StockX is looking to escape some of the claims lodged against it by Nike, newly unsealed court filings reveal. In a motion for partial summary judgment that was originally filed in August and unsealed on Tuesday, the online resale platform is looking to escape the false advertising claims that Nike is waging, which stem from its sale of non-fungible tokens (“NFTs”) tied to images and physical versions of Nike footwear – albeit without receiving Nike’s authorization.
In its newly unsealed motion for partial summary judgment, StockX argues that Nike has failed to put forth any evidence showing that its authentication and advertising practices mislead consumers or harm Nike. Specifically, Detroit-based StockX highlights the accuracy of its claims surrounding the sneaker-tied NFTs, the non-material impact of its advertising on consumer decisions, and the absence of any injury to Nike as a result of its advertising and sale of the NFTs.
Meanwhile, StockX does not contest Nike’s broader trademark infringement and unfair competition allegations in its motion; those causes of action remain central to the parties’ dispute.
The Background: Nike first filed suit against StockX in a New York federal court in February 2022, accusing the sneaker and apparel marketplace of trademark infringement, dilution, and unfair competition in connection with its Vault NFTs, digital assets linked to authenticated Nike footwear. According to Nike’s complaint, StockX marketed the NFTs using various Nike trademarks, thereby, creating confusion among consumers as to the source of the NFTs and/or Nike’s involvement with the project, and leading to public criticism of the NFT-based venture.
Nike’s underlying complaint warns of potential misuse when it comes to web3 technology, with the sportswear titan, arguing that NFTs “have become a virtual playground for infringers to usurp the goodwill of some of the most famous trademarks.”
Meanwhile, in defending its position, StockX has argued that its Vault NFTs serve as proof of ownership for the physical products at play and do not represent standalone digital sneakers. The company states that it explicitly clarifies that the NFTs are not affiliated with third-party brands like Nike and further argues that it does not need authorization to sell the physical products (thanks to the first sale doctrine) and the corresponding NFTs at issue, which act as a receipt of sorts for those physical products.
StockX’s Summary Judgment Arguments
In its newly unsealed push for partial summary judgment, StockX contends that Nike has failed to demonstrate the materiality of the StockX advertising claims at issue, including “100% Verified Authentic,” “Guaranteed Authenticity,” and “99.96% Accuracy Rate,” among others. In other words, Nike fails to show that the authenticity-centric claims were likely to influence consumer purchasing decisions, per StockX.
StockX emphasizes that in accordance with case law from the U.S. Court of Appeals for the Second Circuit, materiality requires a showing that the alleged deception significantly affects purchasing behavior. Citing Reed Construction Data, Inc. v. McGraw-Hill Cos., Inc., StockX argues that simply presenting offending advertising statements is insufficient; there must be proof that these statements influenced consumers’ buying choices.
The problem, according to StockX, is that Nike did not provide survey evidence or consumer testimony linking StockX’s claims to consumer decisions, which are critical to establishing materiality. Furthermore, the reseller highlights a consumer survey of its own, which found that there was no material impact of the challenged claims on consumer purchasing behavior.
StockX goes on to assert that Nike’s interpretation of its authentication claims acknowledges the multiple reasonable meanings of those claims. StockX emphasizes that “Nike necessarily argues that StockX’s claims are susceptible to multiple interpretations and do not unambiguously convey a single, false message.” This is significant, StockX contends, as Second Circuit law holds that advertisements open to more than one interpretation cannot be deemed literally false. StockX asserts that “if the language … is susceptible to more than one reasonable interpretation, the advertisement cannot be literally false.”
Finally, StockX contends that Nike has not demonstrated any actual harm from StockX’s claims, as there is no evidence of comparative advertising – i.e., direct or implied comparisons to a competitor’s products that could influence consumer perception – that could directly harm Nike. The company asserts that Nike has not shown any actual harm from the challenged claims, highlighting that the sportswear giant admitted the absence of comparative advertising. “Nike admits the challenged advertising was not comparative, foreclosing any presumption of harm,” StockX alleges.
In its filing, StockX points to additional Second Circuit precedent that establishes that a plaintiff must present “some affirmative indication of actual injury or causation,” and states that without evidence of lost sales or reputational damage directly tied to StockX’s statements, Nike’s claim must fail.
Nike’s Sealed Filings
Amid the back-and-forth over StockX’s motion for partial summary judgment is Nike’s own summary judgment motion, which it filed in August. Nike’s motion and associated filing from Nike made are still sealed, though StockX’s response to the sealed filing was made available on Tuesday, as well. According to StockX’s opposition to Nike’s summary judgment bid, Nike is arguing that StockX facilitated the sale of counterfeit sneakers through its platform; that it engaged in false advertising by making the aforementioned misleading advertising claims to consumers; and that StockX acted with reckless disregard about the presence of counterfeit goods on its platforms.
The case is Nike, Inc. v. StockX LLC, 1:22-cv-00983 (SDNY).
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