Nike wants to ‘destroy’ rogue NFTs – how will it work?

Charlie Taylor

When a company like Nike finds someone using its brand without permission, it can ask the courts to order the unauthorized goods destroyed. Nike has done this in the past, but its latest trademark lawsuit comes with a twist — the products it wants to “destroy” are NFTs, which are permanently inscribed on the Ethereum blockchain. , a website that allows people to buy and sell used brands, including Nike shoes. These sneakers are among their most popular items, and a few months ago StockX decided to take it a step further by selling NFT versions of the Nike Dunk, Jordan 1, and other sneaker lines. According to StockX, NFTs — which it calls Vault NFTs — are simply a receipt that customers can redeem for the equivalent pair of physical sneakers. If they choose to redeem, they must surrender the NFT. NFTs, by the way, look like this: It might come as no surprise that a brand-conscious company like Nike, which recently announced its own partnership with NFT studio RTFKT, doesn’t buy into StockX’s “receipt” theory for NFTs. For the footwear giant, NFTs are a trademark infringement. In a complaint filed last month in federal court in New York, Nike accused StockX of stealing its trademark to profit from a “gold rush market” for NFTs. (The company may be right: many of the NFTs sold for more than $1,000 and few people seem interested in trading them for shoes.) As a remedy for StockX’s alleged infringement of its trademarks, Nike wants the company to turn over its profits and stop selling NFT sneakers. It also wants a judge to “order that StockX be obligated to hand over to Nike for destruction any and all NFTs from the Vault.” According to Alexandra Roberts, a professor of trademark law at the University of New Hampshire, it is quite common for companies to ask to destroy goods that infringe on their intellectual property – there is even a law that authorizes them to do so. But whether a court will grant the order largely depends on what the trademark owner is trying to destroy. “Material destruction might seem reasonable when we’re talking about a sign in front of a restaurant, menus, napkins and pizza boxes, jewelry,” Roberts said. Where do NFTs fit into this? It’s an open question, as the courts have never had to address it before. And even if the New York court agrees to order the destruction of the StockX NFTs, there is the question of how exactly Nike would do that. Records on the blockchain show that StockX actually inscribed the NFTs on Ethereum, meaning they are indestructible, except in the extremely unlikely event that the developers agree to fork the blockchain to get rid of them. According to some, the most practical thing for Nike would be to send the NFTs to a so-called burner wallet. It wouldn’t destroy them, but it would serve the same purpose: “This means that the best outcome for a brand that is trying to destroy NFTs might be to send them to a write address, which still doesn’t destroy them, but makes them incapable of being transferred. ”, writes the Fashion Law Blog. Roberts notes that Nike may have a good reason to seek the destruction of NFTs, as “in the context of the metaverse, not only do NFTs last much longer than dresses or shoes, they can be resold many times over without losing value.” But she agrees that sending the NFTs to a burnout wallet can achieve the same goal — for her, the measure amounts to a luxury brand seizing counterfeit goods, then putting them in a safe deposit box and throwing away the key. Nike and its lawyers did not respond to repeated requests for comment on their plans for the NFTs if they win the case. It is possible that the lawyers have not yet thought about the matter and simply used the standard language of previous trademark claims in the StockX case. If the judge sides with Nike in the case and agrees that the NFTs should be destroyed, it will be interesting to see if the company will actually employ a burning license and if it or other brands will use that same address – someday in the future, there could be a blockchain wallet stuffed with nothing but fake and unauthorized luxury goods. *Translated with permission from Decrypt.co.

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