Lil Nas X Sued By Nike For Selling 666 “Satan” Shoes! – Ep. 31 [Podcast]

Summary

In this week’s episode of Stuff You Should Know About IP, Thomas Colson and Raymond Guarnieri discuss the Satan Shoe, a modified Nike Air Max 97 sneaker sold by MSCHF. The sole of each Satan Shoe not only contains flowing red dye that resembles blood, but also contains a drop of actual human blood. The Satan Shoe release coincided with the release of a Lil Nas X song entitled “Call Me By Your Name” and its accompanying music video. In 2019, MSCHF released the Jesus Shoe, which was a Nike sneaker that contained holy water from the Jordan River. Both the Satan Shoe and the Jesus Shoe contain the Nike swoosh, though Nike itself was not involved in the design or distribution of either shoe. The release of MSCHF’s Satan Shoe resulted in negative social media comments, threats, and boycotts directed at Nike. Nike did not sue MSCHF over the Jesus Shoe, but Nike did sue MSCHF over the Satan Shoe under two causes of action: 1) trademark infringement under the cause of action of a likelihood of confusion, essentially alleging that when consumers saw the Nike trademark on the Satan Shoe, they would mistakenly think that the Satan Shoe was a Nike product; and 2) dilution of the Nike brand, essentially alleging that MSCHF tarnished the Nike brand by using the Nike trademark in connection with the Satan Shoe. MSCHF responded that its consumers are so sophisticated that they would not be confused as to the source of the Satan Shoe, that most consumers use the Satan Shoe as a piece of art rather than as actual footwear, and that Nike was engaged in censorship because Nike did not object to the Jesus Shoe. However, the point of trademark law is to allow the owner of a mark to censor with respect to the mark. Nike sought and obtained a temporary restraining order that prevented MSCHF from selling the Satan Shoe, but by the time the TRO was issued, 665 of the 666 pairs of Satan Shoes had already been sold, and the 666^th was not even intended for sale. Tom Colson predicts that Nike and MSCHF will settle their case. [Editor’s note: Nike and MSCHF reached a settlement several days after the recording of this podcast.]

Sources

Transcript

Raymond Guarnieri:

Lil Nas X brings 666 Satan-themed Nike Air Maxes to the market, and Nike sues for trademark infringement. Can Lil Nas X’s lawyers ensure his salvation? Well, that might depend on what you mean by salvation. Today on Stuff You Should Know About IP, we cover the trademark battle from hell, literally.

Today’s episode of Stuff You Should Know About IP is brought to you by the Trademark Lawyer Magazine. If you want to stay up-to-date with everything that’s going on in the world of IP and trademarks, go to www.trademarklawyermagazine.com. This issue is free to read for up to eight weeks. That’s trademarklawyermagazine.com for global news in the world of trademarks. All right, Tom, what in the hell is going on with Lil Nas X?

Thomas Colson:

Oh my God, I love how you put that. What in the hell is going on? It’s funny because about two and a half or maybe two hours ago, I had never heard of Lil Nas X, okay?

Raymond Guarnieri:

And then you’ve got a very interesting call from me.

Thomas Colson:

Yes. And I had never heard of the Satan Shoe, which I should have. It’s almost like I’ve been living under a rock now that I’ve been doing a little bit of reading on it. So basically, just to kind of frame this with a little background, in March of this year, a company called MSCHF… And by the way, it’s spelled funny. It’s M-S-C-H-F, MSCHF. So if you want to search it online, it’s M-S-C-H-F. They collaborated with a recording artist whose name is Montero Lamar Hill, also known as Lil Nas X. And they collaborated to buy a bunch of Nike Air Max 97 shoes, modify them, and then sell them for a ton of money. And when I say a ton of money, these shoes sold out in a minute. In one minute after launch, one minute, they sold 665 shoes for $1,018 each, okay?

Raymond Guarnieri:

That’s insane.

Thomas Colson:

That’s insane. And the reason I emphasize 665 is because they held back the 666th shoe. As you know from Revelation, that is the sign of the beast, right?

