Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 1 of 28
`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 1 of 28
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`Megan K. Bannigan
`(mkbannigan@debevoise.com)
`Jyotin Hamid
`(jhamid@debevoise.com)
`Justin Ferrone
`(jcferrone@debevoise.com)
`Kathryn C. Saba
`(ksaba@debevoise.com)
`DEBEVOISE & PLIMPTON LLP
`919 Third Avenue
`New York, New York 10022
`(212) 909-6000
`
`David Mayberry
`(DMayberry@kilpatricktownsend.com)
`Rob Potter
`(RPotter@kilpatricktownsend.com)
`KILPATRICK TOWNSEND &
`STOCKTON LLP
`1114 Avenue of the Americas
`New York, New York 10036
`(212) 775-8733
`
`UNITED STATES DISTRICT COURT
`SOUTHERNDISTRICT OF NEW YORK
`eee ee ee ee ee ee ee ee ee eeee x
`
`NIKE,INC.,
`
`:
`
`No. 22-CV-983-VEC
`
`Vv.
`
`STOCKX LLC,
`
`Plaintiff,
`
`Defendant.
`
`ANSWER
`
`JURY DEMANDED
`
`eee ee ee ee ee ee ee ee ee eeee x
`
`StockX LLC (“StockX”), by and through its undersigned counsel, hereby submits its
`
`Answerto the Complaint, filed by Nike, Inc. (“Nike”) on February 3, 2022.
`
`PRELIMINARY STATEMENT
`
`StockX is an online global marketplace that provides its customers access to items of
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`current culture, including coveted sneakers, apparel, collectibles, trading cards, and accessories,
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`among other products. Customers use StockX’s platform not only to sell or acquire physical
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`products for consumption, but also to trade such physical products for investment purposes.
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`StockX’s recent introduction of non-fungible tokens (“NFTs”) to track ownership of frequently
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`

`

`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 2 of 28
`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 2 of 28
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`traded physical products is transforming the trading experience on its marketplace by increasing
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`efficiencies and decreasing transaction costs for buyers and sellers. Using NFTsin this manneris
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`lawful and violates no legitimate right ofNike or any ofthe manufacturers of the underlying goods.
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`Nike’s claims lack merit, disregard settled doctrines of trademark law, including the doctrines of
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`first sale and nominative fair use, and show a fundamental misunderstanding of the various
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`functions NFTscan serve.
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`Unlike most online marketplaces, which do not authenticate goods sold on their platforms,
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`StockX uses a proprietary, multi-step authentication process for every product sold on its platform.
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`This process ensures that items traded on StockX conform to the product descriptions and
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`condition standards advertised by StockX, and that the products offered for sale are what they
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`claim to be, and are not counterfeit, defective, or used—meaning StockX’s customers can trust
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`that transactions made through StockX are safe. StockX has authenticated tens of millions of
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`products since its formation, combining its authentication team’s expert knowledge with AI-
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`enhancedtechnology to allow global customers to trade with confidence.
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`While StockX’s authentication process is critically important, it does not come without
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`costs. Upon eachsale, the seller ships the product to one of StockX’s eleven authentication centers
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`around the world; StockX performs its multi-step authentication process; and StockX then ships
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`the product to the buyer and ensuresthat the seller is paid. As a practical matter, this means that
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`for each subsequent trade of the same item, consumers not only incur costs and fees associated
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`with multiple legs of shipping and authentication, but also experience a delay in ownership and
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`payoutuntil the process is complete.
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`For manyreasons, including StockX’s reputation as a place to purchase authentic products,
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`as well as the incorporation of stock market-like mechanics inspired by the world’s financial
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`

