On Monday, the resale company StockX — which began with sneakers but has since branched out into art, collectibles and electronics — released a new brand campaign.
The campaign’s theme is “Own it,” focusing on how StockX consumers can “own” parts of their personality or personal aesthetic through the things that can be bought on the platform. But the term “own it” is a fraught one for StockX at the moment.
The company’s ongoing lawsuit with Nike rests on the concept of ownership. Nike sued StockX in May for selling NFTs that feature Nike imagery. Nike contends that StockX is selling a digital product using Nike’s protected trademarks, while StockX argues that the NFTs are merely tokens tied to a real physical pair of shoes held in StockX’s possession.
Since NFTs exploded in popularity at the beginning of 2021, the gold rush for brands to get into the space has outpaced regulation of the space. The ambiguity this creates has led to conflicts like the one between Nike and StockX over who is entitled to make and sell NFTs and of what.
But that ambiguity may end up changing soon. On July 8, senators Thom Tillis of North Carolina and Patrick Leahy of Vermont sent a joint letter to the U.S. Patent and Trademark Office asking the agency to conduct a study on the usage and legal rights of NFTs to help guide policy on the matter.
Among the list of questions that Tillis and Leahy sent, the USPTO is mandated to answer in what way infringement applies and who is responsible when an NFT is associated with an asset owned by a third party.
“Right now, this is a legal gray area,” said Andy Ruben, CEO of resale company Trove, which currently has no involvement in the NFT space. “It’s so early for NFTs and blockchains that a lot of this is still being figured out.”
According to Leahy, it’s important to answer these questions sooner rather than later.
“NFTs are already in global use today and their adoption continues to grow since their relatively recent introduction,” Leahy wrote in the letter. “NFTS can be found in nearly all spheres — from academia to entertainment to medicine, art and beyond. Thus, it is imperative that we understand how NFTs fit into the world of intellectual property rights — as said rights stand today and as they may evolve as we move into the future.”
The European Union has also recently updated its trademark policies in order to accommodate the rise of NFTs. The E.U. uses a system called the Nice Classifications to classify different types of goods and products into certain categories for trademark applications. On Friday, the European Union Intellectual Property Office announced that, in the next updated version of the Nice Classification, set to go into effect in 2023, NFTs will be incorporated into the law. An existing category called digital goods, which currently applies to products like downloadable music from iTunes, for example, will include NFTs.
However, the E.U.’s new rules state that describing a virtual good as an NFT is not enough. Instead, the E.U. will require people selling NFTs to also state what type of digital good the NFT is tied to. For example, an NFT tied to a work of digital art will have to list the art as well. Notably, the E.U. rules say that an NFT is tied specifically to a digital good, not a physical one.
Nike has been proactive in this area. It filed trademarks and “intent-to-use” applications with the USPTO at the end of 2021 for its various protected images, like the Swoosh and “Just Do It,” to be used in “downloadable virtual goods.”
If the USPTO comes to a similar conclusion as the E.U., that would be a blow to StockX’s argument that its NFTs are tied to a physical pair of shoes and not to the digital image that holders receive which features Nike’s trademarked imagery.
“[StockX’s] statements reflect the fact that StockX’s Nike-branded Vault NFTs, whose purchasers can trade or collect and display in their portfolio, are new virtual products that StockX has bundled with additional StockX services and unspecified benefits (‘exclusive access to StockX releases, promotions, events,’)” Nike’s lawsuit against StockX reads.