Nike Inc. has accused StockX LLC, a sneaker resale marketplace of minting non-fungible tokens that uses its trademarks without approval and selling them at inflated prices.
Nike filed a trademark infringement suit on Thursday in a federal court in Manhattan. Nike in its lawsuit said that StockX LLC is “blatantly free riding, almost exclusively, on the back of Nike’s famous trademarks and associated goodwill”.
The sneaker makers said that StockX is selling NFTs at heavily inflated prices to unsuspecting consumers.
“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’ are, in fact, authorised by Nike when they are not.”
The company had agreed in December to buy RTFKT, a business that creates digital products like sneakers and uses blockchain technology.
“Given Nike’s longstanding use in this space, StockX’s unauthorised and unapproved branding of Vault NFTs with Nike trademarks is all more like to confuse customers, create a false association between the parties, jeopardise the capacity of Nike’s famous marks to identify its own digital goods in the meta verse and beyond and harm Nike’s reputation through an association with inferior digital products.”
However, the StockX released a statement on Friday which stated that it doesn’t comment on pending litigation. In April the company was valued at $3.8 billion after a secondary tender offering.
StockX claimed that it was starting a service, Vault NFTs which allowed the users to trade sneakers without ever taking possession of them.
“The services 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.”
Nike on the other hand said that it does not sell StockX’s services or exclusive access to such benefits. “But those NFTs are far more than just physical Nike shoes, 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 in its lawsuit.