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`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 3 of 28
`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 3 of 28
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`exchanges, StockX’s platform hasattracted a significant number of customers whoare interested
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`in acquiring and trading current culture products, without any interest in immediately or ever
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`wearing (or “consuming”) those products or taking physical possession of those products.
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`Nonetheless, until recently, such customers had to incur the transaction costs and shipping times
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`commonly associated with e-commerce experiences, even though physical possession was
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`unnecessary to these customers’ goals and needs.
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`To innovate and expedite the process of trading physical products, StockX recently turned
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`to NFTs. NFTsare traded on a blockchain, which permanently stores records of each NFTtransfer,
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`visibleto all users in the network. In contrast to most NFT projects to date, which consist ofdigital
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`images (including JPEGs or GIFs) created for the metaverse, with or without additional utility
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`attached, StockX Vault NFTs are one of the first NFT applications tied to a physical product.
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`StockX’s Vault NFT program enables secondary trading on StockX to be moreefficient, track
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`ownership of goods, and cut out unnecessary costs and fees for customers.
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`StockX Vault NFTs are absolutely not “virtual products”or digital sneakers. Rather, each
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`Vault NFT is tied to a specific physical good that has already been authenticated by StockX.
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`Consumers purchase the Vault NFTs and have two choices regarding ongoing possession: (1)
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`retain digital possession of the Vault NFT and leave the authenticated physical good in StockX’s
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`climate-controlled, high-security vault (a “Stored Item”); or (2) take possession of the physical
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`good from the vault at any time, in which case the Vault NFT is removed from the customer’s
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`digital portfolio and permanently removed from circulation. The Vault NFTitself has no intrinsic
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`value—it is effectively a claim ticket, or a “key” to access the underlying Stored Item. Nor can
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`the Vault NFT be traded separately, or decoupled, from ownership of the underlying Stored Item.
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`As explained on StockX’s product pages, a “Vault NFT represents and tracks proof of ownership
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`

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`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 4 of 28
`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 4 of 28
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`of the actual sneaker stored within [the] StockX Vault.” The actual product of value is the
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`underlying Stored Item, and there is no mark-up for the actual Vault NFT. While StockX sets the
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`initial price for Vault NFTs, StockX doesnotset or control prices for subsequent trades, which are
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`dictated completely by StockX users.
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`The benefit of taking possession of the Vault NFT, rather than the Stored Item,is that the
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`owner can makea future trade without incurring transaction costs, delay, or risk of damageor loss
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`associated with shipping physical sneakers to StockX and then to the ultimate recipients. Instead,
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`the owner need only transfer the Vault NFT, which can be performed almost instantaneously
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`through the Internet. The Stored Item remains safe in the StockX vault, and the transfer of
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`ownership to the buyer is immediate. Because the Stored Item never leaves the StockX vault, the
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`product does not need to be authenticated again. This novel processis ideal for a growing group
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`of consumers (whoalready makeup a significant portion of StockX’s customer base), who trade
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`current culture products and do not wantto take physical possession of products for use.!
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`To date, StockX has released Vault NFTs associated with twenty-eight different types of
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`physical products, including sneakers, trading cards, and collectibles. Eleven of these products are
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`styles of shoes originally manufactured and sold by Nike, adidas, and Puma. In selecting the styles
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`of shoes to include in the Vault NFT program, StockX looked to best-selling products of which
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`sufficient quantities in a certain shoe size were available for purchase. Examples of Vault NFTs
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`and Stored Items that StockX offers for sale are included below.
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`1
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`In addition, customers experiencing storage constraints due to their existing physical
`inventory may choose to purchase StockX Vault NFTsto take advantage of the convenience
`of storing physical goods in the StockX vault, allowing them to sell or hold the underlying
`physical goods without the inconvenience of managing the storage logisticsorrisks.
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`

