Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 1 of 50
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`UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF NEW YORK
`
`NIKE, INC.,
`
`v.
`
`STOCKX LLC,
`
`Plaintiff,
`
`Case No. 22-cv-___________
`
`COMPLAINT
`
`Defendant.
`
`JURY TRIAL REQUESTED
`
`Plaintiff Nike, Inc. (“Nike” or “Plaintiff”) for its Complaint against Defendant StockX LLC
`
`(“StockX” or “Defendant”) for trademark infringement, trademark dilution, and related causes of
`
`action alleges as follows:
`
`PRELIMINARY STATEMENT
`
`1.
`
`This lawsuit arises from Defendant StockX’s unauthorized and infringing use of
`
`Nike’s famous marks in connection with StockX’s entry into the Non-Fungible Token market.
`
`Non-Fungible Tokens or “NFTs” have quickly become pervasive in their use by brand owners
`
`seeking to enter the nascent marketplace of virtual or digital products connected to a token on the
`
`blockchain. NFTs are commonly understood to be blockchain-based virtual products that can be
`
`collected, sold, and traded in the marketplace. They are an exciting way for brands to interact with
`
`their consumers in and out of the “metaverse,” and diverse commercial applications of NFTs have
`
`emerged throughout the past two years. Far more than a fleeting trend, NFTs are part of the future
`
`of commerce.
`
`2.
`
`Unfortunately, novel product offerings, burgeoning technologies, and gold rush
`
`markets tend to create opportunities for third parties to capitalize on the goodwill of reputable
`
`brands and create confusion in the marketplace. NFTs are, not surprisingly, no exception to the
`
`rule, and this new frontier has swiftly become a virtual playground for infringers to usurp the
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 2 of 50
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`goodwill of some of the most famous trademarks in the world and use those trademarks without
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`authorization to market their virtual products and generate ill-gotten profits.
`
`3.
`
`Enter Defendant StockX, the operator of an online resale platform for various
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`brands of sneakers, apparel, luxury handbags, electronics, and other collectible goods that purports
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`to provide authentication services to its customers. StockX publicly touts the fact that Nike
`
`products drive more sales on its e-commerce platform than any other brand, and StockX
`
`advertisements and social media accounts are teeming with images of Nike goods. Recognizing
`
`firsthand the immense value of Nike’s brands, StockX has chosen to compete in the NFT market
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`not by taking the time to develop its own intellectual property rights, but rather by blatantly
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`freeriding, almost exclusively, on the back of Nike’s famous trademarks and associated goodwill.
`
`4.
`
`Specifically, without Nike’s authorization or approval, StockX is “minting” NFTs
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`that prominently use Nike’s trademarks, marketing those NFTs using Nike’s goodwill, and selling
`
`those NFTs at heavily inflated prices to unsuspecting consumers who believe or are likely to
`
`believe that those “investible digital assets” (as StockX calls them) are, in fact, authorized by Nike
`
`when they are not. Unlike its e-commerce business which caters to buyers and sellers of goods
`
`originating from various companies, nearly all the NFTs minted by StockX to date are Nike-
`
`branded NFTs, yet none of those NFTs originate from Nike. Examples of StockX’s infringing
`
`NFTs appear below:
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`-2-
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 3 of 50
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`5.
`
`StockX claims that its “100% Authentic” Nike-branded “Vault NFTs” do no more
`
`than track ownership of a physical Nike product safely secured in its “vault.” But StockX’s Vault
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`NFTs are far more than just physical Nike shoes, and StockX’s claim that a Vault NFT exclusively
`
`functions as a traceable digital receipt is belied by its statements. Those statements reflect the fact
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`that StockX’s Nike-branded Vault NFTs, whose purchasers can trade or collect and display in their
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`portfolio, are new virtual products that StockX has bundled with additional StockX services and
`
`unspecified benefits (“exclusive access to StockX releases, promotions, events”). Nike does not
`
`sell StockX’s services or exclusive access to such benefits. Yet StockX’s new virtual products
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`have been created, marketed, offered for sale, and sold by StockX using Nike’s trademarks without
`
`Nike’s consent.
