The names Nike and Hermes rarely appear in a sentence together, even when discussing fashion apparel. But the explosion in popularity of non-fungible tokens (or more simply, NFT’s) has made them strange bedfellows.
Athletic shoe and apparel manufacturer Nike has filed a trademark infringement lawsuit against StockX for its creation and sales of an NFT based on Nike sneakers. French luxury brand Hermes has done likewise against Mason Rothschild. The cases were filed in different U.S. district courts (Nike in New York and Hermes in California), but many of the issues that will decide their outcome are the same.
Based in Detroit, StockX bills itself as an online marketplace and clothing reseller, primarily of sneakers, founded by Dan Gilbert, Josh Luber, Greg Schwartz, and Chris Kaufman in 2015.
Rothschild is a Los Angeles-based digital artist.
Nike’s lawsuit alleges that StockX has used Nike sneakers and the Nike brand name to promote the sale of NFTs without Nike’s permission and by so doing is infringing Nike’s trademarks and diluting the value of the brand name. StockX responds by claiming it is merely reselling Nike sneakers it purchased and has the right to promote them by using the Nike name. In an oddly worded offering for their sale to “investors,” the StockX NFTs feature images of limited-edition Nike sneakers and seem to offer a promise that purchasers may be entitled to physical manifestations of the sneakers at an undisclosed future date.
The Hermes suit seeks to stop Rothschild’s use of Hermes’ BIRKEN trademark as part of its description of the NFTs being sold under the name METABIRKEN using a website set up at “metabirken.com.” So far, Rothschild has declaimed any pecuniary motivation and instead relied upon a defense that his word constitutes “artistic expression.”
Both suits also seek recovery of unspecified monetary damages and attorney’s fees.
Why It Matters. Nike and Hermes are not alone in their quest to stop the unauthorized use of their IP by third parties hoping to cash in on the wildfire popularity of NFTs. However, there is no case law on point as well as no legislation directly governing what can and cannot be created and sold as an NFT. Traditional concepts of IP ownership and control, free speech, consumer protection, and false advertising will almost certainly come into play, should either case make it to trial, but both cases serve as stark reminders that anyone seeking to use IP they don’t own or have permission to use runs a very real risk of being sued.