Raymond Guarnieri:

Uh-huh (affirmative).

Thomas Colson:

And that Lil Nas or Montero Lamar Hill was going to, I guess, give away to someone he wanted or sell it or do something really cool with the number 666 shoe. Because each shoe, they consider a work of art so each one is numbered just like a print of a painting would be, like the 1st print, the 50th print, the 666th print. So MSCHF and Lil Nas get together to create this. But just to round this out a little bit more before we get into the Satan Shoe, a year before, actually two years ago, in 2019, MSCHF came out with another shoe which is called the Jesus Shoe.

Raymond Guarnieri:

I didn’t know about that.

Thomas Colson:

So the Jesus Shoe was white, all-white. And then the Satan Shoe is all-black with red and the Jesus Shoe was all-white. And essentially, the shtick on that shoe was… First of all, they only had a couple dozen of those, but they sold them for up to $3,000 per pair, okay?

Raymond Guarnieri:

Wow.

Thomas Colson:

And they make these things works of art. Like in the Jesus Shoe, they got holy water from the Jordan River and they shot it into the soles. So you get the soles and you see a liquid in there. It’s holy water. And they have crosses thrown into the laces and they make it look like a Jesus Shoe. In fact, there was a quote which I forgot to write down, but it was something like, “What would Jesus wear?” You know those bracelets that are What Would Jesus Do? Well, they had What Would Jesus Wear-

Raymond Guarnieri:

Oh, man.

Thomas Colson:

… and it was the dopest sneakers of all. It was the Jesus Shoe. So that’s in 2019. And Nike doesn’t care. They’re okay because they’re getting a ton of great press on the Jesus Shoe.

Raymond Guarnieri:

Interesting.

Thomas Colson:

Flash forward to Lil Nas and MSCHF creating the Satan Shoe. The Satan Shoe looks like Satan would wear, like what would Jesus wear and what would Satan wear. And in the sole of the shoe, they put red dye. So when you lift it like this, the red dye is flowing in the sole of the shoe. And their shtick on this is like in the case of the Jesus Shoe, they got holy water from the Jordan River. The Jordan River, I’m pretty sure is where John the Baptist was baptized, right?

Raymond Guarnieri:

Mm-hmm (affirmative).

Thomas Colson:

So anyway, in this, they take a drop of human blood, actual human blood, that was donated from all the MSCHF team and they put a drop of human blood in the sole of every shoe. So it’s red dye that looked like blood, but there’s actually real blood in there.

Raymond Guarnieri:

I feel like… I’ll just pause on that. Human blood?

Thomas Colson:

Yeah, yeah. I know. Listen, you got to give them-

Raymond Guarnieri:

Wouldn’t the CDC have a problem with that?

Thomas Colson:

Yeah, right. You got to give them props for being creative, right?

Raymond Guarnieri:

Yeah.

Thomas Colson:

Not only that, but they have this pentagon-shaped pendant on the top of the shoe and it’s got some text on it. They’ve got a citation to a phrase in the Catholic Bible from Luke 10:18 which is, “I saw Satan fall like lightning from heaven.” So the shoe actually says Luke 10:18 on it. And then the box, the box that the shoe comes in, which is… You know how Apple always has really cool boxes to their phones?

Raymond Guarnieri:

Oh yeah, yeah.

Thomas Colson:

This has a really cool box. I mean, it’s almost like Renaissance art inside. When you open the box, there’s a whole hell scene with all these people suffering in hell. I’ve been to the Louvre and you’d see wall of Renaissance painting after Renaissance painting and there’s all these hellish scenes. That’s what the box looks like, and then it has the Luke 10:18 actual quote on the box, in the inside. So you open it up and there’s just, bam, this really intense artwork.