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`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 5 of 28
`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 5 of 28
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`StockX Vault NFT adidas Yeezy Boost 350 V2 Beluga Reflective - US M10
`¥ ®
`A StockX token representing ownershipof a physicalpair. (250/500available to date)
`@NFT|StockX Verified|Edition of 500
`
`Last Sale:
`ViewAsks||View Bids||View Sales
`
`
`$272
`
`(0%)
`Redeemab
`for 1 Pair
`
`Se
`
`
`
`Buy for $295
`
`Sell This Item for $276
`
`
`
` é\s
`
`StockX Vault NFT Puma MB.01 LaMelo Ball Rick and Morty - US M10
`-
`A StockX token representing ownership of a physical pair. Drops 3/11 at Ipm ET.
`
`WONFT|StockX Vented Edition of 50
`
`Last Sale:
`
`- View Asks||View Bids||View Sales
`
`
`
`
`No Sales Yet
`
`Buy
`
`Sal
`
`Lowest Ask
`
`Highest Bid
`
`
`
`
`
`StockX Vault NFT Nike Dunk Low Retro White Black - US M10
`- -«
`A StockX token representing ownership of a physical pair.
`
`(@NFT StockX Verified|Edition of 100
`
`Last Sale:
`
`
`
`$415 View Aske||View Bids||View Sales
`4 $5 (1.2%)
`
`9
`
`pe
`
`Sall
`
`Highest Bid
`
`
`
`

`

`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 6 of 28
`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 6 of 28
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`StockX Vault NFT Stephen Curry 2012 Panini Prizm #72 - PSA 9
`ao
`ve
`A StockX token representing ownership of a physical card.
`@NFT|StockXVerified|Edition of 16
`
`Stockx a Sg
`ae
`ae
`cepa
`
`$575
`dighest Bld
`$380
`
`Last Sale:
`
`$574 | View Asks||View Bids||View Sales
`¥ -$26 (-4.3%)
`
`
`
`
`
`As shownabove, each Vault NFT prominently includes the StockX trademark,as does the
`
`product page where the physical goodsare offered for sale. In addition, muchlike a product page
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`or advertisement on any other e-commerce site, Vault NFTs accurately depict and describe the
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`underlying physical goods that the consumer is purchasing. For example, the Vault NFT for the
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`Nike Low Dunk Retro White Black showsan image (generated by StockX) of the Stored Item held
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`in the StockX vault and the relevant product name. Because the ownerof the Stored Item need
`
`not initially receive the physical goods but can subsequently use the Vault NFTto transfertitle to
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`the Stored Item, the image and product nameon the Vault NFTplaya critical role in describing
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`whatgoodsare actually being bought and sold.
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`Further, the product page for each Vault NFT displays a description of how the StockX
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`Vault NFT functions, as well as a disclaimer of any association oraffiliation with product brands,
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`whichis depicted below.
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`

`

`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 7 of 28
`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 7 of 28
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`
`
`* BuyA
`- a tokenfor
`
`Vault N
`the
`physica
`
`vault
`
`rks:
`
`J
`
`
`
`For more information on officialNike
`
`;
`
`process. TheVault NFTis
`pamelacoonectod to Nike
`rs==5
`www.Nike.com.
`
`At every point in the process, consumers are made aware they are purchasing physical
`
`goods that StockX has authenticated, that StockX is storing such physical goodsin its vault, that
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`such physical goods may betraded via blockchain and tracked using a StockX-branded Vault NFT,
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`and that the Vault NFT may be redeemed for the physical goods themselves. To date, consumers
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`have enjoyed their experience, successfully completing 2,853 Vault NFT transactions through
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`StockX’s website since the Vault NFT program launched. Consumers have therefore recognized,
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`and will continue to recognize, that StockX’s Vault NFTs are a cutting-edge technology to
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`revolutionize the trading of authenticated physical goods. No one has been—or could be—
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`confused as to the source.
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`Nike’s Complaint is nothing more than a baseless and misleading attempt to interfere with
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`the application of a new technology to the increasingly popular and lawful secondary market for
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`the sale of its sneakers and other goods. Nike’s position is that resellers of products are legally
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`prohibited from accurately describing the physical products they seek to trade in a digital world,
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`contrary to trademark law. StockX’s use of images of Nike sneakers and descriptionsofre-sale
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`

