Sneakers are incredibly popular these days, both as urban streetwear and as financial assets. Individuals known as “sneakerheads” often collect, trade, or resell rare sneakers. Similarly, auction houses, such as Sotheby’s, as well as online marketplaces including StockX and GOAT, sell sneakers, some of which are so rare they sell for five figures. Due to their rare nature, the marketplace is ripe for selling counterfeit sneakers.
As with many profit generating products, footwear often intersects with the law, particularly in the area of intellectual property. Trademarks and patents are omnipresent within the sneaker industry. In fact, sneakers are prime targets for counterfeiting and trademark infringement—Customs and Border Control has seized nearly $100 million worth of counterfeit footwear. There are a number of interesting legal cases that provide a good picture of what is transpiring within this industry.
Nike vs. StockX
The recent movie Air told the story of how Michael Jordan came to represent Nike, paving the way to launch the legendary Air Jordan shoe. As fans of the film have seen, Nike takes its sneaker business seriously. It should be no surprise that when Nike found that StockX had allegedly sold several pairs of counterfeit sneakers, Nike began litigation to address StockX’s sale of the shoes, as well as its authentication policies.
Interestingly, Nike had previously sued StockX for trademark infringement and dilution. At the time, StockX created non fungible tokens, or “NFTs,” containing images of various Nike shoes that displayed the famous Nike “Swoosh.” Nike argued StockX was using their marks without permission, they further argued that the use diluted and diminished the Nike trademark. StockX argued a defense of fair use.
Busy Nike Lawyers
Stock X is not the only company Nike has sued. The sneaker company has upped its game on intellectual property and has filed for hundreds of patents over the last few years. They have sued Lululemon for infringing upon a patent related to textiles and webbed areas. Nike has also sued the Japanese company A Bathing Ape (known as Bape) for trademark infringement, stating the company is making shoes that are nearly identical to some of Nike’s top sellers, including Air Force 1 and Jordan 1.
The interesting thing about Bape vs Nike has registered what is known as trade dress protection for these and other popular sneakers. Trade dress is defined as “the overall commercial image (look and feel) of a product or service that indicates or identifies the source of the product or service and distinguishes it from those of others…. Trade dress can consist of such elements as size, shape, color, texture, etc.to the extent such elements are not functional.” The trade dress argument was a large focus of the complaint against Bape.
Another prominent Nike sneaker lawsuit was over the “Satan shoes,” a pair of Nikes promoted by singer Lil Nas X. These were altered to contain a drop of blood, and Nike, who had no part in making the shoes and no desire to be associated with such imagery, took swift action to reach a settlement with MSCHF, the company that produced them.
Adidas vs Payless Shoesource
Nike is not alone in monitoring and enforcing the intellectual property rights of its sneakers. Other companies, such as Adidas, also enforce their property rights when faced with potential infringement. Adidas has a wide-ranging intellectual property portfolio, which includes the “Three Stripe” trademark and its “Superstar” trade dress.
Several decades ago, Payless Shoes sold inexpensive sneakers with three stripes that were very similar to what Adidas used on its well-known kicks. In 1994, Adidas sued Payless for trademark infringement and dilution. Payless kept producing new models, however, and many of these continued to bear strikingly similar marks to Adidas’ trademarks—Payless even created shoes with two and four stripes!
One can imagine how this may have further angered Adidas. Eventually, Payless was found to have acted “willfully” in continuing to infringe upon Adidas’s intellectual property and was ordered to pay $305 million. This amount was later reduced, but was still a very significant amount for a trademark law case.
Protecting Rights: A Continuous Process
Adidas, like Nike, continually works to protect their products’ intellectual property rights. Both companies have sought to build portfolios of intellectual property and regularly monitor the market to ensure counterfeit sneakers and copycats are identified and addressed. This includes nameless and well-known counterfeiters.
Litigation and other types of enforcement provide guidance and support in the ever-changing sneaker landscape. Business owners seeking to become a part of this booming industry should respect the intellectual property of other businesses and work with experts on creating and protecting a brand of their own. And sneakerheads, be cognizant of where you are buying your shoes to avoid counterfeit products.
The Michelson Institute for Intellectual Property, an initiative of the Michelson 20MM Foundation, provides access to empowering IP education for budding inventors and entrepreneurs. Michelson 20MM was founded thanks to the generous support of renowned spinal surgeon Dr. Gary K. Michelson and Alya Michelson. To learn more, visit 20mm.org.