So they released the Satan Shoe and it coincided with the release of a new Lil Nas song entitled Call Me by Your Name and a music video which is all about Satan as a snake coming down the tree and then he’s attacking Lil Nas, and then all kinds of nasty stuff happens. But it’s a little tiny bit unsettling music video, very intense. The graphics are very intense. So they have this out there. And the problem though, unlike when the Jesus Shoe came out which, by the way, the most Googled shoe in 2019, the Jesus Shoe. So Nike gets all this great press. Because you know, everyone’s not a Catholic, there’s all kinds of religions. But usually, people don’t get this uncomfortable feeling when they think of Jesus. Whatever your religion is, you’re not getting all this negativity around Jesus, for the most part, some people might, but for the most part. Whereas Satan, there’s a lot of frightening negativity that goes with it, right?

Raymond Guarnieri:

Sure. Yeah. I [crosstalk 00:07:39] that.

Thomas Colson:

So with the Jesus Shoe… Yeah. And look, I’m not against. You’re a Satan worshiper, that’s fine. I’m not bashing you. I’m just saying even you would have to admit if you’re a Satan worshiper, it’s kind of frightening, you know?

Raymond Guarnieri:

Just a little bit, yeah.

Thomas Colson:

Yeah. So the Jesus Shoe creates all this press, the number one Googled shoe in 2019. Nike pays this much money for all that press, right? Because the way MSCHF works is they buy the shoes at retail price, tweak them such that they’re not even Nike’s anymore although they still have the swoosh, and then they resell them. So Nike has nothing to do with this. They had nothing to do with the Jesus Shoe. They have nothing to do with the Satan Shoe, right?

Raymond Guarnieri:

Right.

Thomas Colson:

So it’s got nothing to do with that. So they spend this much money on advertising and they get all kinds of visibility around the Jesus Shoe. Then, comes the Satan Shoe. Now, they’re getting just as much press but it’s not the kind of press they want. They’re getting negative comments on social media, they’re getting threats, people boycotting them, right, because it looks like they’re sponsoring the shoe.

Now, it’s kind of interesting, Ray. In 2019 when the Jesus Shoe came out, it probably looked like they were sponsoring that shoe too, right?

Raymond Guarnieri:

Yeah.

Thomas Colson:

But they didn’t care because it was working for them. You know what I mean? It’s working in their favor. But as soon as it’s working against you, you got to protect your brand, right? I mean, their brand is worth a fortune. I mean, their brand is worth probably as much as their company. I mean, they’re the Nike Swoosh, right? It’s a famous mark and they’ve got to protect-

Raymond Guarnieri:

[crosstalk 00:09:25] wearing Nike shoes.

Thomas Colson:

Yeah. They’ve got to protect their brand, right?

Raymond Guarnieri:

They’re great. You associate a good shoe, Nike.

Thomas Colson:

Exactly. Exactly. When you see the Nike swoosh, you feel like, “Wow, that’s quality,” right? And that’s what a trademark is all about, being able to build your quality brand and then that becomes a sales rep for you. If you see anyone with a Nike shoe, they got a good shoe, right?

Raymond Guarnieri:

Yeah.

Thomas Colson:

So what do they do when they’re getting all this bad press suddenly? They immediately bring a lawsuit against MSCHF in the New York State District Court. They have original jurisdiction in the New York State Federal District Court because they’re suing under the U.S. Lanham Act, which is the trademark act essentially for the federal court. But they do something else because they are worried because this is becoming a runaway problem, right? They’re getting threats of boycotts, they’re getting negative press. They’re getting associated with devil worshipers, and they don’t want to be associated with that, right? It’s tarnishing their brand, okay? That’s an important phrase. It’s tarnishing their brand.

So what do they do? They sue for trademark infringement under the cause of action of a likelihood of confusion. They also sue under something called dilution, dilution of their brand. Now, trademark infringement under likelihood of confusion is essentially, people think it’s your product when it’s not. And the reason they think that is because something that looks very much like your trademark is on it, right?

Raymond Guarnieri:

Yeah.

Thomas Colson:

The trademark identifies the source or origin of the product. So when you see the Nike swoosh, who do you think of?

Raymond Guarnieri:

Nike.

