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Nike Inc. escalated its legal battle with the sneaker Marketplace StockX. Nike claimed to have purchased four counterfeit Nike pairs from the platform despite the company's promises to only market authentic sneakers.
This lawsuit over the reseller giant marks the second time Nike has sued the Marketplace. The first lawsuit was made back in February 2022 over an NFT trademark infringement, whereas the second lawsuit filed on May 10, 2022, was over the issue of selling fake Air Jordans, one of Nike's most famous footwear lines.
Nike x StockX's counterfeit sneakers drama explained in detail
Nike Inc.'s ongoing battle with the reseller giant has entered a new phase with the added counterfeit sneakers lawsuit. One of the world's most famous sportswear makers asked a federal judge to let it add claims of false advertising and counterfeiting over the ongoing trademark infringement lawsuit against the sneaker reseller marketplace.
They claimed to have purchased four sneakers from the site, and despite their authentication certificate, they received four fake copies of the sneakers. The four counterfeit shoes included the silhouettes, Air Jordan 1 Retro High OF from the reseller giant placed between December and January.
In a court filing, Nike claimed,
"But despite StockX's numerous guarantees of authenticity, Nike recently obtained four confirmed pairs of counterfeit 'Nike' shoes, which were purchased within a two-month period on StockX's platform," Nike argued in court documents filed Tuesday.
The label further added to their statement claiming that the reseller marketplace's promises have been fake,
"StockX affixed its “Verified Authentic” hangtag to each pair of counterfeit shoes and included a paper receipt in the shoe box stating that each pair of counterfeit shoes is “100% Authentic." At least one pair of those counterfeit shoes are the same style as one of the infringing Nike-branded Vault NFTs," read the complaint.
The reseller marketplace giant indefinitely denied these claims and reverted to the statement on Wednesday, May 11, 2022, claiming they take customer protection extremely seriously. They further claimed,
"We've invested millions to fight the proliferation of counterfeit products that virtually every global marketplace faces today. Nike's latest filing is not only baseless but also is curious given that their own brand protection team has communicated confidence in our authentication program, and that hundreds of Nike employees – including current senior executives – use StockX to buy and sell products," StockX said in a statement sent to NPR.
Not only did they claim this, they further stated that their new allegation is to resuscitate their previously losing legal case, and it is entirely baseless,
The move by Nike “amounts to nothing more than a panicked and desperate attempt to resuscitate its losing legal case against our innovative Vault NFT program that revolutionizes the way that consumers can buy, store, and sell collectibles safely, efficiently, and sustainably. Nike’s challenge has no merit and clearly demonstrates their lack of understanding of the modern marketplace," claimed StockX.
Nike, therefore, proposed these allegations over the reseller giant counterfeiting activities and misleading claims regarding "proprietary" authentication progress.
The company has authenticated every product sold through the marketplace. The marketplace claims that when a sale goes through, the seller's items are submitted to the reseller company's committee to be verified. If deemed authentic, the product is shipped to the buyer, and the seller receives a payout.
However, if the item isn't verified, the order will be canceled entirely. This process is one of the main reasons behind the success of the sneaker reseller giant and its new level over competitors like eBay.
These factual statements by Nike add to the original five causes of action. The sixth cause of action is added for counterfeiting, while the seventh cause of action is claimed for false advertising.
The court has yet to determine whether these new allegations are true. The lawsuit will be a significant loss for the reseller marketplace if the statement is confirmed, as the company has always claimed to sell only original products.
Nike x StockX's previously filed Infringement lawsuit drama explained in details
Nike previously sued the reseller giant in federal court in Manhattan’s southern district of New York on February 3, 2022, accusing the marketplace of trademark infringement and selling NFTs of its trademark in the virtual world without authorization. They further accused the sneaker reseller giant of "blatantly freeriding" on Nike's popularity and trademarks. They complained in a court filing, stating,
“Nike did not approve of or authorize StockX’s Nike-branded Vault NFTs.” “Those unsanctioned products are likely to confuse consumers, create a false association between those products and Nike, and dilute Nike’s famous trademarks,” reads the complaint.
StockX sold those NFTs to give their loyal customers a physical version of those shoes soon as the product is available. Nike claimed it was nothing more than a freeride for the reseller company.
The complaint further added that the reseller giant has sold more than 500 Nike NFTs in the previous month, aka January, which led customers to question the legitimacy of the Nike brand's value itself and destroy its market value.
Nike said they are planning on stepping into the metaverse with the digital art studio RTFKT in partnership, which they did on April 22, 2022.
The StockX site's original NFT description on the website read,
"Each Vault NFT is backed by a physical item held in StockX's custody, tied directly one-to-one via the blockchain,".., "This means that if you buy an edition of a Vault NFT, you are the owner of the corresponding physical good which secured and stored in StockX's Vault."
The statement explained how the reseller giant's vault NFTs work. They further complained over the high value of reseller prices at the site. They gave an example of a Nike Dunk Low pair in black and white. The original retail price of the shoe, which was $282, was being offered at the reseller market's NFT version for $809.
The lawsuit demanded that the reseller giant be prohibited from selling NFT with Nike's advert and pay for the already suffered damage by the sportswear giant's label.
StockX, in turn, argued that these NFTs are not digital sneakers but a simple listing of physical sneaker stores in the vault of the marketplace which customers can trade.
As an online marketplace, the label allows its users to shop for handbags, streetwear, and, most notably, sneakers, heavily marketed by the reseller giant. The marketplace has become a destination for many sneakerheads, which helps them find a pair sold out before they can buy them at retail prices from Nike manufacturers or the original retailers.
The case filed is Nike Inc. v StockX LLC, 22-cv-983, U.S. District Court, Southern District of New York.