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`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 8 of 28
`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 8 of 28
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`Nike products in connection with StockX Vault NFTsis nominativefair use. It is no different than
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`major e-commerceretailers and marketplaces who use imagesand descriptions of products to sell
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`physical sneakers and other goods, which consumerssee (and are not confused by) every single
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`day. Nike’s suit threatens the legitimate use of NFTs not just by StockX, but by other innovators
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`that also use NFTsto track title to physical goods held in a vault, such as fine art, whiskey, and
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`wine. The use of NFTsto digitally track ownership of physical products is not only lawful, but
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`also increasesefficiency for and decreases costs to consumers, promotes sustainability, and should
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`not be disturbed.
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`GENERAL DENIAL
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`Except as otherwise expressly admitted herein, StockX denies each and every allegation
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`contained in the Complaint,
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`including, without limitation, any allegations contained in the
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`preliminary statement, headings, subheadings, footnotes, or incorporated images within the
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`Complaint, and specifically denies any liability to Nike. Pursuant to Rule 8(b) of the Federal Rules
`
`of Civil Procedure, allegations in the Complaint to which no responsive pleading is required shall
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`be considered denied.
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`StockX expressly reserves the right to seek leave to amend and/or
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`supplement this Answer as maybe necessary.
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`RESPONSE TO SPECIFIC ALLEGATIONS
`
`NIKE’S PRELIMINARY STATEMENT
`
`1.
`
`Deny, except deny knowledge or information sufficient to form a belief as to
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`whether NFTsare “pervasive in their use by brand owners” or as to how NFTs “are commonly
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`understood,” and admit that NFTs are an exciting technology for which diverse commercial
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`applications have emerged, includingtrackingtitle to physical goods, and that NFTs appear to be
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`“{flar more than a fleeting trend,” and “part of the future of commerce.”
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`

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`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 9 of 28
`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 9 of 28
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`2.
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`Deny knowledge or information sufficient to form a belief as to the truth of Nike’s
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`allegations.
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`3.
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`Deny,and refer to the contents of StockX advertisements and social media content,
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`which speak for themselves, except admit that StockX provides a platform for the resale and
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`authentication of sneakers, apparel, electronics, collectibles, trading cards and accessories, and that
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`StockX lawfully sells Nike goods, as well as goods from brands including, but not limited to New
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`Balance, Puma, adidas, Reebok, Asics, and Converse.
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`4.
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`Deny, except admit that StockX creates Vault NFTs, which include an image
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`generated by StockX of the associated Stored Item that StockX offers for sale to consumers and to
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`which the NFT is tied. StockX further admits that the images included in paragraph four of the
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`Complaint appear to be images of StockX-branded Vault NFTs depicting the physical Nike SB
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`Dunk Low Ben & Jerry’s Chunky Dunky, Nike Dunk Low Retro White Black, and KAWSSacai
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`Nike Blazer Low Blue shoes that StockX stores in its physical vault and offers for sale to
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`consumers through the Vault NFT program. StockX further avers that some Vault NFTs are
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`currently trading at values below that of the comparable physical product, not associated with the
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`Vault NFT program; for example, as of March 22, 2022,the last sale price for a Vault NFT tied to
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`an adidas Yeezy Boost 350 V2 Beluga Reflective was $273, whereas the last sale price for the
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`comparable physical product was $282.
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`5.
`
`Deny, andrefer to the contents of StockX’s public statements on its website, which
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`speak for themselves, except admit that StockX plans to continue its Vault NFT program, which
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`includesthe sale of stored Nike, adidas, and Pumaproducts.
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`6.
`
`Deny,and refer to the contents of StockX’s public statements on its website at the
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`time of Nike’s complaint, and StockX’s current Terms and Conditions of Use, which speak for
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`

