The moment a firm like Nike uses its right to take legal action against anyone who uses its trademark without authorization, violators beware.
For the first time, Nike is suing to “destroy” NFTs. An NFT is a type of cryptocurrency that has a system which permanently records them on the Ethereum blockchain.
Nike NFT Selling Breach
Detroit-based StockX is a platform that allows consumers to purchase and sell second-hand products, including Nike sneakers. However, it is at the center of the investigation. NFT copies of the Nike Dunk, Jordan 1, and other shoe lines have become increasingly popular. It was since StockX began selling them a few months ago.
A receipt that clients can redeem for a pair of tangible sneakers is what StockX refers to as a Vault NFT. The clients must surrender the NFT if they decide to redeem it.
To be fair, it’s not surprising that brand-conscious Nike rejects StockX’s “receipt” hypothesis for NFTs. This is despite Nike has announced recently its own partnership with NFT studio RTFKT. The NFTs are trademark infringement for the shoe company.
The Nike brand launched a federal lawsuit against StockX last month, alleging that the latter had plagiarized its trademark to take advantage of the “gold rush market” for NFTs. Few people appear interested in redeeming the NFTs for shoes. According to the corporation, StockX sold many of the NFTs for over $1,000. This is a good point of the corporation.
Nike Demands Compensation
Nike wants StockX to hand over its revenues and stop selling NFT sneakers as a form of compensation for allegedly violating its trademarks. In addition, Nike is seeking a judge’s order to direct that StockX. They should force StockX to submit to Nike for destruction of any Vault of NFTs.
The University of New Hampshire’s trademark law professor, Alexandra Roberts, says it’s customary for firms to request the destruction of goods that infringe on their intellectual property. However, what the brand owner seeks to eliminate will influence the court’s decision. It will be whether or not to grant the order.
Roberts made a statement about the NFT process. When talking about things like restaurant signs, menus, napkins, and food packaging, the degradation of materials can feel reasonable. On the other hand, the public may see it wasteful if the rule says to set the items on fire or to melt down the jewelries.
StockX Survives for the Meantime
Since the courts have never had to deal with this issue previously, there is no definitive answer if Nike included NFTs in the issue. The question of how Nike will destroy the StockX NFTs remains even if the New York court orders their destruction.
This means that StockX has inscribed the NFTs on Ethereum. As a result, they are indestructible unless developers agree to fork the blockchain and remove them from the public ledger. However, this is exceedingly improbable.
According to some, Nike should transfer NFTs to a “burner wallet”. Crypto enthusiasts thought this to be the most feasible solution. This wouldn’t kill them, but it would accomplish the same goal.
Because digital designers can’t move NFTs any longer, the optimum solution for a brand that wants them destroyed may be for the NFTs to be sent to a burn address. This is the argument of the Fashion Law Blog.
Nike’s Response Still Awaited
If Nike is seeking to destroy the NFTs, trademark scholar Roberts believes they have a good case. For not only do NFTs last considerably longer than outfits or shoes, they may be re-sold several times without depreciating in the metaverse environment. It’s akin to luxury brands grabbing counterfeit items and then storing them in a protected warehouse before destroying the key.
The company has ignored repeated requests for Nike and its lawyers. They were waiting for a reply to questions about what the company plans to do with the NFTs if it wins. This could be boilerplate language from previous StockX trademark lawsuits if the lawyers haven’t fully thought the issue through.
In this case, if the judge sides with Nike and orders the destruction of the NFTs, it will be interesting to see whether the company employs a burning wallet. On the other hand, they can use the same address. In the future, there may be users who would fill blockchain wallets with counterfeit and unauthorized luxury goods.
“The opinions voiced in this Cryptocurrency news article are solely those of the individuals quoted or interpretations of the author. These opinions & interpretations are not necessarily endorsed by Your Crypto Banker or its subsidiaries.”
