“For Nike’s part, given the public protest, its aggressive response made sense. But so, too, did its ultimate decision to settle for a voluntary rather than a mandatory recall…. [F]orcing a mandatory recall was unlikely to increase Nike’s popularity among the adoring sneakerheads who paid over $1,000 to purchase the collectible Satan Shoes.”
Though the parties have quickly settled their case, the question remains open: was Lil Nas X’s “Satan Shoe” an exercise of free speech or a trademark violation? What we do know is that sneaker giant Nike’s complaint filed in the Eastern District of New York on March 29, 2021 alleged a dispute of biblical proportions against Brooklyn art collective MSCHF Product Studio, Inc. Nike targeted its own Air Max 97 shoe, which it claimed MSCHF and its collaborator Lil Nas X (who was not named in the lawsuit) materially altered to feature an upside down cross, a pentagram, and an injection of human blood into the sole to create the “Satan Shoe” – 666 of them to be exact. The Satan Shoe still displays Nike’s famous Swoosh, which inspired calls to boycott the brand for its alleged association with the controversial shoes. Nike asserted claims of trademark infringement, trademark dilution, false designation of origin, and unfair competition, and sought a temporary restraining order, a permanent injunction, and damages.
In a battle that threatened to be bloodier than the shoe at its center, the main legal issues would likely have been:
- Whether the “First Sale” Doctrine Protects MSCHF. Generally, the first sale doctrine allows the owner of a product to resell it, even if the product is protected by copyright, trademark, or other IP. The first sale doctrine has been described as “critical to the functioning of our economy” because it “reduces transaction costs and enables competition between sellers of new products as well as between new and used products.” Owners’ Rights Initiative, Docket No. 130927852-3852-01, Department of Commerce, USPTO. However, the first sale doctrine does not apply where the product has been “materially altered” prior to resale and accordingly is not “genuine.” This exception applies because material alterations can create confusion as to whether the trademark owner or the reseller is responsible for them, despite the owner being deprived of its right to control the quality of its own products. See Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 25:41 (5th ed. 2019).
Nike’s allegations suggested the Satan Shoes run afoul of the first sale doctrine because they are “customized in such a manner that they constitute new, unauthorized products” and thus are not genuine. Nike, Inc. v. MSCHF Product Studio, Inc., Case 1:21-cv-01679, ECF 1 ¶ 45 (EDNY March 29, 2021). Nike expressed concern that material alterations such as the injection of human blood and red ink into the midsole may even pose safety risks for purchasers, and because it wasn’t involved, Nike had no opportunity to inspect the shoes for quality. Nonetheless, because the Satan Shoes retain Nike’s Swoosh and other trade dress, Nike alleged that consumers have been deceived into believing that Nike manufactured or endorsed them, material alterations and all. On balance, it seems likely Nike has the better side of this argument, as the first sale doctrine is not intended to sanction this kind of mass alteration of another’s product without permission.
- Whether the Satan Shoe is Protected By the First Amendment. Even if the first sale doctrine does not apply, MSCHF argued the Satan Shoe is untouchable because it is protected by MSCFH’s First Amendment right to free speech—namely, to comment on greedy “collab culture” and to criticize religious norms that demonize homosexuals. This kind of First Amendment / free speech defense is often successful where the asserted trademark is used in a context that clearly conveys a joke or social commentary, such that consumers are unlikely to mistakenly believe that the trademark owner condoned the use. MSCFH relied on precedent that protected prior parodic works that courts considered “artistically relevant,” “not explicitly misleading,” and/or “noncommercial.” See Mattel Inc. v. Walking Mt. Prods., 353 F.3d 792, 806–12 (9th Cir. 2003) (photographs of Barbie dolls that offered critique of women’s position in society was artistic and protected under the First Amendment, notwithstanding Mattel’s right in its Barbie trademarks and trade dress); Cliffs Notes, Inc. v. Bantam Doubleday Dell Publ’g Grp., Inc., 886 F.2d 490, 494–95 (2d Cir. 1989) (parody of Cliffs Notes study guides called Spy Notes not likely to cause confusion because “the consumer would likely be put on notice from the first that Spy Notes was not Cliffs Notes”); VIP Prods. LLC v. Jack Daniel’s Props., Inc., 953 F.3d 1170, 1176 (9th Cir. 2020) (dog toy that resembled a bottle of Jack Daniel’s Whiskey not actionable under the dilution act because the trade dress was used to convey a humorous message and was therefore “noncommercial”).
