Nike has asked a New York federal court to allow it to amend the complaint that it filed against StockX early this year over the resale marketplace’s allegedly infringing “Vault” NFTs, asserting that since it lodged that complaint, “additional facts transpired or were discovered that are highly relevant to [its] claims against StockX.” In addition to entering into the non-fungible token (“NFT”) market since the filing of its suit by way of a venture with its RTFKT brand, the Beaverton, Oregon-based sportswear behemoth claims that it has purchased a number of pairs of counterfeit “Nike” sneakers from the StockX platform, and all the while, StockX has altered its terms for the “Vault” NFTs, giving rise to the need for Nike to make relevant amendments to its original filing.
In the 25-page memo of law in support that it filed with the U.S. District Court for the Southern District of New York on Tuesday, counsel for Nike seeks leave to amend the complaint that it filed against StockX in February, in which it accused the fashion and footwear resale platform of trademark infringement, trademark dilution, and unfair competition. Since it lodged that complaint, Nike claims that there are “multiple facts that occurred or were discovered” that are directly related to its claims against StockX.
Primarily, Nike argues that “StockX has made a series of modifications to its representations surrounding [the] Vault NFTs” at the center of the case. For example, Nike states that after it “shined a spotlight on several problematic and deceptive terms governing the infringing Nike-branded NFTs, StockX deleted and/or replaced those terms.” StockX also allegedly “modified Vault NFT marketing that, e.g., promised owners of the infringing Nike-branded NFTs exclusive StockX benefits.” While these changes “do nothing to excuse StockX’s ongoing infringement of Nike’s marks or to resolve its past infringement and, indeed, by the time those modifications were made, StockX had already offered for sale, sold, and/or released into the stream of commerce all of the infringing Nike-branded NFTs,” Nike argues that StockX’s “revisionary conduct is, nonetheless, relevant to [its] claims,” and thus, should be included in an amended complaint.
Beyond that, Nike says that its own position has changed since it filed suit, as it has since entered the NFT market, a fact that is critical to the likelihood of confusion analysis. “Two key factors in the likelihood of confusion analysis are ‘proximity of the products and their competitiveness with one another’ and evidence that the senior user may ‘bridge the gap’ by developing a product for sale in the market of the alleged infringer’s product,” Nike asserts. “Sure enough, after Nike’s drop of these NFTs, additional actual confusion between the parties’ occurred because of StockX’s infringing Nike-branded NFTs.”
Finally, Nike proposes supplementing its pleadings with additional allegations – and two addition causes of action – centering on its alleged purchase of “four confirmed pairs of counterfeit ‘Nike’ shoes” from the StockX platform. Despite “StockX’s numerous guarantees of authenticity,” and its argument that each of the Vault NFTs functions as “a ‘claim ticket’ to a pair of Nike shoes that StockX authenticated using its ‘proprietary, multi-step authentication process,’” Nike claims that it purchased the counterfeit sneakers “within a two-month period on StockX’s platform.”
“At least one pair of those counterfeit shoes are the same style as one of the infringing Nike-branded Vault NFTs,” Nike asserts.
In addition to seeking to include factual allegations about how StockX is “actively and directly selling counterfeit goods on its platform,” Nike says that it is looking to add counterfeiting and false advertising causes of action to its original five causes of action. Nike claims that it has a claim for false advertising in light of StockX’s practice of “guaranteeing [its] sales as ‘100% Verified Authentic’ based on its ‘proprietary’ authentication process when they are not,” and give that “those statements are material to [consumers’] purchasing decisions.”
As support for proposed inclusion of counterfeiting and false advertising claims, Nike asserts that “a court in this District recently denied a Rule 12(b)(6) motion to dismiss nearly identical causes of action for counterfeiting and false advertising.” The case that Nike is referencing is Chanel v. The RealReal (“TRR”), in which the court held that “Chanel has adequately averred that its own investigation revealed that TRR marketed and sold counterfeit Chanel products, and Chanel has also alleged that TRR’s own customers have complained about the receipt of counterfeit merchandise.”
In the case at hand, just as Chanel asserts in its case against TRR, Nike argues that it sets out “plausible claims for counterfeiting and false advertising because the proposed [amended complaint] sufficiently alleges that StockX has been and is currently dealing in counterfeit Nike goods, which renders false and/or misleading StockX’s ‘100% Verified Authentic’ claims and its claims about the ‘proprietary multi-step verification process’ it employs to authenticate goods.”
Nike also contends that it “sufficiently alleges that StockX is knowingly deceiving consumers with these false and/or misleading statements about the authenticity of the Nike goods for sale on its platform, continuing to engage in such improper and unlawful business practices to attract consumers to its platform and induce consumers to purchase supposedly genuine Nike goods and purchase and trade the infringing Nike-branded Vault NFTs.” And still yet, Nike alleges that “the continued sale of counterfeit Nike goods on StockX’s platform and StockX’s false and/or misleading claims about its authentication process has caused and is causing Nike injury as a result of, inter alia, harm to reputation, diverted sales, consumer confusion, dilution, and tarnishment of its valuable trademarks.”
For the foregoing reasons, Nike requests the Court grant it leave to file a first amended complaint.
In a statement in response to Nike’s filing, a spokesman for StockX stated on Wednesday, “We take customer protection extremely seriously, and 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. This latest tactic 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.”
The case is Nike, Inc. v. StockX LLC, 1:22-cv-00983 (SDNY).