StockX Says Nike Shows ‘Misunderstanding’ of NFTs in Lawsuit

(Bloomberg) -- Sneaker marketplace StockX responded to a trademark-infringement lawsuit from Nike Inc. on Thursday, saying in a court filing that the world’s largest athletic-wear company shows a “fundamental misunderstanding” of nonfungible tokens.

In February, Nike filed a complaint in federal court in Manhattan accusing StockX of “blatantly freeriding” on Nike’s trademarks and goodwill with a new service called Vault NFTs.

StockX contends that its NFTs aren’t virtual sneakers but rather e-commerce listings for physical sneakers that users can buy or sell. The Vault service allows users to trade sneakers instantly without ever taking possession of them, thus eliminating shipping costs and transit times. 

“Using NFTs in this manner is lawful and violates no legitimate right of Nike or any of the manufacturers of the underlying goods,” StockX said in the filing. “Nike’s claims lack merit, disregard settled doctrines of trademark law, including the doctrines of first sale and nominative fair use.”

Legal scuffles are breaking out over NFTs as they become more mainstream, attracting major brands ranging from Louis Vuitton to Taco Bell. Even Nike is getting involved with the craze, buying virtual sneaker maker RTFKT for an undisclosed sum in December. Nike has also filed trademarks to protect its name in “downloadable virtual goods.”

StockX’s Vault site lists products from several brands in addition to Nike, including Adidas and Puma sneakers, Topps and Panini sports cards, Pokemon cards, and Supreme merchandise. In the filing, StockX said its NFTs don’t have any intrinsic value and are “effectively a claim ticket” for the items being sold.

“Nike’s suit threatens the legitimate use of NFTs not just by StockX, but by other innovators that also use NFTs to track title to physical goods held in a vault, such as fine art, whiskey, and wine,” StockX said in its filing.

StockX is said to be planning to go public this year as alternative assets like sneakers and collectibles have become a hot market for investors. The company said in April 2021 that it was valued at $3.8 billion after a secondary tender offering.

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