Nike denied that the First Amendment could save MSCHF. It argued that MSCHF’s mass-produced shoes are not entitled to the same protection as a single work in a museum or in a satirical magazine, that MSCHF’s “work of art” demonstrates no artistic relevance to Nike’s trademark, and that any religious commentary is divorced from Nike’s company, brand, and the sneakers that MSCHF is using as the vehicle for its message. Moreover, even if there were some protectable art at play, Nike asserted that MSCHF incorporated more of Nike’s trade dress than necessary to accomplish its message, including most prominently, Nike’s famous Swoosh.
Setting aside somewhat subjective issues around the protectability of the “Satan Shoe” as art or free speech, First Amendment defenses are usually subservient to the ultimate question of whether consumers are likely to be confused that Nike is “in on” the Satan Shoe. MSCFH claimed its highly sophisticated “sneakerhead” customers, who have already purchased 665 of its 666 “works of art” for $1018, won’t mistakenly believe that Nike approved of the Satan Shoe. Nike, for its part, pointed to evidence of numerous social media posts and a Snopes.com entry that demonstrate actual confusion, even by such “sneakerheads,” in support of its claims of a likelihood of both point-of-sale and post-sale confusion, dilution by blurring, and dilution by tarnishment.
- Whether Nike Has Acquiesced to MSCHF’s Alterations. As sneakerheads will remember, in 2019 MSCHF produced the “Jesus Shoe,” another of its Nike-based “works of art,” which altered the Nike Air Max 97s by incorporating 100 percent frankincense wool, adding a crucifix to the laces, and injecting holy water into the soles. According to MSCHF, Nike did not object to the Jesus Shoe, which led MSCHF to believe Nike would adopt the same attitude toward future projects. But as Nike pointed out in its response, trademark owners are not obligated to pursue every act of infringement. While the Jesus Shoe involved similar alterations, fewer than two dozen sneakers were produced, and the more traditionally Christian “message” inspired far less incendiary commentary than its satanic successor.
Nike was first to slay the demon in this case by obtaining an order preventing MSCHF from selling the Satan Shoe, and finding that Nike was likely to succeed on its infringement and dilution claims. The order did not demand a recall, which made it somewhat of a pyrrhic victory since all but one of the Satan Shoes had already shipped.
Aside from the legal issues, the public controversy surrounding the Satan Shoe and its aftermath – including the parties’ settlement – seems the more interesting angle. Nike and MSCHF agreed that MSCHF will issue a voluntary recall for both the Satan Shoes and the Jesus Shoes, offering refunds to purchasers who wish to return the shoes. For those consumers who choose not to return their shoes, no recourse from Nike will be available in the event of a defect or other issue with the shoes.
As indicated by David Bernstein of Debevoise & Plimpton, MSCHF’s attorney, MSCHF’s controversial statement was intentional, and Nike’s lawsuit effectively amplified MSCHF’s artistic message. But that outcry cuts both ways and is probably also a large part of the reason MSCHF agreed to the voluntary recall. That’s because the outcry evidenced actual confusion, which would likely have been the death knell to MSCHF’s First Amendment defenses.
For Nike’s part, given the public protest, its aggressive response made sense. But so, too, did its ultimate decision to settle for a voluntary rather than a mandatory recall. Even though Nike likely had the upper hand when it comes to the law, forcing a mandatory recall was unlikely to increase Nike’s popularity among the adoring sneakerheads who paid over $1,000 to purchase the collectible Satan Shoes (which are now all the more valuable because of the ban on additional shoes). And Nike must of course stay hip to sneaker culture, which places substantial value on these artsy collab shoes that are part fashion part social commentary. Its settlement manages to avoid brand devilment by absolving itself of responsibility for the Satan Shoes (and the Jesus Shoes)—all without alienating the sneakerheads who heavily influence the market in which Nike operates.
Images taken from court documents