On 02/03/2022 Nike, Inc filed an Intellectual Property – Trademark court case against Stockx LLC in U.S. District Courts. Court records for this case are available from New York Southern District.
Source: Nike, Inc. v. Stockx LLC
The initial lawsuit was in regard to trademark after StockX rolled out their NFTs. Web3 is an evolving landscape requiring brands to remain vigilant in protecting their assets. StockX’s NFT is contained on what the e-commerce site labels as an internal blockchain. They also tied their NFTs to physical product, but unlike a seller using StockX to sell a product they bought from a retail outlet, StockX is creating a digital product and profiting from Nike’s image which has been trademarked with the USPTO. This could provide Nike an opportunity to set a precedent with retailers when the lawsuit is argued. Traditionally a wholesale relationship allows a retailer to carry and sell the brand. The retail outlet has requirements for marketing and using the trademarks for a brand. E-Commerce, third party platforms are not in a relationship with the brand. The transaction taking place on StockX is between the seller and the site. While it’s not smart to assume, the moment StockX made a 2D digital image featuring Nike products they were possibly in direct competition with Nike and were profiting from the image and logos associated with the Swoosh. I discussed trademark in a video using the book SNRKLaw:
The AJ1 USPTO Trademark & SNKRLAW by Anand & Goldstein Chapter 7: The Law of Sneakers
Nike has since updated their lawsuit with a claim that StockX is further impending on trademark by allowing counterfeits to be sold on their platform. “According to reporting from Bloomberg, Nike legal representatives purchased four counterfeit pairs from the platform over a two-month period of time, all with receipts stating the items were one hundred percent authentic.” – Fashion United. There are questions about how and why Nike was able to authenticate pairs of sneakers, but those questions can be clarified via a simple “logo”. On all new Nike footwear there is a RFID symbol. In authentication videos I’ve done I explained in great detail that Nike utilizes what’s behind the symbol to manage their supply chain.
If you notice in the screenshot above, I have the label pulled back on the box in the picture. I’ve created an authentication checklist and I include pulling the label down to see if the flat RFID chip is on the back of the label. A counterfeit product tends to be made as cheaply as possible, and most fake sneakers won’t have the RFID chip. If that chip is there, once Nike scans the shipments into their supply chain, the RFID is updated. This means that the chip itself can serve as provenance. In many ways this RFID chip is actually an additional tool in the argument against StockX NFTs. One of the primary reasons an NFT is so valuable is irrespectively of the blockchain where items sold can be verified via the digital ledgers. Interestingly enough, StockX is claiming that their NFTs are verified on Etherscan, but I’ve long wondered how this is if the blockchain is internally held? I don’t want to conflate the two cases, but there is some overlap with is another interesting topic of discussion in this ongoing case. If you want to read the case information, use the source link at the lead of this post. This is one to bookmark and watch as the ramifications could be widespread for third party retail beyond StockX.
