StockX claims Nike has 'fundamental misunderstanding' of NFTs in lawsuit
StockX responded to Nike’s February lawsuit against its NFT program by claiming that the sportswear giant has shown a “fundamental misunderstanding” of NFTs.
The response raises new questions about how digital products are classified and valued.
Vault NFTs were introduced by StockX in January to allow clients to buy and trade sneakers without having to handle the physical item. The NFTs, which are represented by realistic shoe graphics, authenticate ownership of the physical item and can be swapped for it.
They also provide clients with access to StockX releases, promotions, and events, and are frequently sold for more than the physical counterpart's cost.
According to Nike's lawsuit, StockX "was openly freeriding" on Nike's trademarks with branded NFTs that buyers would mistake for valuable assets authorized by Nike.
In its filing, Nike’s alleged that StockX has chosen to compete in the NFT market not by taking the time to develop its intellectual property rights, but rather by blatantly freeriding, almost exclusively, on the back of Nike's famous trademarks and associated goodwill, while also noting that this is done without permission or approval.
StockX immediately responded, claiming that the lawsuit was a "mischaracterization of the service StockX offers through [their] NFT experience," and that the NFTs just display proof of ownership of tangible objects housed in its vault.
StockX has now replied in court that Vault NFTs are neither "virtual items" nor "digital footwear," that the program saves customers "time and money while decreasing the environmental impact of shipping," and that StockX customers use the platform to trade products for investment purposes.
According to StockX, selling Nike sneakers using StockX Vault NFTs is no different than selling physical sneakers through major e-commerce stores and marketplaces that employ images and descriptions of things to sell physical sneakers that consumers view every day.
The difference that may be claimed is that most buyers do not pay to obtain product photos.