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`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 10 of 28
`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 10 of 28
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`themselves and are attached hereto as Exhibit A, except admit that Vault NFT owners may redeem
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`the NFT and take possession of the associated physical shoes for a small fee; that StockX has
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`successfully completed redemptions.
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`7.
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`Paragraph 7 states a legal conclusion to which no response is required. To the
`
`extent a response is required, deny knowledgeor information sufficient to form a belief as to the
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`truth of Nike’s allegations regarding consumerperception and otherwise deny.
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`8.
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`Deny, except admit and aver that Nike is not entitled to play any role in decision-
`
`making regarding the StockX-branded Vault NFT program.
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`9.
`
`Paragraph9 states legal conclusions to which noresponseis required. To the extent
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`a responseis required, deny knowledge or information sufficient to form a belief as to the truth of
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`Nike’s allegations regarding Nike’s historical use of its trademark and investment in NFT
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`technology and services, and otherwise deny.
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`THE PARTIES
`
`10.
`
`Admit.
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`11.
`
`Admit.
`
`12.
`
`Admit.
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`JURISDICTION AND VENUE
`
`13.
`
`Paragraph 13 states a legal conclusion to which no responseis required.
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`
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`14._—‘Paragraph 14 states a legal conclusion to which no responseis required.
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`15.
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`Paragraph 15 states a legal conclusion to which no response is required. To the
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`extent a response is required, admit that the StockX Website and StockX App are accessible to
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`consumers in New York and that StockX is recruiting employees for open positions based in New
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`York, including Sr. Engineering Manager — NFT and Checkout, a Senior Engineering Manager,
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`Category Expansion, and Staff Software Engineer — Marketplace.
`
`10
`
`

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`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 11 of 28
`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 11 of 28
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`16.
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`Paragraph 16 states a legal conclusion to which no response is required. To the
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`extent a response is required, admit that the StockX Editorial Director is based in New York and
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`that StockX is recruiting employees for open positions based in New York.
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`FACTUAL BACKGROUND
`
`17.
`
`Admit.
`
`18.
`
`Admit.
`
`19.
`
`Admit.
`
`20.
`
`Admit.
`
`21.
`
`Deny knowledgeor information sufficient to form a belief as to the truth of Nike’s
`
`allegations.
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`22.
`
`Deny knowledgeor information sufficient to form a belief as to the truth of Nike’s
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`allegations.
`
`23.
`
`Paragraph 23 states a legal conclusion as to the fame ofNike’s trademarks, to which
`
`no response is required. To the extent a response is required, deny knowledge or information
`
`sufficient to form a beliefas to the truth of Nike’s allegations.
`
`24.
`
`Paragraph 24 states a legal conclusion as to the fame of Nike andits brands, to
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`which no response is required. To the extent a response is required, deny knowledge or
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`information sufficient to form a belief as to the truth of Nike’s allegations.
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`25.
`
`Paragraph 25 states a legal conclusion as to Nike’s ownership ofthe right,title, and
`
`interest in and to the listed trademarks (“‘Asserted Marks’), to which no responseis required. To
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`the extent a response is required, deny knowledgeor information sufficient to form a belief as to
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`the truth of Nike’s allegations and, to the extent relevant, refer to the United States Patent and
`
`Trademark Office records, which speak for themselves.
`
`11
`
`

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`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 12 of 28
`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 12 of 28
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`26.
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`Paragraph 26 states a legal conclusion as to the validity of the alleged U.S.
`
`registrations for the Asserted Marks, to which no responseis required. To the extent a responseis
`
`required, deny knowledge or information sufficient to form a belief as to the truth of Nike’s
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`allegations and, to the extent relevant, refer to the United States Patent and Trademark Office
`
`records, which speak for themselves.
`
`27.
`
`Paragraph 27 states a legal conclusion as to the incontestability of the Asserted
`
`Marks, to which no responseis required. To the extent a response is required, deny knowledge or
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`information sufficient to form a belief as to the truth of Nike’s allegations and, to the extent
`
`relevant, refer to the United States Patent and Trademark Office records, which speak for
`
`themselves.
`
`28.
`
`Paragraph 28 states a legal conclusion as to common law rights in the Asserted
`
`Marks, to which no responseis required. To the extent a response is required, deny knowledge or
`
`information sufficient to form a belief as to the truth of Nike’s allegations.
`
`29.
`
`Deny knowledgeor information sufficient to form a belief as to the truth of Nike’s
`
`allegations.
`
`30.
`
`Deny knowledgeor information sufficient to form a belief as to the truth of Nike’s
`
`allegations.
`
`31.
`
`Paragraph 31 states a legal conclusion as to the strength and fame of the Asserted
`
`Marks, to which no responseis required. To the extent a response is required, deny knowledge or
`
`information sufficient to form a belief as to the truth of Nike’s allegations.
`
`32.
`
`Deny knowledgeor information sufficient to form a belief as to the truth of Nike’s
`
`allegations.
`
`12
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`