`
` And, according
`
`to StockX,
`
`it
`
`is “just getting started.”
`
` See
`
`https://stockx.com/about/stockx-launches-vault-nfts/.
`
`6.
`
`Just as troubling are other StockX statements that appear to negate StockX’s
`
`primary claim that a Vault NFT can be readily traded in for the associated physical shoes stored in
`
`a StockX facility. For example, while StockX claims that Vault NFT owners may “redeem” the
`
`NFT and take possession of the shoes (for an additional fee), it also states that “the redemption
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`process is not currently available” to NFT owners. StockX also, shockingly, retains the right to
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`unilaterally redeem a Vault NFT for a so-called “Experiential Component,” and take away the
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`NFT, completely depriving the Vault NFT owner of possession of the shoes that are supposedly
`
`connected to the NFT.
`
`7.
`
`Nike did not approve of or authorize StockX’s Nike-branded Vault NFTs. Those
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`unsanctioned products are likely to confuse consumers, create a false association between those
`
`products and Nike, and dilute Nike’s famous trademarks. Indeed, consumers are already
`
`questioning whether Nike authorized StockX to sell its infringing NFT products, asking how
`
`-3-
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`StockX received “the licensing to sell NFTs with [N]ike branding.” See Paragraph 82, infra.
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`StockX’s misappropriation of Nike’s famous trademarks and goodwill to buoy its entry into the
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`lucrative NFT and digital collectible market deprives Nike of its exclusive right to use its marks
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`in connection with this new commercial medium. In addition, the Vault NFTs’ inflated prices and
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`murky terms of purchase and ownership, as discussed further below, have already led to public
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`criticism of StockX and allegations that the Vault NFTs are a scam. StockX’s prominent use of
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`Nike’s trademarks in connection with these dubious virtual products has already generated
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`negative associations with Nike in a way that harms Nike’s reputation and the immense goodwill
`
`that Nike has amassed in its brands. Consumers have even attributed StockX’s conduct to Nike,
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`with one consumer expressing that the Vault NFTs are “just a stupid scam for Nike to make
`
`money.” See Paragraph 84, infra (emphasis added).
`
`8.
`
`Despite StockX’s prominent use of Nike’s trademarks in connection with the Vault
`
`NFTs, Nike has no control over the quality of the Vault NFTs whatsoever. Nike has no say in how
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`many Vault NFTs bearing its trademarks are released, where the Vault NFTs are released and
`
`traded, when the Vault NFTs are released, how the Vault NFTs are released, traded, or redeemed,
`
`and at what price the Vault NFTs are sold.
`
`9.
`
`Nike’s widely publicized December 13, 2021 acquisition of RTFKT, a digital art
`
`and collectible creative studio, demonstrates its recent investment in NFT technology and services,
`
`but Nike has been using its famous trademarks in connection with virtual goods and digital
`
`applications for years. Given Nike’s longstanding use in this space, StockX’s unauthorized and
`
`unapproved branding of Vault NFTs with Nike trademarks is all the more likely to confuse
`
`consumers, create a false association between the parties, jeopardize the capacity of Nike’s famous
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`marks to identify its own digital goods in the metaverse and beyond, and harm Nike’s reputation
`
`-4-
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 5 of 50
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`through an association with inferior digital products. Nike therefore requests that the Court swiftly
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`and permanently stop StockX from continuing to sell Vault NFTs bearing Nike’s famous marks.
`
`THE PARTIES
`
`10.
`
`Nike is a corporation organized under the laws of the State of Oregon with a
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`principal place of business at One Bowerman Drive, Beaverton, Oregon 97005.
`
`11.
`
`On information and belief, StockX LLC is organized as a Michigan LLC with its
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`principal place of business located at 1046 Woodward Avenue, Detroit, Michigan 48226. StockX
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`LLC is an online marketplace and reseller of sneakers, streetwear, electronics, luxury handbags,
`
`and other collectibles. StockX maintains various offices and/or facilities located in New York,
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`California, and Oregon, including a store and drop-off facility located at 237 Lafayette Street, New
`
`York, New York 10012.
