Nike just filed a lawsuit in one online marketplace for allowing the launch of NFTs based on their brand of shoes. 

NFTs are an emerging trend, making many people question and discuss the role of trademark law and copyright within society. The marketplace in question is StockX which resells bags, sneakers, and other streetwear, among other items. 

StockX’s NFT system involves using NFTs as a connection between a digital certification of ownership and a physical good. Those “Vault NFTs” can be redeemed for items in the real world, or they can be exchanged for digital goods. 

The whole dilemma comes down to the way one perceives NFTs. You can see them as either an extension of the average selling process, making them merely a digital receipt of ownership. You can also see them as an entirely different product, which would mean that StockX has infringed on the copyright of Nike. 

“StockX almost exclusively used Nike’s marks to launch its Vault NFTs because it knew that doing so would garner attention, drive sales, and confuse consumers into believing that Nike collaborated with StockX on the Vault NFTs,” says Nike. 

The company has sued them for infringement of their trademark, false advertisement of origin, and many other potentially illicit practices. According to Nike, most of StockX’s merch is related to Nike shoes.

Nike claims that “StockX is using Nike’s trademarks to market, promote, and attract potential purchasers.”. Furthermore, they critique the marketplace by saying it is characterized by “inflated prices and murky terms of purchase and ownership.”

Nike claims that you can’t redeem the NFTs for shoes, which makes them incapable of serving their role as a receipt for ownership and instead makes them into unique digital assets. 

In a statement that responds to Nike’s allegations and the backlash from many on social media, Katy Cockrel, the communications VP, claims that “Our Vault NFTs depict and represent proof of ownership of physical goods stored in our vault that customers can trade on our platform. StockX Vault NFTs are not digital or virtual sneakers. We do not state or imply that our Vault NFTs are associated with, sponsored by, or officially connected to any third party brand.”

According to StockX’s statement, the brand “undoubtedly has the right to provide our customers with this new and innovative approach to trading current culture products, and we plan to defend our position vigorously.”

Nike is a massively popular brand and has a compelling motivation to avoid getting its brand confused with anything else. Last year it acquired RTFKT, an NFT studio that would serve as the source for its crypto collection. 

Before being acquired, RTFKT would go with a similar StockX scheme to tie digital assets to physical items. The difference was that each pair of shoes had a custom design that didn’t focus on the brand to avoid potential backlash and problems with companies. 

The field of NFTs is new, and the debate surrounding trademark law is very murky. According to the legal principle of the first sale doctrine, markets can resell goods and, in the act of doing so, use images of those goods without issues of copyright. 

The confusing role of NFTs as both a digital asset of ownership and a digital image has led to many intense debates.