Jun 6, 2022 - Economy

NFTs bring opportunity and pain to brands

Illustration of a social media "like" icon made out of a $100 bill.

Illustration: Gabriella Turrisi/Axios

Companies such as Nike have been rushing to digitize their products (sneakers, burgers, beer, clothing, tweets) in the form of NFTs, or non-fungible tokens, and add-ons for virtual spaces — or the metaverse.

Why it matters: Popularity can be monetized in more ways than ever. But with that comes a whole new set of threats to brand protection.

  • "There’s absolutely a push — particularly among major brands — to not only exploit, economically, these new opportunities but also to protect themselves from an intellectual property standpoint," Darren Heitner, an IP attorney, tells Axios.

Driving the news: Nike and secondary online marketplace StockX are locked in a legal battle over the use of Nike’s brands.

  • Nike claimed in a lawsuit filed earlier this year that some of StockX’s NFTs infringed on Nike’s trademarks and the NFTs themselves could damage Nike’s reputation.
  • The brand as of last month has also accused StockX of knowingly selling counterfeits

StockX responded to the latest claim today in a filing, and CEO Scott Cutler tells Axios the claims are “absolutely meritless.”

  • "We are not selling a Nike sneaker. We're not selling a Nike trademark. We're essentially selling [an] NFT, which is related to the right to physically possess the item that is stored in a vault," says Cutler.
  • Nike did not respond to requests for further comment beyond the suit.

What to watch: StockX is preparing to go public and Cutler wouldn’t say more about the process other than the company is focused on expanding globally.

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