What looked at first like a relatively tame bout of litigation between Nike and resell giant StockX escalated this week, turning a lawsuit that was initially focused on trademark infringement via non-fungible tokens into a larger conversation about fake sneakers on the secondary market. There are many significant details missing in this latest phase, but it’s still given the sneaker public some of its most enticing drama since the last major sneaker industry allegations.
The battle between Nike and StockX turned deliciously messy when the former asked to amend its original complaint on Tuesday, submitting to the court a revised lawsuit that accused StockX of selling fake sneakers. Nike raised the stakes in doing so, calling into question not just StockX’s new NFT program but the legitimacy of its entire operation.
Every product sold on StockX is authenticated by the company—when a sale goes through, the seller submits the item to StockX to be verified; if it’s deemed authentic, the seller receives a payout and the item is shipped to the buyer. If not, the order is canceled. This process helped separate StockX from competitors like eBay, which only recently added an authentication service for sneakers. (Full disclosure: eBay is a sponsor of the Complex Sneakers Podcast, a show I cohost.) StockX’s legitimacy as a middleman that can verify whether sneakers are real is one of the things the business was built on.
In its lawsuit, Nike has challenged that legitimacy by saying it was able to acquire fake sneakers through StockX. The reselling platform responded to that claim with a statement the next day, defending its sneaker authentication process while slinging some mud back at Nike.
Here’s what’s happened in the Nike v. StockX lawsuit so far, as well as this writer’s opinions on the twists and turns that got us here.
Nike filed a memo on Tuesday asking the court to amend its original lawsuit, adding to it allegations of counterfeiting and false advertising. Nike lawyers say StockX has modified some of its statements about its NFT program since the lawsuit was filed in what the sneaker brand says is an attempt to “erase some of the unsavory conduct” identified in the lawsuit. Much more damning than that, though, was Nike blasting StockX’s authentication process. Nike says that since December 2021, it’s obtained four pairs of “authenticated” shoes from StockX that are counterfeit. Specifically, Nike lawyers say they bought a pair of the patent leather Air Jordan 1 “Bred” from StockX that was counterfeit. This, Nike says, renders StockX’s claims about products sold through its platform being “100% verified authentic” false and/or misleading.
My take: My great hope is that this lawsuit progresses further so that we can learn more about how exactly Nike went about buying fake sneakers from StockX. The easiest way to do this would be for the brand to set up a sting sale on themselves, listing a counterfeit shoe via StockX on one end of the purchase and then buying it from the other side to see if it passes authentication.
Nike not giving any detail in the lawsuit about how it obtained the shoes feels like a choice made to obfuscate a legitimate evaluation of how good StockX is at identifying fake shoes. If, for example, Nike ordered 500 pairs of Air Jordan 1s and had some poor intern sifting through them to find which ones weren’t legitimate, only to find four fakes in the batch, that’s still 99 percent accuracy.
Nike omitted an explanation as to how it determined the products obtained from StockX were counterfeit. There are absolutely people at Nike who know what to look for when spotting fake sneakers, but we don’t know what tools and knowledge they have access to that the public doesn’t. Are there methods they’re using to determine authenticity that are significantly better than StockX’s? Might those methods benefit more people if they were shared with secondary platforms? The counter to this is that making these tools more available would eventually benefit producers of counterfeit shoes, but one still has to wonder about how Nike officially confirms a sneaker’s authenticity.
On Wednesday, StockX responded to Nike’s accusations about counterfeiting with a statement that called the sneaker brand’s amended complaint “nothing more than a panicked and desperate attempt to resuscitate its losing legal case.” StockX said in its statement that the in-house brand protection team at Nike has expressed confidence in its authentication program. Juiciest of all, it claimed that “hundreds of Nike employees—including current senior executives—use StockX to buy and sell products.”
My take: I agree with the sentiment from StockX that Nike’s escalation this week is a bit of a distraction, but everything else about this response is wild. It doesn’t address the issue of fakes on its platform that directly, deflecting to nudge people in the direction of a grand conspiracy involving Nike people themselves reselling shoes.
This comes off as StockX playing into the Ann Hebert scandal from last year by saying that Nike employees up to the executive level use its platform. The idea of a Nike exec buying products on StockX isn’t that devastating or surprising, but it is satisfying to imagine a higher-up suffering through the tilted balance of supply and demand Nike itself carefully orchestrated and paying thousands of dollars for a pair of Travis Scott Jordans. If high-level Nike employees really are reselling a significant amount of shoes on StockX, though, the brand has some internal auditing to do. Still, given the platform’s data leak in 2019, it’s a bad look for StockX to be referencing customers’ private data, no matter where they work, in a public statement like this. One of the great things about StockX is the anonymity it grants, and this feels like a breach of that.
After Nike accused the platform of selling fake shoes this week, StockX provided Complex with data on its authentication process. StockX says it’s invested millions of dollars in authentication and that its customers report a 99.96 percent accuracy rate. The platform says it’s turned down nearly 300,000 products that failed authentication in the last year, which represents over $60 million in value. StockX pointed out that it authenticates over 1 million products per month and claims to have stopped $50 million worth of fake sneaker transactions.
My take: We know that fake sneakers get through on StockX, because no secondary platform can provide 100 percent guarantee that every product sold is legitimate. There will always be human error. And fake sneakers are increasingly hard to differentiate from the real thing—gone is the era in sneaker collecting when uploading a few jpegs to show your peers on a forum was good enough to tell whether you’d been duped. But nobody wants to buy from a platform they don’t trust, and there are plenty of people who don’t trust StockX.
All one has to do is search for StockX on social media to encounter the ample complaints and horror stories from customers who say they were sold fakes and offered no resolution. These are tough to verify, but there are too many to ignore. There are claims about shoes arriving damaged. There’s even a video circulating this week of a delivery driver outside StockX’s dropoff location in New York carelessly chucking boxes into his truck, although it’s not clear if they’re items sold through the platform. Of course, there are millions more smooth transactions not marked by any kind of social media post.
Is the negative feedback enough to dissuade me personally from using StockX? More often than not, if I’m bidding on StockX, it’s to put lowball offers on Supreme clothing that people forgot about. I’ve never doubted the authenticity of the few items I have purchased there. I’ve sold a good amount of items, but only ever bought two pairs of shoes (one of which I later resold). The news of the lawsuit won’t affect how much I use StockX, which was already pretty minimally. But it does remind me that every time I buy something on the secondary market, I am taking on some amount of risk that the item may not be authentic. If you as a buyer don’t feel comfortable with that risk or aren’t sure of how big it is, don’t buy the shoes.