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`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 13 of 28
`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 13 of 28
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`33.|Deny knowledgeor information sufficient to form a belief as to the truth of Nike’s
`
`allegations.
`
`34.
`
`Deny knowledgeor information sufficient to form a belief as to the truth of Nike’s
`
`allegations.
`
`35.|Deny knowledgeor information sufficient to form a belief as to the truth of Nike’s
`
`allegations.
`
`36.
`
`Deny knowledgeor information sufficient to form a belief as to the truth of Nike’s
`
`allegations and, to the extent relevant, refer to the relevant United States Patent and Trademark
`
`Office records, which speak for themselves.
`
`37.|Deny knowledgeor information sufficient to form a belief as to the truth of Nike’s
`
`allegations and refer to the linked announcement, the contents of which speak for themselves.
`
`38.
`
`Deny knowledgeor information sufficient to form a belief as to the truth of Nike’s
`
`allegations.
`
`39.
`
`Deny knowledgeor information sufficient to form a belief as to the truth of Nike’s
`
`allegations.
`
`40.
`
`Deny knowledge or information sufficient to form a belief as to the truth of Nike’s
`
`allegations regardingits initiatives, and otherwise deny.
`
`41.
`
`Deny, except admit that StockX provides an online marketplace for the resale of
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`sneakers, apparel, electronics, collectibles, trading cards and accessories; further admit that while
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`StockX users can buy and sell goods from each other, they can also buy goodsdirectly from
`
`StockX in limited circumstances; and further admit that StockX is not an authorized distributor of
`
`Nike goods but engages in the lawful resale of goods from brands including, but not limited to
`
`Nike, Puma, New Balance, adidas, Reebok, Asics, and Converse.
`
`13
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`

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`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 14 of 28
`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 14 of 28
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`42.
`
`Deny, except admit that when a sale of a goodthat is not associated with the Vault
`
`NFTprogram occurs, the seller ships the item to StockX, StockX authenticates the item using a
`
`proprietary, multi-step authentication process, StockX ships the item to the buyer, and StockX
`
`paysthe seller less a transaction fee. However, whenthe sale of a Vault NFT and associated Stored
`
`Item occurs, several of these steps are unnecessary and do not occur; the seller does not have to
`
`ship the product to StockX for authentication because the product is already authenticated and
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`stored in the StockX vault, where it remains until an associated Vault NFT is redeemed for the
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`physical good.
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`43.
`
`Deny, except admit that the Jordan, Nike, and Converse brands were amongthe top
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`five trading footwear brands by volume on StockX’s marketplace in 2021 and otherwise refer to
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`the contents of StockX’s most recent annual report, which speak for themselves.
`
`44.
`
`Admit andrefer to the full contents of the January 18, 2022 announcement“StockX
`
`Launches Vault NFTs,” which speak for themselves.
`
`45.
`
`Deny, except admit that consumers can purchase a Vault NFTthat is created and
`
`first offered by StockX reflecting the “key” or “claim ticket” to the Stored Item depicted on the
`
`Vault NFT and held in StockX’s vault, and further admit that by selling a Vault NFT, a useris
`
`transferringtitle to the associated Stored Item.
`
`46.
`
`Deny, except admit that StockX sets the initial price for Vault NFTs and that
`
`StockX does not set or control prices for subsequent trades by its users, and that prices for
`
`subsequent trades fluctuate; for example, as of March 22, 2022, the last sale price for the Vault
`
`NFTproduct referenced in paragraph 46 of the Complaint was $275.
`
`47.
`
`Deny, except admit that StockX sets the initial price for Vault NFTs and that
`
`StockX does not set or control prices for subsequent trades by its users, and that prices for
`
`14
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`