`
`12.
`
`On information and belief, StockX is the owner and operator of https://stockx.com
`
`(the “StockX Website”) and StockX mobile application (the “StockX App”), where StockX
`
`conducts, inter alia, its online commercial activities.
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`JURISDICTION AND VENUE
`
`13.
`
`This action arises under the trademark and anti-dilution laws of the United States,
`
`15 U.S.C. § 1051, et seq., and under statutory and common law unfair competition. This Court
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`has subject matter jurisdiction at least under 15 U.S.C. § 1121 and 28 U.S.C. §§ 1331 and 1338
`
`because this action arises under federal trademark law. This Court has supplemental jurisdiction
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`over the remaining claims pursuant to 28 U.S.C. § 1367.
`
`14.
`
`This Court has personal jurisdiction over StockX because StockX has committed,
`
`and continues to commit, acts of infringement and dilution in this District, has conducted, and
`
`continues to conduct, business in this District through the StockX Website, StockX App, and a
`
`-5-
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 6 of 50
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`physical store, offices and/or facilities located in this District, and/or has engaged in continuous
`
`and systematic activities in this District.
`
`15.
`
`Personal jurisdiction is proper pursuant to N.Y. C.P.L.R. § 302(a) because StockX
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`regularly conducts, solicits, or transacts business in New York and in this District. StockX created
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`the StockX Website and StockX App, which are accessible to consumers in New York, and direct
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`unauthorized and infringing uses of Nike’s trademarks into New York and this District. StockX
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`targets New York consumers by operating the StockX Website and StockX App, by operating a
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`physical store and offices and/or facilities in New York, by employing employees in New York,
`
`and by advertising, selling, and offering for sale StockX Vault NFTs through the StockX Website,
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`StockX App, and related social media accounts. Moreover, StockX is actively recruiting
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`employees for several open positions located in New York, New York, including a Director, Real
`
`Estate, a Sr. Engineering Manager – NFT and Checkout, a Senior Manager, NFT Partnerships, and
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`a Technical Lead – Notifications.
`
`16.
`
`Venue is proper in this District pursuant to 28 U.S.C. § 1391(b) because StockX
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`conducts and continues to conduct a substantial and significant amount of business in this District,
`
`a substantial part of the events giving rise to these claims arose in this District, and customer
`
`confusion is likely to occur in this District. Moreover, on information and belief, the locus of
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`StockX’s Vault NFT and Web3 initiative appears to be in this District. For example, StockX’s
`
`Director, Innovation along with the lead software engineer responsible for developing and
`
`launching StockX’s NFT offering are, on information and belief, located in New York. Moreover,
`
`StockX’s January 18, 2021 announcement of its Vault NFT offering was issued by its Editorial
`
`Director based in New York City. See https://stockx.com/news/introducing-nfts-on-stockx/.
`
`StockX is also actively recruiting in this District for employees to join its NFT and Web3 program.
`
`-6-
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 7 of 50
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`As just one example, StockX has postings for the following senior positions located in New York:
`
`Sr. Engineering Manager – NFT and Checkout; and Senior Manager, NFT Partnerships. See
`
`https://boards.greenhouse.io/stockx/jobs/5783991002; and https://web3.career/senior-manager-
`
`nft-partnerships-stockx/15645.
`
`NFTs and Blockchain
`
`FACTUAL BACKGROUND
`
`17. While blockchains have myriad actual and potential uses, a primary use is to serve
`
`as an ecosystem and ledger for blockchain-based assets, like cryptocurrencies (such as Bitcoin
`
`(BTC) and Ether (ETH)) and NFTs. Much like banks track ownership of money in bank accounts
`
`and process transfers from one account to another, storing the information privately, blockchain
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`technology enables the transfer of ownership of cryptocurrencies and NFTs between accounts,
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`storing the information of the transfer of ownership in blocks of data visible for all to see. A
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`distinguishing and touted feature of blockchains is decentralization. Unlike bank or other asset
`
`ledgers, which are typically maintained by one or more larger entities, blockchains can be
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`maintained by innumerable individuals and entities, acting relatively independently but
`
`participating in a coordinated ecosystem. Today there exist many blockchains, the largest of which
`
`supports the Bitcoin cryptocurrency, while the second largest of which, Ethereum, supports a much
`
`broader set of assets, including both the Ether cryptocurrency and NFTs that are stored and traded
`
`on the Ethereum blockchain network.
