Nike's House of Innovation in New York.

Nike Inc.’s curious patent for “Cryptokicks” appears to be taking the shoe experience to the next level. 

The sportswear company obtained the approval of the U.S. Patent and Trademark Office on Tuesday for a patent that appears to cover a technique of using blockchain technology to track the ownership of a physical shoe or a digital rendering of the shoe, patent experts said. 

The technology could help sniff out counterfeits in the secondary market, and look toward a future of a virtual shoe experience, where digital renderings of shoes could be traded, sold or even used in online contexts like gaming, patent attorneys said. 

“It’s a more sophisticated way of tracking things in the physical world and digital world,” said Rachel Walsh, a partner in Goodwin Procter LLP’s intellectual property litigation group. “With a piece of apparel, they can track it, make sure it’s not copied, and [that it is] exchanged between people in the secondary market in a more secure way.”

A representative for Nike declined to comment on what exactly the patent covers, but said in a statement that “we’re pleased that our patent application to Cryptokicks has been accepted and issued, and we look forward to exploring opportunities for Nike to serve athletes and consumers in the blockchain space.” 

The patent appears to cover a technique of creating and storing an ownership record for shoes, attorneys said. The record would be stored within a blockchain, which is essentially a chain of data that is contained securely. In this scenario, consumers could receive something like a token linked to the shoe they purchase, which they can use to trade or sell their shoes. 

Such tokens could be stored in consumers’ so-called digital wallets, which potentially could be linked to a video game network, for instance. That way a consumer’s video game avatar could wear the digital shoes in their virtual pursuits, attorneys said. 

“This is a very forward-looking patent application,” said Robert Roby, a partner at Knobbe Martens. “I don’t know how much of this is reality-based, so much as…‘let’s get a bunch of engineers in a room and see what we can dream up.’”  

Blockchain is essentially a distributed network to track physical items and to monitor the chain of custody from the supplier to the purchaser. Initially associated with cryptocurrency, it’s increasingly seen as a way to track the ownership of a physical asset, and confirm the authenticity of a product on the market, particularly in the luxury jewelry sector.

For instance, the tracking company Everledger Ltd. has deployed blockchain technology to track diamonds, using a similar model to prevent counterfeiting and stealing, or to verify that the gems in question are not conflict diamonds.  

Because of its interlinked design, blockchain infrastructure makes it easy to create and store ownership records and trails, and difficult for outsiders to manipulate information without disrupting the trail and leaving evidence of foul play, intellectual property experts said. 

“Attempts at changing [data in a blockchain] are easily detectable,” said Marc Kaufman, a partner at Rimon P.C. “Each block is tied to the block before it, and the cryptographic computation takes significant resources to change a block, you would have to change every block after.”

What this patent means for Nike’s competitors remains to be seen. Nike’s patent would not preclude others from using blockchain for similar purposes, but it might prevent them from using Nike’s particular way of doing it, including the unique type of record they’re seeking to store in the blockchain, and series of steps associated with it. 

Competitors are still free to take similar steps using different types of identifiers and different method steps. Meanwhile, any disputes down the road could also be resolved by courts, where judges would interpret the scope of the patent in question. 

“At the basic level, a patent gives you the right to exclude,” said Walsh of Goodwin Procter. “It does mean that [Nike] has staked a claim on the idea of using blockchain to track apparel [with] a fairly specific way of tracking the designs in the digital and physical world.”

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