike’s complaint is “nothing more than a failed attempt to bolster its still meritless claims.”
StockX introduced its Vault NFT series in January. In the company’s own words, the idea was to allow customers to buy NFTs tied to a physical product akin to a digital receipt. According to the company, the benefit would be more efficient trading as a buyer wouldn’t have to wait to resell a shoe. Of the nine limited-edition Vault NFT series initially launched, eight were linked to Nike shoes.
When Nike sued, it claimed the NFTs infringed on its trademarks and would be confusing to customers. Then, in an amended complaint, Nike said it bought four pairs of counterfeit shoes from December to February. Essentially, Nike is questioning how StockX can use NFTs to authenticate sneakers when it can’t even reliably tell if a sneaker is real or fake.
StockX takes issue with Nike’s characterization of its authentication process. Unlike other resellers, StockX made a name for itself by promising each shoe sold on its site is the real deal. In the filing, the reseller says each sneaker is inspected by hand along with “AI-enhanced machine learning technology.” It also noted that in the past, Nike had praised StockX’s authentication process and its efforts to stop counterfeits.
Basically, the whole brouhaha boils down to Nike and StockX disagreeing over what the Vault NFTs are. StockX says in the filing that the Vault NFTs are “absolutely not ‘virtual products’ or digital sneakers” because they’re tied to a physical good. Because it serves as a digital receipt, StockX says it can’t actually be sold as a separate product. The thing is, when you buy the Vault NFT, the shoe itself actually stays in StockX inventory until someone chooses to claim the physical good. The NFT, in the meantime, can be resold multiple times. According to Nike, this makes the Vault NFTs a separate product and not a digital receipt.
However this case shakes out, it could have far-reaching implications for how an NFT is actually defined and whether NFTs in the resale market would be considered trademark infringement.