`
`18. Many blockchain-based assets, like cryptocurrencies, are “fungible.” Like money
`
`in a bank account, each individual coin (or “token”) is not distinguishable from others and is
`
`divisible. For this reason, cryptocurrencies may function as a medium of exchange.
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`-7-
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`19.
`
`By contrast, certain tokens, referred to as “non-fungible tokens” or “NFTs,” are
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`both indivisible and uniquely identifiable. Their movement can be tracked from one blockchain
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`address to another via smart contracts. This feature makes it possible to use NFTs to track
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`ownership or licensed rights over assets, similar to a certificate of ownership or real estate title.
`
`20.
`
`NFTs have been widely used to track ownership over rights (often a limited license
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`for personal use) to a new type of digital collectible, which may be a digital photograph, video,
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`artwork, sound recording, avatar, digital clothing, footwear and other products, or other type of
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`media. These NFT collectibles can be bought, sold, resold, and generally traded on various
`
`platforms.
`
`21. While such NFT collectibles have existed for years, beginning in early 2021 interest
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`exploded. Many prominent apparel and consumer goods brands have successfully launched and
`
`sold NFT collections, incorporating their trademarks, trade dress, and other intellectual property
`
`into artwork associated with each NFT. These NFTs have taken many different forms but have
`
`always closely connected the trademark owner with the digital asset. As further discussed below,
`
`Nike is one such market entrant.
`
`Nike’s Business and Valuable Trademark Rights
`
`22.
`
`Nike’s principal business activity is the design, development, and worldwide
`
`marketing and selling of athletic footwear, apparel, equipment, accessories, and services.
`
`23.
`
`As a result of decades of Nike’s advertising, promotional, and marketing efforts,
`
`Nike has established itself as a multibillion-dollar brand and the world’s leading designer,
`
`marketer, and distributor of athletic footwear and apparel products which are sold in connection
`
`with Nike’s famous trademarks. In addition to spending significant amounts in support of
`
`advertising and promotion of its products and services, Nike conducts successful marketing
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`-8-
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 9 of 50
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`campaigns across various social media platforms, including Facebook, Twitter, YouTube,
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`Instagram, TikTok, and Snapchat, to further promote Nike’s products, services, brands, and
`
`trademarks.
`
`24.
`
`Nike and its brands have achieved widespread recognition and fame throughout the
`
`United States and the world. Among the purchasing public, Nike’s products and services are
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`instantly recognizable and are seen as high-quality, innovative, and dependable.
`
`25.
`
`Nike is the owner of the right, title, and interest in and to, inter alia, the following
`
`trademarks registered on the Principal Register of the United States Patent and Trademark Office
`
`(collectively, the “Asserted Marks”):
`
`Trademark Design
`AIR JORDAN
`(word mark)
`
`DUNK
`(word mark)
`JUMPMAN
`(word mark)
`
`Title
`Reg. No.
`1,370,283 AIR JORDAN
`
`3,725,535 Air Jordan &
`Wings
`Design*1
`3,780,236 DUNK
`
`3,627,820 JUMPMAN
`
`1,558,100 JumpMan
`Design
`
`1,742,019 JumpMan
`Design
`
`Classes
`Reg. Date
`11/12/1985 25- Clothing,
`footwear
`12/15/2009 25- Clothing,
`footwear,
`headgear
`25- Footwear
`
`4/27/2010
`
`9/11/2007
`
`9/26/1989
`
`25- Clothing,
`footwear,
`headgear
`25- Clothing,
`Footwear
`
`12/22/1992 25- Clothing,
`footwear,
`headgear
`
`18- Leather
`and
`imitations of
`leather
`25- Clothing,
`
`978,952
`
`NIKE
`
`NIKE
`
`2/19/1974
`
`1 * indicates unofficial, descriptive title.
