Nike joins the fashion industry's fight against 'illegal' NFTs

The notoriety and value of digital assets in the form of NFTs has exploded in the past year – and so have the legal issues and complications that come with it.

Nike is the latest company to file a lawsuit on this issue. The company sued shopping platform StockX for creating and marketing NFTs with its logo and branding Thursday.

Nike follows a lawsuit by French luxury brand Hermès against artist Mason Rothschild, who last month auctioned off 100 MetaBirkins - a digital homage to the label's famous Birkin bag - with some raising tens of thousands of dollars.

The probability of success of NFT lawsuits

The Hermès case could end in many different ways, according to lawyer Annabelle Gauberti, whose Crefovi law firm specializes in the creative sector. Rothschild had argued in his defense that as an artist he is protected by the First Amendment - an appeal that often stands in US courts.

A similar situation already existed in Europe: Gauberti recalls a case ten years ago in which Louis Vuitton failed in an attempt to prevent a Dutch artist from labeling a Louis Vuitton bag with the image of a Darfur refugee Mistake. "The fair use argument works well, especially in UK and US law, where an artist can use a trademarked word or product to convey a message or to parody it," Gauberti said. But she also said that Rothschild might have difficulty convincing a judge of the artistic merit of his work: "It's hard to see at first glance what message he's trying to convey, apart from the fact that he can make a lot of money. So it will." be a lot of work for his legal team," she said.

The Nike case is a more commercial one, as StockX itself has never claimed that its NFTs are a form of art. Nevertheless, it remains to be seen whether and how trademark law will prove itself in the digital world. "The extent of trademark protection in the digital world, as well as the possible legal implications, has yet to be explored," attorney Danielle Garno wrote in a briefing for Lexology.

Do NFTs have different rules than physical art?

In his public response to Hermès, Rothschild compared his MetaBirkins to Andy Warhol's famous Campbell's soup pictures. "The fact that I'm selling the art with NFTs doesn't change the fact that it's art," he wrote in his response posted on Twitter.

However, Edward Lee of the Chicago-Kent College of Law told Bloomberg Law that the Warhol comparison was not perfectly apt, as the Campbell Soup Co. would likely never get into the business of selling paintings, while Hermès would certainly choose to do so could create his own NFTs.

The technological aspect of NFTs can also cause confusion, because an NFT is basically just proof of ownership, not the object itself. “Many people assume that the content of the NFT is in the token when they talk about an NFT . But that's not the case, and because that's not the case, there is no such thing as unauthorized reproduction," Primavera De Filippi, co-author of Blockchain and the Law, told Business of Fashion magazine.

What can companies do to protect themselves?

Hermès has asked Rothschild to remove and destroy its MetaBirkins. So far, one of the NFT platforms, OpenSea, has agreed to withdraw the Meta Birkins from sale.

But Gauberti said it's very difficult to enforce his right online. “Even if the lawsuits are successful, the question is how to prosecute whoever already bought the item or how to prevent it from being sold at secondary auctions. As far as online enforcement goes, it's like the Wild West," she said.

It is best if the brands are one step ahead of the imitators and dominate the market with "official" NFTs. Nike did just that, acquiring RTFKT, a company specializing in the design of digital sneakers, in December. "A strong offense is the best defense," says Gauberti. "Right now, a lot of these brands are reluctant to develop their own NFTs because their core products are physical and they're watching the market for now to see if the Metaverse really is that through the roof." will go." (AFP)

This translated and edited post previously appeared on FashionUnited.com. Translation and editing: Karenita Haalck.