Sportswear brand Nike sought to sue MSCHF, an art collective based in America, for, amongst other things, trade mark infringement. Their 43rd release, referred to as ‘Satan Shoes’ is a pair of custom Nike Air Max 97 trainers produced in collaboration with singer Lil Nas X. The shoes are a limited edition shoe, with 666 pairs made and the sole of the shoes contain red ink and one drop of human blood as well as other symbols associated with Satanism.

BACKGROUND

On 29 March 2021 Nike filed a complaint against MSCHF in relation to the Satan Shoes on the grounds of “initial interest confusion, post-sale confusion, confusion in the secondary sneakers markets, and dilution by blurring and tarnishment” [48] claiming that “Nike has suffered significant harm to its goodwill, including among consumers who believe that Nike is endorsing satanism” [42]

NIKE’s COMPLAINT

Nike claims that the shoes have been customized “in such a manner that they constitute new unauthorized products” [45] and brings the following causes of action:

  1. Trade Mark Infringement – under 15 U.S.C. 1114:

Nike claims that “MSCHF has knowingly used and continues to use in commerce, without Nike’s permission or authorization, Nike’s Asserted Marks, and/or confusingly similar marks, in connection with products manufactured, advertised, promoted, and sold in the United States…MSCHF has used Nike’s Asserted Marks with the knowledge of, and the intent to call to mind and create a likelihood of confusion” [53] – “no control over nature and quality” [55]

  1. False designation of origin/unfair competition – under 15 U.S.C. 1125(a):

In addition, Nike claims that the Satan Shoes are “likely to cause consumer confusion, mistake, or deception as to the origin, sponsorship, or approval of MSCHF and/or MSCHF’s Satan Shoes…creating false and misleading impression…”  that the shoes “are manufactured by, authorized, or otherwise associated with Nike” [61]

  1. Trade Mark Dilution – under 15 U.S.C. 1125(c):

It is also alleged that the Satan Shoes are “likely to cause dilution of the distinctive quality of Nike’s Associated Marks” [70] and that the use of “satanic imagery is likely to cause dilution by tarnishment” [70]

  1. Common law TMI and unfair competition

Nike says that MSCHF, with knowledge and intentional disregard of Nike’s rights, continues to advertise, promote, and sell products using Nike’s Asserted Marks and/or confusingly similar marks. MSCHF’s acts have caused, continue to cause, and/or are likely to cause confusion as to the source and/or sponsorship of Nike’s products.” [78]

TEMPORARY RESTRAINING ORDER

On 30 March 2021, Nike applied for a temporary restraining order against the shoes which was granted and motioned for a preliminary injunction against MSCHF.

MSCHF STATEMENT

On 1 April 2021 MSCHF published a statement in relation to the dispute, outlining the fact that they had previously released Jesus Shoes, which were customised Air Max 97’s containing holy water from the river Jordan in the sole. In the statement, MSCHF said “who are Nike to censor one but not the other?” and highlighted the fact that the collective had “no affiliation with Nike” and that they “strongly believe in the freedom of expression”.

SETTLEMENT

The parties ultimately settled the dispute on 8 April 2021.

WHAT MIGHT HAVE HAPPENED IN THE UK?

Under English law, trade mark infringement is covered by section 10 of the Trade Marks Act 1994 (TMA).

  • S10(3) TMA covers tarnishment and dilution, a trade mark owner would have to demonstrate that their “trade mark has a reputation in the UK, and that the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character, or the repute of the trade mark.”
  • S10(2) TMA where brand uses a sign which is identical/or similar with the TM and is used in relation to goods/services which are identical/similar and there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark.
  • Much like in the US, Nike would be able to apply for injunctive relief to prevent the sale of the infringing goods.

TRADE MARK EXHAUSTION

Under s12(1) TMA a “trade mark is not infringed by the use of the trade mark in relation to goods which have been put on the market in the European Economic Area under that trade mark by the proprietor with his consent.” This means that where a pair of trainers have been subsequently bought and resold there is no trade mark infringement. With customised shoes the law is not as clear cut.

Generally, where the customisation is merely decorative and there is no deception as to the origin of the shoes i.e. the shoes are clearly labelled as customised a brand should be cleared to sell customised shoes. However, in MSCHF’s case, the soles of the shoes had been customised to include ink and one drop of human blood. Nike complained that “making changes to the midsole may pose safety risks for consumers” [33]. On that basis, Nike may be able to claim trade mark infringement under s12(2) TMA which says s12(1) “does not apply where there exist legitimate reasons for the proprietor to oppose further dealings in the goods (in particular, where the condition of the goods has been changed or impaired after they have been put on the market)”. In addition, the harm to Nike’s goodwill as a result of customers believing that Nike endorses satanism could be a legitimate reason for Nike to oppose further dealings.

BREXIT

The Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2019 deal with trade mark exhaustion after Brexit. In summary, where goods have been placed on the market in the UK, IP rights are not exhausted in the European Economic Area (EEA). Where goods are put on the market in the EEA they will be exhausted in the UK.