Nike Obtains Temporary Restraining Order: MSCHF On the Hook for Trademark Infringement and Dilution Over "Satan Shoes"

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Source: The Nike Complaint

The social media went ablaze when MSCHF dropped "Satan Shoes", which it advertised as customized Nike Air Max 97. The drop has garnered the attention of the media in large part because each shoe's midsole prominently displays red ink that contains a drop of real human blood. Arguably profiting off the satanic theme, which was reinforced by the presence of Lil Nas in promotional materials, MSCHF shared that only 666 pairs are up for sale. The limited collection was sold out. Nike promptly filed a complaint with the United States District Court for the Eastern District of New York (E.D.N.Y.) to stop the circulation. See Nike, Inc. v. MSCHF Product Studio Inc., 1:21-cv-01679 (E.D.N.Y). Counsel for Nike raised two issues - trademark infringement and dilution - that are somewhat inter-related but quite distinct. Today, I will focus on explaining the trademark infringement portion of the complaint. That way, when I upload a post about dilution, you'll be able to see the differences between the two more clearly.

In its complaint, Nike states that MSCHF's "material alterations" to Nike Air Max 97 were never authorized and approved, making it clear that Nike "is in no way connected with [MSCHF]". Nike further points out that the unauthorized use would cause the public to assume "an erroneous association between MSCHF's products and Nike". Aside from the likelihood of confusion, Nike cited social media posts that are calling for people to boycott Nike as evidencing the actual confusion in the marketplace. In light of the uproar, the purpose of this lawsuit, Nike says, is about "setting the record straight" as "an innovative brand that strives to push the envelope and do the right thing". In essence, Nike wishes to completely dissociate itself from MSCHF, even though no affiliation ever existed in the first place.

Source: The Nike Complaint

Nike indicates that the manufacturing and distribution of infringing shoes featuring Swoosh, Nike's trademarked logo, is the basis for Lanham Act violations. See 15 U.S.C. §  1114. In doing so, MSCHF illegally attempted to "capitalize on Nike's valuable reputation and goodwill" for its commercial gains. As remedies, Nike seeks to recover from MSCHF the actual damages it has come to suffer because of the alleged wrongdoing. Furthermore, Nike asserts that MSCHF acted with actual knowledge to impute bad faith to the latter. In the similar vein, Nike demands a jury trial. The idea seems to be that the jury will be sympathetic to Nike's case. If the jury finds bad faith on the part of MSCHF, Nike is entitled to statutory damages, which are not insubstantial. See 15 U.S.C. § 1117(c). In the meantime, the judge issued a temporary restraining order that enjoins MSCHF from distributing the shoes in question during the pendency of the lawsuit.

As a concluding remark, Nike seems rightfully concerned about the fact that it has received unsolicited negative publicity and is now embroiled in a legal dispute. It is thus completely understandable that Nike further demanded that all infringing products be sent to Nike for complete destruction. Nike can and will take every measure necessary to protect the goodwill of its famed Swoosh mark. In response, MSCHF issued a public statement in which it made a passionate appeal to the First Amendment. The statement highlights that "MSCHF strongly believes in the freedom of expression, and nothing is more important than our ability, and the ability of other artists like us, to continue with our work over the coming years." Would it work? Although I believe that the right of freedom of expression is a noble right that shouldn't be curtailed absent sound justifications, MSCHF's formulation sounds like nay to me, at least as it has been argued at this stage of the litigation.