We originally covered online sneakerhead and hypebeast cultural hub StockX and its first formal push into NFTs, the ‘StockX Vault,’ less than a month ago. StockX sought a new approach to recognize ownership in an apparent effort to tokenize their physical assets – but what does that genuinely imply, and how would StockX completely execute it? Those questions still require some much-needed clarification, which must be brought to the surface.
However, StockX will face more obstacles before that can happen, as leading apparel company Nike has filed a lawsuit against the site for improper trademark usage.
Given how early in the evolution of NFTs we are, there is little to no precedence for how courts would interpret trademark incorporation and usage in the context of NFTs. However, here’s what we know about the most recent case in this field:
- A federal lawsuit involving brand dilution: Nike filed the action in the Southern District of New York this week, claiming that the Vault program utilizes Nike trademarks without permission. According to the complaint, “Nike did not approve or sanction StockX’s Nike-branded Vault NFTs.” These unapproved products are likely to confuse consumers, create a false relationship between them and Nike, and dilute Nike’s famous trademarks.”
- Nike’s complaints echo a typical critic’s point of view: StockX detractors in the early days of the Vault program were outraged by the degree of centralization within the ‘Vault.’ According to the platform’s terms of service, an NFT in the Vault program can be redeemed from the owner’s hands at any moment for an “experiential component” at the platform’s sole discretion. This does not appear to be consistent with the qualities of actual ownership that we generally identify with NFTs.
While the lawsuit is expected to result in a settlement, it’s worth emphasizing that there are still many unanswered problems around IP usage in the context of NFTs.
In recent weeks, we’ve been keeping a close eye on the continuing struggle between fashion house Hermes and NFT designer and ‘MetaBirkins’ creator Mason Rothschild. Previously, the fashion label served Rothschild with a cease-and-desist letter on his successful NFT series, which Rothschild publicly declined. In the most recent development, Hermes has chosen to sue Rothschild. The case is widely seen as one that could establish the standard for NFT IP usage in the coming years.
