One thing we’re definitely going to see a lot more of in the NFT space is lawsuits. From artists suing NFT marketplaces that sell their stolen works, NFT owners suing marketplaces after their assets are stolen, and much more.
When you take a concept as novel as NFTs and an industry that is bringing in billions of dollars, someone is bound to have a dispute and more than a few people will find themselves in court.
One of the most prominent NFT-related lawsuits is between Nike, a global apparel brand and StockX, a popular sneaker reseller. The current legal scuffle has taken a turn as StockX has claimed in court that Nike’s lawsuit is without merit.
The History of the Case
So, how did StockX and Nike end up in court in the first place? This all began in January 2022 when StockX announced its Vault NFT series. This series essentially saw the site sell 9 limited edition sneakers that were attached to NFTs.
The benefit of this was that sneakers could easily be resold even without the physical product being available just yet. 8 out of the 9 limited edition sneakers being resold were Nikes and this is where the dispute began.
Nike then brought a lawsuit against StockX, initially claiming that the site was infringing on copyright and then claiming that there was the possibility of StockX selling counterfeit products on their site which could affect Nike.
In response to this, StockX has claimed that it has a very thorough authentication program that uses both human and AI inspection. StockX’s legal team has also pointed out that Nike, prior to the lawsuit, had praised the system.
Now, there is a dispute regarding the vault NFTs and whether or not StockX is selling virtual assets of Nike products, which they would not have the legal right to do so. StockX has claimed in court that the NFTs act as more of a digital receipt and a stand-in for the product and not the product itself.
But Nike has argued that because the NFTs can be traded repeatedly without the physical product it is attached to being moved, it is the product being sold and thus, StockX is in violation of trademark laws.
StockX has hit back claiming that Nike’s claims are meritless and that they have done nothing wrong. The case is still ongoing.
The Worth of an NFT
This lawsuit goes beyond just Nike and StockX and the Vault NFT series. At its core, it is a dispute about when and if NFTs constitute assets. Many NFT collections are tied with tangible assets but it is typically understood that one of the two is the main asset being paid for, with the other being an add-on.
While the NFT sector has accepted this, its legal limitations are being tested in court. Regardless of its outcome, this case will likely set the stage for how trademarked goods can be sold along with NFTs.