`

`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 15 of 28
`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 15 of 28
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`subsequent trades fluctuate; for example, as of March 22, 2022, the last sale price for the Vault
`
`NFTproduct referenced in paragraph 47 of the Complaint was $200.
`
`48.
`
`Admit that Nike accurately quotes a portion of StockX’s “Collect What’s Next —
`
`Introducing NFTs on StockX” webpage,andrefer to the full contents ofthat webpage, which speak
`
`for themselves. Aver that Section 28 of the StockX Terms and Conditions of Use, available at
`
`https://stockx.com/terms,states that:
`
`Each Vault NFT is backed by a physical item held in StockX’s custody and does not have
`value beyond that associated with the underlying physical good. Other types of NFTs
`(“Experiential NFTs”) may grant the NFT holder rights to obtain certain additional
`products, or benefits or to engage in certain experiences, such as unlocking a reward or
`access to an exclusive sale (collectively, “Experiences”). All NFTs on the Services may be
`subject to any additional terms provided by StockX from time to time (“Additional NFT
`Terms”). In addition, from time to time StockX may offer incentives and rewards for users
`of StockX Services generally, but not as a componentof the value of any particular NFT,
`unless otherwise expressly stated in the applicable Additional NFT Terms.
`
`A copy of the current StockX Terms and Conditions of Use are attached hereto as Exhibit A.
`
`49.
`
`Deny, except refer to the contents of StockX’s webpages, which speak for
`
`themselves; admit that upon redemption of a StockX Vault NFT, StockX will charge a $35
`
`withdrawal fee and between $5 and $14.95 for shipping andsales tax to send the Stored Item toits
`
`owner, and that StockX will remove the associated Vault NFT from the owner’s portfolio; and
`
`aver that redemption is now available using the form at <https://stockx.com/help/contact/nft-
`
`redeem>, and that redemptions have,in fact, occurred.
`
`50.
`
`Admit that the Terms and Conditions of Use include a section on “Vault Terms,”
`
`(Section 29), which governs Vault NFTs and relatedly, use of StockX’s vault services, and a
`
`section on “NFT Terms,” (Section 28), which more broadly provides terms pertaining to the
`
`various types of NFTsthat StockX offers or may offer in the future, which include not only Vault
`
`NFTs but also Experiential NFTs, which entitle holders to obtain certain additional products,
`
`15
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`

