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StockX Questions Nike’s ‘Suspicious’ Counterfeiting Allegations

StockX filed a formal legal response Monday to Nike’s claims it sold counterfeit sneakers.

A little more than three months after Nike lodged an initial complaint arguing the resale marketplace’s Vault NFT program constituted trademark infringement, the Swoosh brand submitted a proposed amended complaint on May 10 that added two new causes of action: counterfeiting and false advertising. Though StockX said it “disputes” the allegations in the new complaint, it did not oppose Nike filing it, which the company officially did on May 25.

Less than two weeks later, StockX submitted its response, dubbing Nike’s amended complaint “nothing more than a failed attempt to bolster its still meritless claims.” Though it publicly addressed Nike’s claims—namely, that it bought four pairs of counterfeit shoes on StockX’s website, including one that is among the eight Nike silhouettes in its Vault NFT collection—on May 11, the new reply offers a clearer picture of how StockX plans to address Nike’s new claims.

Specifically, StockX pointed to repeated examples of how Nike had seemingly endorsed its authentication process. These included when Nike invited StockX to join an anti-counterfeiting counsel with the U.S. Department of Homeland Security; its vice present of global litigation and investigations referring to StockX in writing as a “good actor” in reference to its efforts to remove a counterfeit listing; and Nike Brand Protection’s director of authentication and innovation describing StockX and Nike Brand Protection as “aligned on ensuring… consumers only receive authentic product.”

“Despite numerous opportunities to offer feedback or criticisms, at no time in the past did Nike express concerns to StockX about its authentication processes,” StockX wrote. “The motive behind Nike’s new-found litigation position is suspicious at best.”

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The response further contends that the counterfeiting and false advertising claims are “an affront to the entire resale marketplace.” StockX set itself apart from “the vast majority of marketplaces,” noting that it requires every product to pass an authentication process and offers a refund policy “for the rare case” where a counterfeit product reaches a customer.

“If Nike is willing to bring these claims against StockX—who they have praised as a ‘good actor’ that is aligned with their anti-counterfeiting mission—then no marketplace is safe,” it said. “The entire secondary market is perpetually at risk, without any ability for marketplaces or resellers to protect themselves from a frivolous lawsuit. Nike’s true motive—to inflict damage on the resale market as a whole—is obvious.”

StockX also questioned the “significant gaps” in Nike’s amended complaint regarding the alleged counterfeit shoes it claims to have bought, including how it identified the products as inauthentic, how it came to possess these shoes, whether it can “verify the chain of custody” from the time of purchase, whether Nike or its employees “had anything to do with these shoes entering the StockX platform in the first instance,” how many shoes it bought before finding the counterfeit pairs, why it did not notify StockX after discovering the counterfeits and why it “suddenly shifted its attentions to allegedly counterfeit shoes sold separate and apart from the Vault NFT program.”

“Most notably,” it questioned why Nike failed to include the counterfeiting and false advertising allegations in its original complaint and why it waited until May to add them. According to Nike’s amended complaint, it bought the four pairs of allegedly counterfeit shoes in December 2021 and January 2022—before it filed the original complaint on Feb. 3.

Regarding the allegedly counterfeit silhouette that is also one of the eight Nike styles backed by a StockX Vault NFT—the Air Jordan 1 Retro High OG Bred-Patent—it said it had itself authenticated approximately 55,000 pairs of the sneaker, rejecting more than 1,300 for not meeting its quality standards, including hundreds for being counterfeits or having manufacturing defects. The shoe, it noted, is also sold on other marketplaces that do not attempt to authenticate.

“Yet, Nike seems only to care enough about protecting consumers from, and has launched these disingenuous allegations against, the one platform that has now dared to stand up to Nike’s meritless NFT infringement claims,” it wrote.

According to a statement shared by StockX Monday, the company employs more than 300 authenticators. Since its inception, these individuals have inspected more than 30 million products and prevented $60 million in counterfeit sneakers from reaching buyers, it said.

“Like Nike’s initial claims, Nike’s recent allegations lack merit, demonstrate a lack of understanding of the modern marketplace, and display anticompetitive behavior that will stifle the secondary market and hurt consumers,” CEO Scott Cutler said. “We look forward to defending our reputation and understanding why Nike, which once sought to collaborate in combatting counterfeits, now seeks to undermine StockX’s business model.”

StockX also reiterated the grounds on which it previously refuted Nike’s other five causes of action. These arguments included its assertion that its NFTs “are absolutely not ‘virtual products’ or digital sneakers,” and have “no intrinsic value.” Instead, it described them as a “claim ticket” or “key” to the underlying item.

StockX originally launched its first non-fungible tokens in January. Dubbed “Vault NFTs,” the collection ties a tradeable digital token to a physical item StockX holds in its vaults. Owners can choose to redeem the NFT for the item, but must pay a $35 withdrawal fee, as well as shipping and any applicable sales tax. Though the initiative has since expanded to cover trading cards, watches and other collectibles, it originally launched with nine sneaker silhouettes—eight of which belonged to either the Nike or Jordan brands.

Weeks after StockX launched Vault NFTs, Nike filed a complaint alleging that the collection, which visually depicted Nike footwear on the graphics used to represent the NFTs, as well as materials promoting the launch, constituted trademark infringement, false designation of origin, unfair competition, trademark dilution and injury to its business reputation.

Last month, Nike filed a proposed amended complaint that added two new causes of action: counterfeiting and false advertising. These new allegations center around Nike’s assertion that it bought four counterfeit pairs of shoes on StockX’s platform over a two-month period beginning in December—at least weeks before the marketplace launched Vault NFTs. Each of these pairs bore StockX’s “Verified Authentic” hangtag and came with a paper receipt stating the shoes were “100% Authentic,” Nike said.

StockX directly responded to Nike’s counterfeiting allegation the following day with a statement posted to its newsroom. It described this “latest tactic” as “nothing more than a panicked and desperate attempt to resuscitate its losing legal case against our innovative Vault NFT program that revolutionizes the way that consumers can buy, store, and sell collectibles safely, efficiently, and sustainably.”

Per Monday’s response, StockX has completed 3,520 NFT transactions so far. Vault NFTs are currently associated with 43 different “types of physical products,” including various sneakers sold by Nike, Adidas, New Balance and Puma. In some cases, a single sneaker design may have only one corresponding NFT. In others, StockX offers hundreds of NFTs that each represent a matching silhouette in StockX’s vault.