Thomas Colson:

Nike, of course. And that’s what they want you to think until it’s on the Satan Shoe, right? So the problem that they have is-

Raymond Guarnieri:

And even now going forward, I’m going to think, now every time I think of Nike, I’m going to think of the Satan Shoe. How can you erase that from your memory?

Thomas Colson:

How can you get that out of your head?

Raymond Guarnieri:

The damage is done.

Thomas Colson:

Yeah. So here’s the weird situation they’re in though, okay? Let’s say that MSCHF was a company that was selling tens of thousands. They were in the business of selling the Satan Shoe and they were going to be selling it for years, maybe decades, right? Nike sues them, they bring what’s called a motion for a temporary restraining order, which basically is saying to the court, “Before we even get into the lawsuit, I mean before we get deeply into the lawsuit, we want you to temporarily restrain MSCHF from selling these shoes because every day, every minute that they’re out there in the marketplace, they’re hurting our brand irreparably.” Like you just said, Ray, I love the way you put that, it’s in your head already, right?

Raymond Guarnieri:

Yeah.

Thomas Colson:

When you think of Nike, you’re going to think of the Satan Shoe. When you see the Satan Shoe, you’re thinking of Nike, right?

Raymond Guarnieri:

Right.

Thomas Colson:

That’s what they’re trying to prevent. So there’s various phases. You could go for a temporary restraining order, a preliminary injunction, something to stop them. And they do a TRO, which is very urgent and very fast, right? Within days, you’re in court for a TRO.

Raymond Guarnieri:

Right. Because this all played out just in the last week and a half.

Thomas Colson:

Yeah. It all just played out. Right. Even though-

Raymond Guarnieri:

I think he announced it when they went on sale on Palm Sunday, which is like the start of the Christian Holy Week.

Thomas Colson:

Right, right. And even though I just learned about it today, it’s been in the marketplace for several days. You know what it kind of reminds me of?

Raymond Guarnieri:

That’s a short period of time for all of this to play out, right?

Thomas Colson:

Yeah, yeah. Yeah, exactly. Very short. That’s what a TRO is all about. They’re trying to stop it quickly before it destroys their brand anymore irreparably. They can’t fix it. You know what I mean?

Raymond Guarnieri:

Right.

Thomas Colson:

It’s funny because MSCHF responds and says, “Essentially, it’s moot because we only made 666 pair. We sold 665 pair in one minute. We’ve already shipped over 600 of them. So what exactly are you restraining us from doing? We’re not selling anymore,” right? It’s a weird position that Nike is in because they… What they demand is destroy all the shoes.

Raymond Guarnieri:

Wow.

Thomas Colson:

But they’re already out there, right? They’re all ready-

Raymond Guarnieri:

If the customer who has paid for it and has it, they can’t recall it, right?

Thomas Colson:

Yeah. You’re going to do a mandatory recall that’s not a safety recall. Even for safety recalls, how do you recall? You get a car with bad breaks. You send out a recall notice, but people come in if they want. They don’t come in if they don’t want to, right?

Raymond Guarnieri:

Right.

Thomas Colson:

So you’re not going to get someone who just paid. In fact, the fact that you paid $1,000 for a pair of shoes that is now all over the news, they’re demanding a recall, you think anyone’s going to return it?

Raymond Guarnieri:

Oh, they’re probably worth way more right now than they were when they went on sale.

Thomas Colson:

Way more. Exactly. Exactly. So it’s a weird place that Nike is in and MSCHF is in. It’s almost like bringing the TRO, bringing the lawsuit. I mean, they could sue for damages, but a temporary restraining order is just the first part of litigation. You’re suing an action. It’s going to progress the way it progresses, but before it progresses, they want to get them to get the court to stop them immediately because it’s so irreparably damaging. So it puts them in this really weird place of the damage is done and there’s no more sales and you can’t get them back. So what do they do? They prevent the sale of the 666 version which, by the way, Ray, I guarantee you will be worth a fortune, right?

Raymond Guarnieri:

Yeah.