`

`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 16 of 28
`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 16 of 28
`
`benefits, or access to certain experiences, such as unlocking a reward or access to an exclusive
`
`sale, and refer to the full contents of the StockX Terms and Conditions, attached hereto as Exhibit
`
`A, which speak for themselves.
`
`51.
`
`Deny, except refer to the contents of the StockX Terms & Conditions attached
`
`hereto as Exhibit A, which speak for themselves. Further aver that StockX FAQs, available at
`
`https://stockx.com/help/articles/What-are-Vault-NFTs, inform consumersthat:
`
`Vault NFTs are digital tokens that represent ownership of physical items and,
`therefore, do not have any intrinsic value beyond that of the underlying physical
`good. Each Vault NFT is backed by a physical item held in StockX’s custody,tied
`directly one to one via the blockchain. Any item in the StockX Vault is Verified
`Authentic via StockX's authentication process. This means that if you buy an
`edition of a Vault NFT, you are the owner of the corresponding physical good
`whichis secured and stored in StockX’s Vault. You can trade that NFT to someone
`else, which will also transfer ownership of the corresponding physical good, you
`can hold it for any length of time, or you can redeem the item from the StockX
`Vault and take possession of the physical item.
`
`A copy of the StockX FAQarticle “What are Vault NFTs?”is attached hereto as Exhibit B.
`
`52.
`
`Deny, except admit that Vault NFTs do not have any intrinsic value beyondthat of
`
`the associated Stored Item and that Vault Services are currently provided at no additionalcost, but
`
`that users may be required to pay fees as outlined in the Terms and Conditions, and refer to the
`
`contents of the StockX Terms and Conditions, attached hereto as Exhibit A, which speak for
`
`themselves.
`
`53.
`
`Admit andrefer to the full contents of the StockX Terms and Conditions, attached
`
`hereto as Exhibit A, for context.
`
`54.
`
`Deny, andrefer to the contents of the StockX Terms & Conditions attached hereto
`
`as Exhibit A, which speak for themselves and now specifically include the following statement:
`
`“For the avoidance of doubt, Vault NFTs are not Experiential NFTs and do not contain an
`
`Experience that would give rise to automatic redemption, and Vault NFTs do not have an
`
`16
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`

`

`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 17 of 28
`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 17 of 28
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`expiration date. A Vault NFT is only removed from your portfolio once it is redeemed for the
`
`associated product or sold to another buyer.” Exhibit A, Section 29. Aver that Vault NFTs can be
`
`redeemed only for the physical product to which theyaretied.
`
`55.
`
`56.
`
`Deny.
`
`Deny, except admit that as of February 2, 2022, StockX offered Vault NFTs for
`
`nine different types of products, and eight of the nine types of products were genuine Nike shoes.
`
`Aver that StockX’s Vault NFT collection, as shown on the landing page available at
`
`https://stockx.com/Ip/nfts/, has continued to evolve as StockX has released more Vault NFTs. A
`
`copy of the current Vault NFT landing page is attached hereto as Exhibit C.
`
`57.
`
`Deny, except admit that StockX has sold 1,473 individual StockX-branded Vault
`
`NFTs; that some of the Vault NFTs associated with Nike products are offered in editions of 1, 3,
`
`100, and 250, with each Vault NFT tied one-to-one to a physical pair of sneakers held in StockX’s
`
`vault; and that StockX is not an authorized Nike retailer. Aver that each and every Vault NFTis
`
`backed by a physical product. Further, deny knowledge or information sufficient to form a belief
`
`as to the truth of Nike’s allegations as to whatis or is not apparentor clear to Nike.
`
`58.
`
`Deny, except admit that StockX product pages accurately state the name of the
`
`Stored Item and include an image that accurately depicts the Stored Item.
`
`59.
`
`Deny, except admit that StockX authenticates the Stored Items that are depicted in
`
`and associated with its Vault NFTs, and informs consumers that StockX verifies the authenticity
`
`of the Stored Items and that StockX’s authentication process is in no wayaffiliated with Nike.
`
`Averthat an example of a current product description page, available at https://stockx.com/retro-
`
`black-and-white-dunk-vault-nft, clearly indicates that the products are “StockX Verified.”
`
`17
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`

`

`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 18 of 28
`Case 1:22-cv-00983-VEC Document 21 Filed 03/31/22 Page 18 of 28
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`Stockx
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`Q_ Search for brand,color, etc.
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`StockX Vault NFT Nike Dunk Low Retro White Black - US M10
`
`A StockX token representing ownership of a physical pair..4 ®)
`‘@ NT
`StockX Verified
`Edition of 100
`
`A
`
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`$275 View Asks||View Bids||View Sales
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`-- (O%)
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`Last Sale:
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`——”
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` Ss
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`(iey
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`60.
`
`Admit that StockX product pages for Vault NFTs include “Product Details” and a
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`“Product Description,” which include a fair use of the Nike brand to accurately describe the
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`underlying