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`-9-
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 10 of 50
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`1,214,930 NIKE
`
`1,243,248 NIKE
`
`6,124,779 NIKE
`
`1,238,853 NIKE &
`Swoosh
`Design*
`
`1,325,938 NIKE &
`Swoosh
`Design*
`
`(word mark)
`
`NIKE
`(word mark)
`NIKE
`(word mark)
`
`NIKE
`(word mark)
`
`footwear,
`headgear
`25- Footwear
`
`42- Retail
`footwear and
`apparel
`services
`35- Retail
`store services
`and on-line
`retail store
`services
`42- Retail
`footwear and
`apparel
`services
`25- Footwear
`
`11/2/1982
`
`6/21/1983
`
`8/11/2020
`
`5/17/1983
`
`3/19/1985
`
`5,286,596 NIKE AIR
`VAPORMAX
`Swoosh Design
`
`977,190
`
`NIKE AIR VAPORMAX
`(word mark)
`
`9/12/2017
`
`25- Footwear
`
`1/22/1974
`
`25- Footwear
`
`1,264,529 Swoosh Design
`
`1,323,343 Swoosh Design
`
`1/17/1984
`
`42- Retail
`footwear and
`apparel
`services
`
`3/5/1985
`
`25- Footwear
`
`5,794,674 Swoosh Design
`
`7/2/2019
`
`35- Retail
`store services
`and on-line
`retail store
`services
`
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 11 of 50
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`26.
`
`The above U.S. registrations for Nike’s Asserted Marks are valid, subsisting,
`
`unrevoked, uncancelled, and in full force and effect.
`
`27.
`
`Pursuant to 15 U.S.C. § 1065, of Nike’s Asserted Marks, the following federally
`
`registered Nike trademarks are incontestable and constitute prima facie evidence their validity,
`
`Nike’s ownership, and Nike’s exclusive right to use these marks:
`
`a.
`
`b.
`
`c.
`
`d.
`
`e.
`
`f.
`
`g.
`
`h.
`
`i.
`
`j.
`
`k.
`
`l.
`
`Reg. No. 1,370,283 (AIR JORDAN word mark)
`
`Reg. No. 3,725,535 (Air Jordan & Wings Design mark);
`
`Reg. No. 3,780,236 (DUNK word mark);
`
`Reg. No. 3,627,820 (JUMPMAN word mark);
`
`Reg. No. 1,558,100 (JumpMan Design mark);
`
`Reg. No. 978,952 (NIKE word mark);
`
`Reg. No. 1,214,930 (NIKE word mark);
`
`Reg. No. 1,243,248 (NIKE word mark);
`
`Reg. No. 977,190 (Swoosh Design mark);
`
`Reg. No. 1,264,529 (Swoosh Design mark);
`
`Reg. No. 1,323,343 (Swoosh Design mark);
`
`Reg. No. 1,238,853 (Swoosh Design mark); and
`
`m.
`
`Reg. No. 1,325,938 (Swoosh Design mark).
`
`28.
`
`Nike also owns extensive common law rights in the Asserted Marks for use in
`
`connection with Nike’s goods and services. Nike uses the Asserted Marks on or in connection
`
`with many of its products and services.
`
`29.
`
`Nike’s Asserted Marks identify, in the United States and throughout the world,
`
`high-quality products and services designed, produced, and offered by Nike.
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`30.
`
`Nike intends to continue to preserve and maintain its rights in the Asserted Marks.
`
`Nike has continuously used the Asserted Marks in interstate commerce in connection with the sale,
`
`distribution, promotion, and advertising of genuine Nike goods and services since their respective
`
`dates of first use as noted on the federal trademark registration certificates. And, as discussed
`
`further below, Nike has also used the Asserted Marks in connection with virtual products and
`
`intends to further expand such use as reflected in its pending trademark applications.