Thomas Colson:

I mean, who in the crowd of people that are buying these… Again, they’re probably buying… They’re probably not wearing them, although we’re going to get to that. They’re probably buying them as art for their house, like they’ll go up on a shelf. But you’re going to have the 666 version, and if it’s not unsettling to you, like you don’t feel like you’re bringing the devil into your house or something, that would be a really valuable piece of art for you, right-

Raymond Guarnieri:

Sure.

Thomas Colson:

… especially with all the press. But here’s the funny thing that I was thinking about. There’s so much press now that pretty much everyone… Well, not everyone. I had not even heard of it until today. But a lot of people probably no longer associated with Nike because all the message has been… Like, I went to YouTube and watched a couple of people who do this thing called unboxing. Do you know what that is?

Raymond Guarnieri:

Uh-huh (affirmative). Yeah.

Thomas Colson:

It’s actually surprisingly cool.

Raymond Guarnieri:

It’s weirdly entertaining, right?

Thomas Colson:

It’s weirdly entertaining. Exactly. I mean, I thought this has got to be the stupidest thing. And then all of a sudden, I found myself, I couldn’t look away.

Raymond Guarnieri:

The height of Western civilization is watching videos of people opening-

Thomas Colson:

Of people.

Raymond Guarnieri:

… boxes of their product that they have bought.

Thomas Colson:

Look, I thought it was going to be really stupid but I couldn’t wait to see what was in the box, you know? Anyway, they’re unboxing this thing and the guy is saying on YouTube, he’s like, “This has nothing to do with Nike. Just so you know, this is not a Nike thing.” And people, I think, are pretty much hearing that it’s not about Nike but it’s still really spreading a message. It’s probably jacking up the price of these things. So whoever bought them is probably going to resell them for twice as much now if they want. It’s jacking up MSCHF and their reputation because everyone’s hearing about MSCHF now, right? Like I said, I never heard of them before, and now, I even know how to spell their name which has got that funky spelling. And even Nike, in a way, is probably getting… It’s going to turn to good branding because they’re fighting so hard against this tarnishment, right?

But by the way, I want to just mention the other cause of action is dilution. So there’s trademark infringement which is a likelihood of confusion. People buy a product and they think it’s a Nike product, but Nike’s position is, “You’ve changed it so much, it’s not a Nike product anymore.” But still, people think it is. They’re confused in the marketplace as to thinking it is. But the other cause of action is dilution, and that means even if people are not tricked, they know it’s not a Nike product but it’s in your head, right, Ray? It’s in your head. It’s in my head. And if you are a famous mark, in order to have the dilution cause of action, it’s got to be a famous mark. Because famous marks are so famous that I think the mentality is, it doesn’t really matter whether people are confused or not, your brand will be tarnished depending upon what that brand is associated with, right?

A lot of times, the brand is something that… You might have like a sex website that’s called whatever, Microsoft, and people are going to be like, “Oh, that’s got to be Microsoft. Or even if it’s not, I’m thinking of Microsoft when I think of that, and I don’t like that.” Anyway, so they’re bringing an action for dilution as well under the U.S. federal law. And that doesn’t even require people to be confused. They seem to have a good case, but MSCHF’s response as well is that not only do we already sell them all, but they’re also saying, “Hey, no one’s even using these as shoes. It’s just art. So no one.” And oh, they say that the buyers are so sophisticated. They call them sophisticated sneakerheads. And they’re so sophisticated and it’s so expensive that everyone who buys it knows it’s a MSCHF product, right?

Raymond Guarnieri:

Right, right.

Thomas Colson:

They’re buying it from us. They know it’s not Nike. But again, for dilution, you don’t need likelihood of confusion. But then, Nike still comes back because one of their cause of actions is likelihood of confusion and they say, “Well, you say no one’s wearing them. We just saw an Instagram post from Miley Cyrus who has 127 million followers where she’s wearing them,” right? So you say they’re artwork, but Miley’s wearing them and she’s spreading the fact that she’s wearing them to 127 million people, which is a lot of people since our entire country only has 350 million people, right?

