NIKE has reached a settlement with StockX regarding the infringement and counterfeiting of NFT products. Is the leader in sports shoes letting a startup off the hook to save its stock price?

According to a report by Reuters, a document submitted to the New York federal court on Friday shows that NIKE ( NYSE symbol: NKE) and StockX have reached a settlement in NIKE's infringement lawsuit against the online retailer, which dates back to 2022 when Nike accused StockX of launching NFTs without authorization, causing confusion among consumers with its brand trademark, leading to a trademark infringement lawsuit. NIKE accused the company of selling counterfeit shoes and unauthorized digital assets NFTs. Nike and StockX informed the court that they would dismiss the case based on a "biased" Consensus under ( note 1), meaning the case cannot be refiled, and both parties have "amicably" resolved the matter under confidentiality terms.

StockX NFT infringement lawsuit filed by Nike

Nike filed a lawsuit in 2022 accusing StockX of infringing its trademarks by selling NFT images of Nike sneakers. Nike claimed that consumers might mistakenly believe that StockX's NFTs were related to its sneaker products, as Nike had started selling its own NFTs earlier that year.

Nike later added accusations against StockX for selling fake shoes, stating in a proposed amended complaint that although StockX claims its NFT is a process to guarantee the shoes are authentic, according to Reuters, Nike purchased fake shoes through StockX, believing that the sale of fake shoes undermines StockX's argument.

StockX denied the allegations and called them "dishonest." Valerie Caproni of the U.S. ruled in March that StockX should be held responsible for selling 37 pairs of counterfeit shoes, with a jury trial set to begin in October regarding the remaining claims from Nike.

Nike reaches a settlement in the NFT impersonation case, ending a complex intellectual property dispute.

As of August 29, Nike's stock price was $77.37, with an intraday high of $79.12 and a low of $77.16. The settlement of the lawsuit may help boost market confidence in the Nike brand, which could reduce the pressure of risk premiums. Nike may take this opportunity to focus more resources on the brand's NFT projects. The brand's RTFKT has been embroiled in NFT controversies, making Nike a target of criticism. Over the past few years, Nike's stock price has plummeted, and in a short span of a few years, the CEO has changed multiple times, leading to a severe brand crisis.

The Nike lawsuit against infringement is highly significant both in terms of future NFT enforcement frameworks and market implications. It signifies that U.S. courts are adopting a more rigorous approach to trademark and intellectual property reviews for new financial products that combine physical goods and digital assets like NFTs. In the future, digital goods and brand collaborations must have clear authorization and comply with regulatory requirements to go to market. Interestingly, the reason why Nike reached a settlement with StockX remains unknown to outsiders due to commercial confidentiality clauses. It is intriguing why this leading American sneaker brand would let this NFT company off the hook.

Extended reading: Stock price plummeted 23%! What happened to Nike?

Note 1: When the court dismisses a lawsuit, they can choose to dismiss it with prejudice or without prejudice (有偏見或無偏見). A dismissal with prejudice means that the plaintiff cannot bring the same lawsuit again in that court.

This article discusses NIKE reaching a settlement in the case of NFT product infringement and counterfeiting with StockX. Has the sneaker giant let the startup off the hook to save its stock price? Originally appeared in Chain News ABMedia.