`
`31.
`
`As a result of continuous and long-standing promotion, substantial sales, and
`
`consumer recognition, Nike has developed powerful trademarks rights, built substantial goodwill
`
`in the Asserted Marks, and has never abandoned that goodwill. As a result, Nike’s Asserted Marks
`
`have become distinctive and “famous” within the meaning of Section 43(c) of the Lanham Act, 15
`
`U.S.C. § 1125(c).
`
`32.
`
`Having distinctive trademarks that are readily identifiable is an important factor in
`
`creating and maintaining a market for Nike’s products, in identifying Nike and its brands, and in
`
`distinguishing Nike’s products from the products of others.
`
`33.
`
`Nike maintains strict quality control standards for products bearing the Asserted
`
`Marks. Genuine Nike products bearing the Asserted Marks are inspected and approved by Nike
`
`prior to distribution and sale.
`
`34.
`
`Nike also maintains strict control over the use of the Asserted Marks in connection
`
`with its products so that the company can maintain control over its reputation and goodwill. Nike,
`
`for example, carefully determines how many products bearing the Asserted Marks are released,
`
`and when, where, and how those products are sold.
`
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`Nike’s Activities in the Virtual Products Market
`
`35.
`
`Nike has used the Asserted Marks in connection with a variety of physical goods
`
`and associated services for decades. Nike has also for some time incorporated the Asserted Marks
`
`into its virtual products. For example, in October 2019, Nike, through its SNKRS mobile
`
`application, partnered with 2K Sports, makers of the NBA 2K basketball videogame franchise, to
`
`offer “Gamer Exclusives,” limited edition digital and physical Nike sneakers that NBA 2K20
`
`players can unlock through gameplay. See https://news.nike.com/news/nba-2k20-x-nike-gamer-
`
`exclusives.
`
`36.
`
`On October 27 and 28, 2021, Nike filed applications to register the following
`
`trademarks with the United States Patent and Trademark Office for use in connection with, inter
`
`alia, “[d]ownloadable virtual goods, namely computer programs featuring footwear,” (i.e., digital
`
`sneaker NFTs) and “[r]etail store services featuring virtual goods, namely footwear” (i.e., a digital
`
`sneaker NFT trading platform):
`
`a.
`
`b.
`
`c.
`
`d.
`
`e.
`
`NIKE (word mark) (Serial No. 97095855);
`
`JORDAN (word mark) (Serial No. 97096950);
`
` (Serial No. 97096952);
`
` (Serial No. 97096945);
`
` (Serial No. 97095944); and
`
`-13-
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 14 of 50
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`f.
`
` (Serial No. 97096366).
`
`37.
`
`On December 13, 2021, Nike announced that it had acquired RTFKT, a leading
`
`digital art and collectible creative studio that has created some of the most popular apparel-related
`
`digital artwork NFT releases to date, including the CYBERSNEAKER, METAJACKET, and
`
`FEWO Shoes, collectible digital sneakers designed in collaboration with teenage pop artist
`
`FEWOCiOUS. See https://news.nike.com/news/nike-acquires-rtfkt.
`
`38.
`
`On or around January 18, 2022, Nike announced to its employees the formation of
`
`Nike Virtual Studios, a new division that will operate as an independent studio to further develop
`
`Nike’s business around virtual products and partner with its core business to deliver best-in-class
`
`Web3, metaverse, and blockchain-based experiences.
`
`39.
`
`40.
`
`In February 2022, Nike and RTFKT will release a number of virtual products.
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`The Nike initiatives discussed above have been highly publicized and, upon
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`information and belief, StockX has known about Nike’s plans to expand into the NFT market long
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`prior to its January 2022 “Vault NFT” launch.
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`StockX’s Resale Platform
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`41.
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`StockX, like eBay, operates an online marketplace for the resale of sneakers,
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`streetwear, electronics, luxury handbags, and other collectibles accessible to consumers on the
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`StockX Website and StockX App. Upon information and belief, StockX does not sell goods
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`directly to consumers; rather, StockX’s users buy and sell goods from each other on StockX’s
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`platform. StockX is not an authorized distributor of Nike goods.