Raymond Guarnieri:

Right.

Thomas Colson:

Now, I’m sure she has-

Raymond Guarnieri:

I’m sure Miley only put them on to take that one photo. She’s not wearing them in her trip to the grocery.

Thomas Colson:

Oh, yeah. But you know what, she might be because she’s rich enough to wear-

Raymond Guarnieri:

I get it. You’re right. It’s possible.

Thomas Colson:

… a $1,200 pair of shoes.

Raymond Guarnieri:

Probably her cheapest pair of shoes.

Thomas Colson:

Yeah. They’re her kick-around shoes. When she’s going out to do gardening, she’s wearing them. But anyway, so I agree that they’re probably a bunch of sophisticated sneakerheads that are buying these things as art. I mean, it seems like, I don’t know, it seems like an art piece. When you see it, Ray, because you’re going to probably have to get the images to put up on the podcast, you’re going to see, it looks like a piece of art. It looks like a piece of Renaissance art, you know? Again, during the time when a lot of stuff-

Raymond Guarnieri:

I’m sure what they were going for.

Thomas Colson:

Yeah, exactly. And they succeeded because it looks really cool. There’s no question that if you’re the kind of person who likes that sort of thing, it would look cool on your mantle. It’s kind of like, I don’t know, some people put professional football or some people put trophy, some people… Who knows what you’re going to put?

Raymond Guarnieri:

Put Satan stuff.

Thomas Colson:

Yeah. You go to your Satan room. It’s like, you got your Jesus room, you got your Satan room. This is cool for your Satan room. But anyway, so the other thing that MSCHF says is, “You weren’t hating on Jesus Shoes. You weren’t complaining about those. Why are you-

Raymond Guarnieri:

Right. That’s what I’m wondering.

Thomas Colson:

So here’s the thing. And then they used the word, censorship. They say like, “Now, you’re censoring our speech because we’re trending.”

Raymond Guarnieri:

Interesting.

Thomas Colson:

And by the way, there was a thing about this, I read one article that said something about their claim that… I want to think of the way they put it was, they’re making an artistic statement that Nike will partner with anybody. Essentially, they’re like whores or something. They don’t care who they work with or what the principal is, they’ll partner with anybody. And that was kind of like their message. And I thought to myself, okay, if you’re talking about copyright law, that’s different. You might have an exception to copyright infringement because you’re using it to voice your opinion about something that’s newsworthy or something that’s artistic, right?

Raymond Guarnieri:

Right.

Thomas Colson:

And that could be an exception with respect to copyright law, but this is not copyright law. This is trademark law and you are allowed to censor with respect to your trademark. In fact, that’s the whole point.

Raymond Guarnieri:

Yeah. That’s what why the law exists.

Thomas Colson:

Yeah. You have to cautiously, carefully guard your brand image, right? Like, if you buy a franchise to whatever, Yogen Fruz or something, Yogen Fruz will make very certain… I don’t know if you’ve heard of that.

Raymond Guarnieri:

No. I don’t know that.

Thomas Colson:

It’s like a… An old friend of mine had a Yogen Fruz franchise and he asked me, he came to me and said, “Why are they making me buy their sugar and all their products? They’re just trying to rip me off.” And I said, “Well, maybe, but they’re also trying to protect their brand.” Because every single Yogen Fruz thing has to taste the same, the same quality, because they’re trying to make it so that when you see Yogen Fruz, you’d think, “Wow, I know that because I had it somewhere else and it tasted really good.” Like, go into the Hilton, go into the Marriott, same experience wherever you go, right?

Raymond Guarnieri:

Right.

Thomas Colson:

So you are allowed to censor your brand. That’s the point of it. It’s that like the government’s censoring or the news media even, although the news media can’t censor. But this is a brand. By definition, you need to censor. You need to police your brand to make sure that it is a consistent message, consistent quality with respect to your brand. Otherwise, your brand becomes meaningless. That’s why there is a anti-dilution law in place. That’s why there is a trademark infringement under likelihood of confusion in place so that you have the ability to police your brand to make sure that that quality in people’s head stays there and doesn’t get destroyed by somebody producing a cheaper product or something that breaks.

