Nike Wants to Destroy Knockoff NFTs — Buyers Beware
Nike wants to destroy unauthorized NFTs (non-fungible tokens). Will it work, and what will happen to Nike knockoff NFT owners? Buyers need to beware.
Apr. 1 2022, Published 10:48 a.m. ET
Shoe and apparel giant Nike Inc. (NKE) announced last month it's cutting ties with the majority of its retail store partners to focus on e-commerce sales—but there’s one kind of digital transaction that the brand wants to kill. Nike wants to “destroy” an NFT (non-fungible token) collection that uses images of its products and branded swoosh without permission.
The unauthorized NFT sales stem from StockX, and Nike is taking them to court over the tokens. This is new legal territory without a cut-and-dry solution, but owners of Nike NFTs should still beware.
StockX is selling NFTs of Nike and other shoes.
Based in Detroit, StockX started as a haven for sneakerheads and apparel collectors. Sneakers, especially those from brand Nike, became the most popular offering, so StockX decided to make NFTs out of them. Now, the company is part NFT marketplace, part traditional collectible platform.
Each NFT features a shoe, like types of Nike, Yeezy, Puma, and New Balance sneakers. For Nike, offerings include retro styles like Dunk Low, Jordan 1, and Air Jordan. Each token represents ownership of a physical pair of shoes, which are displayed as an image on the NFT smart contract. You can sell your NFT on StockX or redeem it for the physical pair, which StockX stores in its “vault.” Asking prices for Nike NFTs range from $200 to $9,000+.
Nike wants StockX to cease and desist NFT sales.
Like any unauthorized use of its branding, Nike wants StockX to halt sales. However, these are NFTs we are dealing with No legal precedent has been set for how to enforce existing cease-and-desist laws in regards to NFTs.
Regardless, Nike says it’s trademark infringement and wants StockX (and any other unauthorized Nike NFT seller) to destroy the NFTs. Nike likely won’t back down. Its recent partnership with NFT studio RTFKT suggests the brand wants to push its own line of NFTs without knockoff competition.
Will the law oblige and destroy unauthorized NFT sales?
StockX Nike NFTs can serve as a type of receipt for a physical pair. However, buyers so far have largely ignored that aspect and used the NFTs to trade for higher values than they purchased them at. Because of this, it’s possible courts will oblige and deem the Nike NFTs as trademark infringement.
The StockX NFTs trade on the Ethereum blockchain, which means they’re indestructible except in the most extreme circumstances. However, Nike may be able to get StockX to burn the smart contracts so they can’t be traded anymore.
Nike NFT owners should hedge their bets.
The court could swing one way or the other on this, but one thing is clear. Owning a Nike NFT holds greater risk than other NFTs since the unauthorized token could be destroyed (or at least incapacitated on the blockchain).
It may be best to trade for a profit sooner rather than later. If you want to hold your unauthorized NFT in the hopes it gains more value, consider managing the risk in your alternative assets portfolio with other, more reliable investments. All NFTs carry risk because of their speculative nature, but those that don’t toe the line of trademark infringement may be a smidge less risky.
