Counterfeit Products

Nike Files Suit Against Michigan Sellers for Fake Sneakers, NFTs

Nike is stepping up its legal fight with StockX, an online streetwear and sneaker resale marketplace. Earlier this month, Nike alleged that the Michigan-based reseller sold counterfeit sneakers. Back in February, the company filed another lawsuit, claiming that StockX is engaging in trademark infringement by using Nike’s trademark to sell digital versions (non-fungible tokens or NFTs) of Nike sneakers.

The counterfeit claim is ironic since StockX’s main business is the authentication of sneaker brands. The $3.8 billion resale marketplace is a middleman between sellers and buyers. When a customer purchases a pair of sneakers, the seller ships them to StockX first, to authenticate the brand. Often, the sneakers are from major brands like Nike, Reebok, New Balance or Adidas. StockX claims to have a 99.96% accuracy rate; however, according to the complaint, counterfeit sneakers are being sold to customers.

According to the legal filing, several pairs of sneakers that were said to have been authenticated have in fact been knock-offs. In their defense, StockX has stated that it invested millions of dollars toward fighting the explosion of counterfeit products. The company calls Nike’s lawsuit “baseless.” They also say that hundreds of Nike staff members buy and sell products on StockX.

The battle began in February, just after StockX introduced its Vault NFT service. The NFTs, which look like digital images, show proof of ownership of the physical item. With NFTs, customers can easily trade sneakers and store rare products in the vault. Nike maintains that these NFTs were created, marketed and sold without consent—and that one NFT was of a counterfeit pair of Air Jordans.

The lawsuit states that the StockX online marketplace has sold 550 Nike-branded NFTs and has minted an additional 2,000. Other NFT products being offered include sneakers from New Balance and Adidas, action figures and valuable Pokémon cards.

StockX accuses Nike of being out of touch with the current marketplace, and Nike has asked the court to stop StockX from selling NFTs with Nike-owned trademarks and counterfeit Nike sneakers and to stop making false claims about the authenticity of their products.

The resale industry, currently valued at $2 billion in the U.S., has to potential to be as much as $30 billion by 2030.

MLive Michigan – May 31, 2022 – Rose White

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