Legal Risks in the Apparel Industry: Nike Case Study

Intellectual Property Challenges

Nike routinely provides indemnification for intellectual property rights enforcement and faces various legal proceedings, including those related to intellectual property, highlighting the ongoing challenges in protecting and managing IP in the apparel industry.

"In connection with various contracts and agreements, we routinely provide indemnification relating to the enforceability of intellectual property rights, coverage for legal issues that arise and other items where we are acting as the guarantor." --- (NKE, sec filing, 2024/Q4)

"OTHER CONTINGENCIES In the ordinary course of business, we are subject to various legal proceedings, claims and government investigations related to our business, products and actions of our employees and representatives, including contractual and employment relationships, product liability, antitrust, customs, tax, intellectual property and other matters." --- (NKE, sec filing, 2024/Q4)

Marketing and Advertising Compliance

Nike's demand creation expenses have risen primarily due to increased advertising, marketing, and sports marketing costs, with some fluctuations due to foreign exchange rates. This highlights the company's significant investment in marketing, which necessitates strict compliance with advertising regulations to mitigate legal risks.

"Demand creation expense increased primarily due to higher advertising and marketing expense and retail brand presentation expense, partially offset by favorable changes in foreign currency exchange rates." --- (NKE, sec filing, 2024/Q4)

"The increase in demand creation expense was primarily due to increased advertising and marketing expense." --- (NKE, sec filing, 2024/Q3)

"The increase in demand creation expense was primarily due to higher advertising and marketing expense and higher sports marketing expense." --- (NKE, sec filing, 2024/Q3)

"Demand creation expense increased primarily due to higher retail brand presentation expense and digital marketing, partially offset by lower advertising and marketing expense." --- (NKE, sec filing, 2024/Q3)

"Demand creation expense increased primarily due to higher advertising and marketing expense, unfavorable changes in foreign exchange rates and higher sports marketing expense." --- (NKE, sec filing, 2024/Q4)

Litigation History and Management

Nike has faced multiple class action lawsuits for securities fraud, specifically for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, highlighting significant legal challenges in its litigation history.

"The Schall Law Firm, a national shareholder rights litigation firm, reminds investors of a class action lawsuit against NIKE, Inc. ("Nike" or "the Company") (NYSE:NKE) for violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission." --- (NKE, press release, 2024/06/25)

"LOS ANGELES, July 24, 2024 (GLOBE NEWSWIRE) -- The Schall Law Firm, a national shareholder rights litigation firm, reminds investors of a class action lawsuit against NIKE, Inc. ("Nike" or "the Company") (NYSE:NKE) for violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission." --- (NKE, press release, 2024/07/24)

"LOS ANGELES, July 30, 2024 (GLOBE NEWSWIRE) -- The Schall Law Firm, a national shareholder rights litigation firm, reminds investors of a class action lawsuit against NIKE, Inc. ("Nike" or "the Company") (NYSE:NKE) for violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission." --- (NKE, press release, 2024/07/30)

"LOS ANGELES, June 26, 2024 (GLOBE NEWSWIRE) -- The Schall Law Firm, a national shareholder rights litigation firm, reminds investors of a class action lawsuit against NIKE, Inc. ("Nike" or "the Company") (NYSE:NKE) for violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission." --- (NKE, press release, 2024/06/26)

"LOS ANGELES, July 03, 2024 (GLOBE NEWSWIRE) -- The Schall Law Firm, a national shareholder rights litigation firm, reminds investors of a class action lawsuit against NIKE, Inc. ("Nike" or "the Company") (NYSE:NKE) for violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission." --- (NKE, press release, 2024/07/03)