How trademark infringement applies to NFTs
ARI SHAPIRO, HOST:
Nike, Quentin Tarantino and Birkin bags have something in common - they're all tied up in separate lawsuits related to NFTs, nonfungible tokens. People are spending billions of dollars on NFTs. They are seen as a new digital frontier to buy, trade and sell goods.
But this new frontier is still pretty wild. Nike is suing the online resale platform StockX for trademark infringement. StockX operates what it calls a Vault NFT. Here's NPR's Elizabeth Blair.
ELIZABETH BLAIR, BYLINE: If you're confused about NFTs, here's some sage advice from attorney Rhett Millsaps.
RHETT MILLSAPS: You might want to look up the dictionary definition of NFT. Actually, you know, it's in all the dictionaries now.
BLAIR: Millsaps represents an artist who's being sued over his NFTs. Merriam Webster defines a nonfungible token as a unique digital identifier that cannot be copied, substituted or subdivided that is recorded in a blockchain and that is used to certify authenticity and ownership. In other words, an NFT is not the actual thing you bought but proof that you bought it. Don't feel bad if you're still confused, says trademark lawyer Moish Peltz.
MOISH PELTZ: One of the hallmarks of a trademark infringement case is whether there's consumer confusion. And it's like, well, everyone's confused because NFTs are confusing.
BLAIR: And yet some of the age-old reason someone would sue for trademark infringement still apply. StockX is an online marketplace where you can buy Nike products, including sneakers. But Nike says StockX is not an authorized Nike retailer. Nike's lawsuit says StockX is minting NFTs that prominently use Nike's trademarks.
StockX sent NPR a statement, saying the lawsuit lacks merit. StockX says, quote, "its Vault NFTs depict and represent proof of ownership of physical goods stored in our vault that customers can trade on our platform." Trademark lawyer Moish Peltz says the idea is that those NFTs represent real sneakers.
PELTZ: If you purchase a StockX Vault NFT, you would have the right to exchange that NFT for the physical shoe.
BLAIR: Or, he says, they could be traded or resold.
PELTZ: So you could trade one NFT for another. You could trade one NFT for several other NFTs. You could sell it for more or less than you bought it for.
BLAIR: For example, on the StockX site, a pair of women's Nike Air VaporMax has gone from a sale price of $600 to $2,000 in less than a month. Dinusha Mendis, a professor of intellectual property and innovation law at Bournemouth University, says that can get a trademark holder's attention.
DINUSHA MENDIS: So if you're buying an NFT sneaker and it does have a trademark on it, like Nike, for you to go and resell it and you sell at a higher price, you know, if there's no association with Nike, then there might be an infringement there.
BLAIR: Nike itself is getting in on the NFT sensation through its purchase of a digital art studio active in the metaverse. In its lawsuit, Nike says StockX's Vault NFTs are likely to confuse consumers in that marketplace and jeopardize Nike's trademark.
Elizabeth Blair, NPR News. Transcript provided by NPR, Copyright NPR.