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The Nike v. StockX Lawsuit Could Determine What Type of NFTs Can Be Created

Dubbed the “Sneaker Wars,” Nike’s ongoing lawsuit against online shoe retailer StockX will likely end up dictating how intellectual property law is applied to NFTs. The case, which was filed by Nike in February 2022, alleges that StockX engaged in the unauthorized and infringing use of Nike’s famous marks in its Vault NFT collection.

Launched in 2016, StockX is an online resale sneaker retailer. However, its subsidiary business also allows individuals to sell other items  – designer clothes, Pokémon trading cards, Playstation 5 consoles, and so on. 

When a user buys a pair of shoes off StockX’s website, the seller ships the shoes to one of StockX’s authentication facilities in the U.S. or overseas. For those sneakers that are “verified,” they are subsequently sent to the buyer by StockX, whereas those that fail the authenticity test, according to StockX, are sent back to the seller, removing StockX from liability. 

The Answer continues to characterize Nike’s Complaint as nothing more than a “baseless and misleading attempt” to interfere with a new technology Nike doesn’t understand, which has opened up a secondary market for the sale of StockX’s sneakers and other goods.

Similar to the rule of law at the heart of Hermès, the Lanham Act and the Second Circuit’s Rogers test also comes into play as legal standards, which set the traditional boundaries of intellectual property and trademark infringement. Under Rogers, the use of a trademark in an artistic work is actionable only if the mark (1) has no “artistic relevance” to the underlying work or (2) explicitly misleads as to the source or content of the work.

In other words, these counterfeit pairs of sneakers were marked as “StockX Verified,” somehow passing the company’s proprietary “authentication guarantee,” which Nike says constitutes false advertising.

It also said in its statement that Nike’s in-house brand protection team has also praised the company’s authentication program, where “hundreds of Nike employees — including current senior executives — use StockX to buy and sell products.”

The ongoing case tests the relationship between a retailer and manufacturer, bringing up new questions as to the types of NFTs that can be created and how a “fair use” defense could be applied. Until now, it has been rare that our landscape has seen a scenario where a manufacturer brings suit against a retailer for selling products that may have been counterfeited. 

Ultimately, our courts are yet again faced with another opportunity to create a legal precedent for how intellectual property is applied to NFTs.

Andrew Rossow is an attorney and journalist who focuses on fintech and intellectual property law.

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The post The Nike v. StockX Lawsuit Could Determine What Type of NFTs Can Be Created appeared first on nft now.

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