The U.S. District Court for the Southern District of New York is the stage for a $60 million fight between Nike and a cult customizer in a headline-making lawsuit that pits trademark rights against alleged artistic expression in the sneaker market. Nike’s legal battle against the Shoe Surgeon centers on allegations of counterfeiting, trademark infringement, and unfair competition, according to Nike, whereas the custom footwear company argues that the lawsuit is an effort by the sportswear titan to monopolize the customization market and stifle independent creativity under the guise of trademark enforcement.
A Bit of Background: In the complaint that it filed with a New York federal court in July, Nike alleges that the Shoe Surgeon and its founder Dominic Chambrone (collectively, the “Shoe Surgeon” or “defendants”) have engaged in the unauthorized use of Nike’s trademarks to produce and sell counterfeit sneakers. Nike claims that the defendants are in the business of manufacturing and selling goods – including sneakers created “entirely from scratch” – that bear counterfeit trademarks. It also maintains that the defendants are offering up “infringing customization workshops,” where they teach others to create counterfeit Nike sneakers.
In a public statement that was picked up by an array of media outlets, Nike framed its lawsuit against the Shoe Surgeon as a necessary step to protect its brand integrity and consumers. The company highlighted its respect for artistic creativity, drawing a distinction between lawful customization and the mass production of counterfeits.
The Shoe Surgeon has responded with a defamation and/or trade libel counterclaim, arguing that Nike’s statements, both in its legal filings and public communications, mischaracterize their actions. They contest Nike’s use of terms like “counterfeit” and “from scratch,” maintaining that their work involves customization of existing Nike sneakers. They also claim that Nike’s public statements, amplified through media coverage, were designed to harm their reputation and business. They further contend that these statements were presented as fact rather than as allegations, a key point in their defamation claim.
Nike’s Motion to Dismiss
With the ball back in its court, Nike is looking to shake the Shoe Surgeon’s counterclaim. Counsel for the Swoosh argues in a filing on January 21 that it should be shielded from the Shoe Surgeon’s defamation and/or trade libel counterclaim on the basis that its allegedly improper statements are privileged, as they are statements pertinent to the overarching litigation. In accordance with Second Circuit precedent, Nike states that “statements by parties and their attorneys are absolutely privileged if, by any view or under any circumstances, they are pertinent to the litigation.”
At the same time, Nike maintains that “out-of-court statements, such as demand letters or statements to the public or media, are also subject to privilege under Section 74 of the New York Civil Rights Law ‘to the extent that they represent fair and true reports of what occurred in the proceeding.’”
With the foregoing in mind, Nike argues that the Shoe Surgeon’s claim should be dismissed with prejudice … [because] the statements in Nike’s complaint are absolutely privileged as a matter of New York common law, [and] Nike’s press statement, which is no more than a fair and true report of allegations in its complaint, is likewise absolutely privileged under N.Y. Civ. Rights Law § 74.”
Counsel for Nike also addresses “the narrowly construed and rarely successful ‘Williams’ exception,” that the Shoe Surgeon raised in a filing of its own. The exception is applicable in the event that a party “maliciously institute[s] a judicial proceeding alleging false and defamatory charges” and “then circulate[s] a press release or other communication based thereon and escape liability by invoking the statute.”
“Critically, this exception requires that the legal action was brought ‘solely’ for the purpose of defaming the opposing party,” Nike asserts, stating that the Shoe Surgeon has failed “to allege anywhere in their 141-paragraph Counterclaim that Nike’s lawsuit was filed solely for the purpose of defaming them.” In addition to the allegations in the Shoe Surgeon’s Counterclaim, Nike claims that its “complaint also amply demonstrates that [it] filed this litigation to enforce its intellectual property rights, not to defame.”
The case is Nike, Inc. v. S2, Inc. d/b/a The Shoe Surgeon, et al., 1:24-cv-05307 (SDNY).
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