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`42.
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`Unlike the eBay model, however, StockX is an active intermediary for each
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`transaction—the seller ships the item to StockX, StockX receives and purportedly verifies the
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 15 of 50
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`item’s authenticity, StockX then ships the item to the buyer with a StockX-branded verification
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`badge, and StockX pays the seller (less its transaction fees). See https://stockx.com/about/how-it-
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`works/.
`
`43.
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`According to StockX’s most recent annual report, Nike’s brands and shoes
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`dominate StockX’s marketplace. For example, three of Nike’s brands—JORDAN, NIKE, and
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`CONVERSE—were the among the top five trading footwear brands by volume on StockX’s
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`marketplace in 2021:
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`-15-
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 16 of 50
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`StockX’s Vault NFTs
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`44.
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`On January 18, 2022, StockX’s New York-based Editorial Director announced the
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`launch of StockX Vault NFTs, a collection of NFTs that StockX’s users purchase directly from
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`StockX through the StockX Website and StockX App. See https://stockx.com/news/introducing-
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`nfts-on-stockx/. StockX claims the Vault NFTs are associated with a unique physical product held
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`in StockX’s custody until the NFT owner “redeems” the NFT in exchange for the associated
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`physical product or some other benefit.
`
`45.
`
`Unlike the physical goods StockX’s users may sell through its online resale
`
`platform—which are manufactured and/or distributed in the first instance by Nike and other brands
`
`or their authorized distributors—StockX’s Vault NFTs are virtual products, i.e., digital
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`collectibles, created and first offered for sale by StockX, and available direct to consumers for
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`purchase and trade on the StockX Website and StockX App.
`
`46.
`
`Thus far, StockX has sold Nike-branded Vault NFTs at prices many multiples
`
`above the price of the physical Nike shoe. For example, the 2022 version of the Nike Dunk Low
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`– Retro White Black (i.e., the physical pair of shoes) will retail for $100 from nike.com:
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`-16-
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 17 of 50
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`According to StockX’s marketplace, as of February 2, 2022, the average sale price for the 2021
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`version of the shoes is $282:
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`-17-
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 18 of 50
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`Yet, as of February 2, 2022, the average price of the Vault NFT purportedly linked to these shoes
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`is $809, with the highest trade being $3500:
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`-18-
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 19 of 50
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`47.
`
`Another example is the sacai x KAWS Blazer Low Neptune Blue size 10 M which
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`retails for $140 from nike.com:
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`According to StockX’s marketplace, as of February 2, 2022, the average sale price for the shoes
`
`is $205:
`
`-19-
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 20 of 50
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`As of February 2, 2022, the average price, however, of the Vault NFT purportedly linked to these
`
`shoes is $590, with the highest trade being $3995:
`
`-20-
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 21 of 50
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`48.
`
`StockX states that the Vault NFTs are minted on the Ethereum blockchain,
`
`“offering owners the opportunity to invest in current culture, with cross-platform liquidity on the
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 22 of 50
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`horizon.” See https://stockx.com/lp/nfts/. StockX also states that Vault NFT owners may be
`
`granted exclusive access to StockX benefits, promotions, experiences, and rewards. Id.
`
`49.
`
`StockX further states that NFT owners may redeem the token to have the shoes
`
`delivered at any time. Simultaneously, StockX states that the “redemption process is not currently
`
`available,” but may be sometime in the “near future.” See https://stockx.com/help/articles/How-
`
`do-I-withdraw-my-item-from-the-Vault. If and when this process becomes available, upon
`
`redemption, StockX will remove the shoes from the vault, charge “a $35 withdrawal fee, a $14
`
`shipping fee, and any applicable sales tax” on top of the price the owner paid for the Vault NFT,
`
`and ship them to the owner. See https://stockx.com/help/articles/What-are-Vault-NFTs;
`
`https://stockx.com/help/articles/How-do-I-withdraw-my-item-from-the-Vault; and
`
`https://stockx.com/help/articles/What-fees-are-associated-with-Vault-NFTs. StockX will then
`
`remove the Vault NFT from circulation by deleting it from the owner’s portfolio (i.e., StockX will
`
`“burn” the Vault NFT). See, e.g., https://stockx.com/retro-black-and-white-dunk-vault-nft.
