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Wednesday, March 31, 2021

Not Nike’s “Satan Shoes:" Is it Trademark Infringement & Dilution? (Updated)

The following guest post is by my FIU colleague Julia Jan Osei-Tutu, who teaches and writes on IP and fashion.

Update, April 2: The district court issued a TRO.

Satan Shoes” are Nike shoes that have been modified by MSCHF. Should one applaud the creativity or is this simply causing mischief and harming the brand?

MSCHF, a New York based company, is marketing and selling a modified Nike AirMax 97 as its “Satan Shoes.” This shoe is a collaboration between MSCHF and Little Nas X, who became well known for his hit song, “Old Town Road” with Billy Ray Cyrus. Lil Nas X is currently promoting his new song “Montero (Call Me By Your Name).” The video for the new song has scenes where Lil Nas X descends to hell and dances with the devil, hence the connection to the satanic theme for the shoe collaboration.

The Satan Shoe has Luke 10:18 written on the front part of the sole, referring to the Bible verse, and 666 near the rear. According to reporting by the New York Times and based on the product description on the website, a drop of human blood from the MSCHF staff members is mixed with ink that fills an air bubble in the Nike Air Max 97. The six hundred and sixty pairs of the shoe that were offered for sale by MSCHF for over $1000.00 per shoe were sold in less than one minute, with one pair remaining for a contest winner.  

Shoe reselling is a lucrative industry, and it is normally not a violation of trademark law to resell those expensive sneakers that you legally purchased. But what happens when the shoe is modified by a third-party and the brand receives a lot of negative public reaction to the customized shoe? Nike filed a complaint, alleging trademark infringement and dilution.

In its complaint, Nike quotes social media posts as evidence of the significant public criticism it received on social media when people assumed that Satan Shoes was a Nike product. Nike asserts that its brand suffered as a result, referencing a call to boycott Nike due to the MSCHF Satan Shoes, which Nike describes as unauthorized and materially altered. Nike seeks an injunction to prevent MSCHF from fulfilling its order for the modified shoe.

 Nike presents a compelling case that the affiliation with demonic imagery is hurting its brand, but is the law really behind Nike? Describing the MSCHF customization, Nike asserts that a “genuine Nike Air Max 97 shoe does not contain any of these customized features.” The customization makes the shoe a new, unauthorized product, according to the Nike complaint. It is worth nothing that the Satan Shoe is not the first modified Nike shoe that MSCHF has sold. MSCHF also sold a customized Nike shoe called “Jesus Shoes” that had “holy water” injected into the soles. Nike did not file suit in relation to the Jesus Shoes, which also sold out.

To establish trademark infringement, Nike needs to demonstrate that there is a likelihood of confusion between its valid trademark and the MSCHF Satan shoe, which also uses the Nike mark since it is a Nike shoe. In evaluating trademark infringement, courts will consider a non-exhaustive list of factors, such as the strength of the brand, the similarity of the marks and products, the intent of the defendant, and evidence of actual confusion, among other factors.  The goal is to ascertain whether consumers are likely to be confused, not whether they are actually confused. However, evidence of actual confusion, which appears to be present here, is helpful to the plaintiff’s case.

There is no question that Nike is a very well-known brand that would be entitled to broad protection. However, the argument for likelihood of confusion at the point of sale is weak because the purchaser knows whether they are buying from Nike or MSCHF. There is possibly some initial interest confusion or post-sale confusion, which Nike also alleges in its complaint, because potential purchasers may think the MSCHF shoe is made by Nike when they see it online or on someone’s feet. Remember that MSCHF is not applying the Nike marks to its own shoe. It is purchasing, customizing and reselling a Nike shoe, which bears the Nike logo.

The public backlash, including the call to boycott Nike for its apparent association with Satan Shoes is relevant to the question of dilution. Dilution is available to famous marks, such as Nike. Dilution by blurring impairs the distinctiveness of a mark and dilution by tarnishment refers to an association arising from the similarity between the marks that harms the reputation of the famous mark. The dilution provision in the federal Trademark statute, the Lanham Act, makes it clear that a successful dilution claim under federal law does not require actual or likely confusion, competition, or economic injury.

Though there is no statutory definition of harm in the statute, courts have tended to find tarnishment in cases where there is some sexual connotation. It is not clear whether simply having the word “Satan” in the title of the shoe, the Biblical references on the shoe, and the human blood injected into the sole of the shoe would be sufficient to amount to tarnishment. While some segment of the population was upset and offended, the shoes seem to have been quite popular, selling out very quickly, and at a price several times higher than the price for the original Nike shoe.

Since it is a resale of a Nike shoe, there may be an argument for trademark exhaustion or first sale doctrine, which provides that the resale of the original article by the first purchaser is neither trademark infringement nor unfair competition. Once a product has been sold by the trademark owner, the purchaser is generally free to resell the product, subject to some limited exceptions. Courts have held that where repackaged products are marked accurately so that the purchaser is put on notice about the source of the product, then there is no infringement or dilution. This is not a case involving repackaging of goods, but if, for instance, it is clear that the modified shoe comes from MSCHF and not directly from Nike, this could be sufficient because the potential confusion would be minimized or eliminated. If it is not clear, this strengthens the argument for infringement and dilution. 

Another exception to the first sale doctrine is the material differences rule, which tends to arise in cases involving parallel imports of goods that are first sold by the trademark owner in another country. However, the rule is not limited to such cases. Goods that are resold are materially different from the original goods if they would affect the consumer decision to purchase the altered product. These differences could be physical differences, such as those contained in the customized shoe. This is a fact specific case by case assessment, which makes it somewhat difficult to predict.

Since the resale of a shoe by the first purchaser is legally permissible, Nike may need to show that the customization of the Satan Shoe has led to material differences between the original shoe and the MSCHF version, thereby causing confusion in the marketplace and diluting the brand. Since Nike has asserted in its complaint that the shoes have been materially altered, this may be part of the Nike strategy.

Ultimately, Lil Nas X’s popular “Montero” single and MSCHF Satan Shoes have successfully launched with significant public attention.

Posted by Howard Wasserman on March 31, 2021 at 11:15 AM in Culture, Intellectual Property | Permalink


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