The marketplace said Nike’s lawsuit shows “a fundamental misunderstanding of the various functions NFTs can serve.”
But just as the company moved in January to form a new division, Nike Virtual Studios, to take advantage of the opportunity, StockX launched its Vault NFTs — which creates digital tokens that can be traded and redeemed for a physical item, including Nike sneakers.
Nike in its lawsuit called foul and said StockX was “blatantly free-riding, almost exclusively, on the back of Nike’s famous trademarks and associated goodwill. 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, authorized by Nike when they are not.
In its response, StockX argued that its customers use the marketplace to not only acquire physical products, but to trade physical items for investment purposes and that using non-fungible tokens — with users trading the digital token tied back to the sneaker — is more efficient and doesn’t require another round of shipping fees and authentication.
“Using NFTs in this matter is lawful and violates no legitimate right of Nike or any of the manufacturers of the underlying goods,” StockX said in court papers.“StockX Vault NFTs are absolutely not ‘virtual products’ or digital sneakers,” StockX said. “Rather, each Vaultis tied to a specific physical good that has already been authenticated by StockX…. The Vault NFT itself has no intrinsic value — it is effectively a claim ticket, or a ‘key’ to access the underlying stored item.
“NFTs can be paired with a physical object to verify its authenticity and prevent counterfeit goods, as StockX is demonstrating,” Witzburg said. “At issue in this case is the overlap of trademark rights and a new technology that has the power to authenticate fashion goods on the secondary market. StockX’s Answer shows that the company truly believes in the power of NFTs to revolutionize the industry by defending its right to integrate the new technology into its business model.
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