`
`50.
`
`StockX’s Terms and Conditions include sections titled “Vault Terms” and “NFT
`
`Terms” (collectively, the “Vault NFT Terms”) which govern the Vault NFT offerings. See
`
`https://stockx.com/terms.
`
`51.
`
`According to the Vault NFT Terms, when a consumer purchases a Vault NFT, the
`
`consumer gains title to both the purchased Vault NFT (i.e., the digital collectible) and the Stored
`
`Item (i.e., the physical goods) to which the NFT corresponds, and the consumer automatically
`
`makes use of StockX’s Vault Services (i.e., storage of the physical goods in StockX’s facility). Id.
`
`52.
`
`The Vault NFT Terms also state that (i) a Vault NFT (i.e., the digital collectible)
`
`has no value beyond that of the associated Stored Item (i.e., the physical goods), and (ii) the Vault
`
`Services are currently provided by StockX at no additional cost; however, a Vault NFT owner may
`
`-22-
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 23 of 50
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`be required to pay additional fees if they elect to have a Stored Item shipped to them or if they use
`
`the Vault Services past January 31, 2023. Id.
`
`53.
`
`By purchasing a Vault NFT, owners agree that they will not attempt to sell the
`
`physical goods to a buyer other than by selling the associated Vault NFT via the StockX platform.
`
`Id.
`
`54.
`
`Notably, under the Vault NFT Terms, StockX also retains the right to unilaterally
`
`redeem a Vault NFT for a so-called “Experiential Component,” and cancel or take away the NFT,
`
`i.e., the Vault NFT owner never receives the physical version of the shoes or loses the opportunity
`
`to do so. Specifically, the Vault NFT Terms state, “Note that in some cases, per the applicable
`
`Additional NFT Terms, StockX may automatically redeem your NFT for an Experiential
`
`Component,2 at its sole discretion, in which case StockX may remove the NFT from your portfolio
`
`and you will cease to own the NFT.” See https://stockx.com/terms:
`
`55.
`
`Upon information and belief, the provision in Paragraph 52 stating that the Vault
`
`NFT has no value apart from the physical shoes directly conflicts with the terms described in
`
`Paragraph 54 above: because StockX retains the right to redeem the Vault NFT for an Experiential
`
`Component, the Vault NFT does, in fact, have value apart from the physical shoes. The provision
`
`likewise directly conflicts with StockX’s other statement that the Vault NFT includes additional
`
`2 The phrase “Experiential Component” is explained and defined under the Vault NFT Terms as
`follows: “NFTs may take a variety of forms, and the holders of NFTs may be entitled to obtain
`certain products, benefits or engage in certain experiences, such as unlocking a prize or entry into
`an exclusive sale (“Experiential Component”), as determined by StockX in its sole discretion,
`subject to any additional terms provided by StockX with or in connection with the purchase of
`such NFT (“Additional NFT Terms”).” See https://stockx.com/terms.
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`-23-
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`Case 1:22-cv-00983-VEC Document 1 Filed 02/03/22 Page 24 of 50
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`benefits beyond the physical shoes, such as “exclusive access to StockX releases, promotions,
`
`events, as a result of ownership.” See https://stockx.com/lp/nfts/.
`
`56.
`
`As of February 2, 2022, StockX’s Vault NFT collection comprises nine NFTs, as
`
`shown below. Eight of the nine prominently display Nike’s marks and are associated with Nike
`
`products. Upon information and belief, StockX almost exclusively used Nike’s marks to launch
`
`its Vault NFTs because it knew that doing so would garner attention, drive sales, and confuse
`
`consumers into believing that Nike collaborated with StockX