You know, the other day I bought a product. I’m not going to say who made it, but it was a rototiller. And the pull thing immediately isn’t working after like 20 minutes. And I’m like, “This thing is terrible.” What’s that?

Raymond Guarnieri:

Rototiller is a brand, isn’t it?

Thomas Colson:

Oh, okay. If it’s a brand, I’m not saying the brand. I’m just saying the tool that does rototilling or whatever that is.

Raymond Guarnieri:

Right. But isn’t that…

Thomas Colson:

I don’t know. That might be a brand. It might have… Is it a brand?

Raymond Guarnieri:

I don’t know. I have to look that up, but it’d be an interesting example of…

Thomas Colson:

Generics.

Raymond Guarnieri:

Yeah, becoming a generic.

Thomas Colson:

Yeah, a trademark becoming generic. Okay. Let me just [crosstalk 00:24:28]. No, no, no. If there’s still a brand called rototiller, I’m not saying they have bad products because it was not the Rototiller brand. I guess you’re right, I should think before I talk about this. Maybe I am genericizing it, which is not cool. But anyway, the device, put it this way, the device that takes it to the ground… I can tell you’re searching it, right, Ray?

Raymond Guarnieri:

Yeah, I don’t think it is. I think the rototiller is the tool that it’s called.

Thomas Colson:

Okay. But anyway, I pulled the thing and it wouldn’t go back in, so I couldn’t start it again.

Raymond Guarnieri:

The pull cord.

Thomas Colson:

I looked at the brand and I’m like, “I don’t want this brand again.” So imagine if somebody is making a product with your brand that you have spent a fortune making sure you have the best parts, the best design, and they have cheap parts. And people like me look at it and say, “This is terrible. I don’t want to buy that brand anymore.” I would never buy the brand of this product again because of my first experience with it. Now, what if it wasn’t even theirs? That would be tragic, right?

Raymond Guarnieri:

Right. Yeah. [crosstalk 00:25:29] that way.

Thomas Colson:

So that’s what Nike is all about here is, “We got to protect our brand.” So anyway, that’s where we are today. They got their TRO, but I don’t know to what effect it is for them because the products are already out there. They can’t destroy the products and they’re not selling anymore, except they did block them from selling the number 666 version.

Raymond Guarnieri:

The last one, yeah.

Thomas Colson:

The final one.

Raymond Guarnieri:

The final one.

Thomas Colson:

But in blocking them, again, I think the price is going to go through the roof. Everyone in that ilk wants that 666 version now. If you think they wanted it before because it was 666, now they really want it.

Raymond Guarnieri:

Right. But you know, divine intervention is preventing them from reaching 666.

Thomas Colson:

You’re calling Nike divine, which is nice. You’re complimenting Nike because they’re a great brand.

Raymond Guarnieri:

Yeah, sure. You guys can have a Nike. Go ahead. Take it. So I have two questions. Let’s start with the first one. One is how strong is that argument that they didn’t have a problem before with the Jesus Shoe, but now they have a problem this time. I mean, is it even going to work for them?

Thomas Colson:

In front of a judge, this is how much impact it would have. In front of a jury, who knows? Who the hell knows, right?

Raymond Guarnieri:

Right.

Thomas Colson:

So I got my word, hell, in there, Ray.

Raymond Guarnieri:

Why doesn’t it matter though?

Thomas Colson:

Well, here’s why, because you have the right to police your brand, right? And if the message associated with the Jesus Shoe was something you’re okay with, that’s your prerogative. You own your brand. It’s not like you have given up all right to police your brand because you didn’t do it once. It’s a totally different message, you know?

Raymond Guarnieri:

That makes sense.

Thomas Colson:

So that’s the point, is you are allowed to censor your brand, right? Yeah. So what’s your second question?

