• by Steven Rosenbaum , Featured Contributor, April 4, 2022

So the first question is: Do you buy used sneakers? The sneaker collectible market is red hot, and StockX is a leader in the fast-growing $14 billion market. StockX is a $4 billion company already. The space is projected to reach $98 billion by 2027, as reported by ResearchAndMarkets.com.

If this doesn’t make sense, think about it this way: trading cards. Remember when they were a thing you bought for fun? Now they’re tradable, collectible and valuable.

“There are a lot of similarities between NFTs and trading cards,” Josy Luber, the CEO of StockX, told Fortune. “These are financial assets that are supply-and-demand-driven, they have market-based pricing unlike consumer packaged goods, and they have long-term value as a collectible and an asset.”

So when the sneaker and streetwear resale platform StockX found itself looking at new markets, the NFT space seemed like a logical expansion.

StockX launched its Vault NFTs in January 2022. Among the NFTs they put up for sale were Nike sneaker images. A month later, Nike fired back, suing StockX on multiple grounds, including trademark infringement and reputational damage.

The NFTs, indicated by realistic shoe imagery, certify ownership of and can be exchanged for, the physical item.

The lawsuit charges that StockX “was blatantly freeriding” on Nike’s trademarks with branded NFTs that consumers could reasonably assume were valuable assets authorized by Nike.

StockX fired back, saying that it was a “mischaracterization of the service StockX offers through [its] NFT experience,” and that the NFTs merely depict proof of ownership of physical goods stored in its vault.

This lawsuit is interesting  because it calls into question the ownership of images, and how owners of brands and copyright can reasonably expect to control the value of their brands in the NFT space.

StockX argues that the use of Nike sneaker images in connection with StockX Vault NFTs is “no different than major e-commerce retailers and marketplaces who use images and descriptions of products to sell physical sneakers.”

For fashion retailers who fiercely protect their brands and copyright, this question has huge financial implications.

Hermès filed suit against an artist for a series of “MetaBirkin” NFTs, which are digital versions of bags that look like Hermès Birkin bags.

Nike has been at the forefront of these issues. In October it filed trademark applications for its virtual goods. Nike acquired Rtfkt, a digital art studio, and released branded NFTs in December.

StockX makes the distinction,saying its tokens facilitate trading shoes stored in the vault, and that the NFTs are "absolutely not 'virtual products' or digital sneakers.” And says furthermore: Nike has a “fundamental misunderstanding” of nonfungible tokens.

StockX is set to go public this year. The company said in April 2021 that it was valued at $3.8 billion.

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