Raymond Guarnieri:

Second question is, is there any recourse for damages that have been done as a result of the dilution argument? Because in my situation… Now, I’ve researched this and I know what’s going on and I’m a Nike customer. So I’m going to say, let’s just say hypothetically, my position is I don’t want to buy from any companies who are promoting Satanic stuff.

Thomas Colson:

Yeah. So if you’re someone who doesn’t like that sort of thing-

Raymond Guarnieri:

Now I know, so I’ll buy Nike again in this hypothetical situation, but what about all the people who didn’t figure out that Nike wasn’t involved and are perhaps still boycotting them? I mean, they’ve certainly lost money as a result of this. How much? I don’t know, but it’s going to hurt them in some way. So how would a court deal with that and what ability does Nike have to recover damages for whatever has been done?

Thomas Colson:

So there is a guy named Gabriel Whaley. I think it’s W-H-A-L-E-Y, Gabriel Whaley. I saw an interview of him. He’s the founder of MSCHF. I think he’s the founder and he seems like a young guy, I mean, if he’s, I don’t know, 30. That’d be my guess. And apparently, MSCHF is getting pretty big and pretty successful, but are they big enough and successful enough to absorb the damage award that could go against them if this litigation goes to its ultimate conclusion?

I mean, I don’t know, Nike’s big. I guess their stock price went down. I just looked at an article and said it went down by 0.4%. Well, they have a pretty big market cap, I’m sure, right? Now, I’m not saying that the price of the stock market has anything to do with their damages. I’m not saying that. I’m just saying maybe sales are down, I don’t know, maybe they’ve lost sales. But let’s say they have, and Nike is such a big giant company, a little tiny shift could be tens of millions of dollars that they could lose, and MSCHF could be on the hook for that because they’re the ones who are arguably diluting the brand.

So let’s say that this thing goes to verdict. It’s not settled. A couple of years of litigation go on, it goes to verdict. MSCHF spends, I don’t know, half a million dollars, $1 million defending themselves against Nike, maybe more. I mean, when you’re dealing with a big giant company like Nike, they’ve got big law firms and they’re hammering papers and arguments so it could get expensive very quickly. So that, they would lose. Then they lose the case, right? Now, they’ve got to pay damages. That could be, I don’t know, 5 million, 10 million, tens of millions, I don’t know, but that could break a company.

Raymond Guarnieri:

Right. Way more than they made on the shoes.

Thomas Colson:

Yeah. Because even if they sold them for $1,018 per shoe, they only sold 665 of them. That 666th one better make a lot of money on the black market to cover their costs. But let’s say they sold 665 at $1,000 per, they’re still not going to be winning that, right? That’s just not enough. And that’s the gross revenue. I was looking at the cost. I was just imagining how much it was to cost to modify these shoes. And then the packaging, the packaging was really nice. And then, they probably spent a lot of money getting these shoes ready for sale.

But the point is, yes, Nike is potentially damaged. And if they are, they can collect. Now, again, I’m not concluding that they’re going to win this case because I’m sure there’s a lot of sophisticated legal arguments that I haven’t considered in my hour and 47 minutes of hearing about Lil Nas and reading everything I could about it for our podcast. But I don’t know, I mean, it seems like if they have a pretty good case and if they did, they’ll probably settle. Ultimately, MSCHF will come out with an apology or something and they’ll do a bunch of social media stuff, and everyone will somehow win in the end. MSCHF is super popular now way more than before. Nike weirdly is getting a lot of… They’re getting boycotted at the moment. But you know, people don’t have a long memory for this kind of stuff but they’ll still remember Nike. So I don’t know, they’ll probably settle.

Raymond Guarnieri:

Interesting. Well, I think this is probably one of the more fascinating trademark infringement cases that we’ve taken a look at.

Thomas Colson:

Me too.

Raymond Guarnieri:

If you guys enjoyed listening to this podcast about the Satan Shoe and Lil Nas X and MSCHF and Nike, please share your comments below. I’m hoping for some interesting ones on this one, in particular. And of course, share the podcast with your friends and colleagues, and we’ll see you next time.