Independent project on Nike based on my Kellogg class, Innovation in Context. Reviews how Nike established its IP portfolio and how it is leveraging it for future growth. All opinions expressed are my own and are not necessarily complete.

1. Innovation in the Nike Context
How IP and Intangible Assets Built the World’s Leading Sports
Brand and What it Means for Nike’s Future
By Chris Gunther

2. 2
As a happy Nike consumer, I chose to apply lessons from an MBA IP
class to analyze Nike’s history and strategy
Disclaimer
All opinions expressed are my own and not necessarily complete. If
you work at Nike or otherwise have feedback, I would love to chat!

3. Phil Knight started Nike with his former Oregon track coach Bill
Bowerman as Blue Ribbon Sports, an importer of Japanese running
shoes
Origin Story
• In the 1960s, University of Oregon track coach Bill Bowerman began tinkering with urethane in a waffle iron, trying to
make more efficient running shoes for his athletes
• One of those athletes, Phil Knight, had success as Bowerman’s guinea pig, became interested in the shoe market, and
wrote his graduate thesis on an opportunity for Japanese manufacturers to disrupt German dominance in athletic shoes
• In 1964, Knight teamed up with his old coach to form Blue Ribbon Sports (BRS), a distributor for Japanese shoemaker
Onitsuka Tiger (later Asics)
3Sources: Shoe Dog – Phil Knight, Bowerman and the Men of Oregon – Kenny Moore, OregonLive, BizJournals

4. From a humble start, Knight and Bowerman turned BRS into a
respected brand, while tinkering and taking steps to develop their
own shoes
Making Nike
Knight and
Bowerman
found BRS;
partner with
Onitsuka
Tiger
4
1964 1965 1966 1967 1968 1969 1970 1971 1972
Knight sells $8,000 worth of
Tiger shoes in his first year,
mostly out of the back of his
car at track meets
BRS sales reach
$20,000;
Expand retail
and distribution
presence to the
East Coast
Onitsuka makes
an offer to buy
BRS Knight later
describes as
“lowball”
BRS brand grows as a cheaper but still high-quality shoe Bowerman
applies for a
patent on his
“moon shoe”
Sources: Shoe Dog – Phil Knight, Bowerman and the Men of Oregon – Kenny Moore, OregonLive, BizJournals

5. As BRS grew, the relationship with Onitsuka soured, leading to a
lawsuit, a break in the distribution agreement, and ultimately, the
start of Nike
Early Challenges and Opportunities
5
• In 1973 Knight formally filed a $33M lawsuit in federal court against Onitsuka
• Alleged Onitsuka “had breached their contract by soliciting new distributors and demanding that Knight sign over
control of BRS for the right to go on distributing Tigers and infringed on BRS’ trademark by selling the 8 models
BRS had registered in the U.S.”
• A judge settled and Knight won the “win or die case” along with $400,000 in damages and both companies came away
with the right to sell their own versions of the model shoe
• The Nike Cortez / Tiger Corsair become the only best-selling sneaker for two different shoe companies in history
Sources: Shoe Dog – Phil Knight, Bowerman and the Men of Oregon – Kenny Moore, OregonLive, BizJournals

6. The early legal challenges taught Knight the importance of
establishing a tight IP regime when starting his new business, Nike
IP Overview
6
Patents | Function Copyright | Expression Trademark | Story
• By 1982, Nike had 14 patents
granted for various shoe designs,
mostly for the soles of track shoes
• Today, Nike has over 10,000
patents worldwide
• Nike filed 473 patents in 2019
alone, more than leading R&D
companies like Tencent, Walmart,
and Lockheed Martin
• 50+% of Nike’s patents are design
patents; ~1,600 are for shoes alone
• Nike often files multiple patents on
a single product, to maximize
protection
• In its annual reports, Nike claims
“We have copyright protection in
our design, graphics, and other
original works. In some instances,
we also obtain registered
copyrights.”
• Nike considers the “NIKE” and
Swoosh Design trademarks to be
among its most valuable assets”
and “have registered them in ~170
jurisdictions worldwide”
• Interbrand valued Nike’s brand,
built on these trademarks, at $32B
in 2019, 16th highest in the world
• More broadly, Nike uses
“trademarks on nearly all of [its]
products and believe[s] having
distinctive marks that are readily
identifiable is an important factor
in creating a market”; Nike has
250+ live trademarks
Sources: EspaceNet, Harrity Patent 300, US Patent and Trademark Office, Nike Annual Reports

7. Today, Nike holds nearly 11,000 (and growing) patents, closer to
the portfolio of a large tech company like Google than its retail
competition
Patent Strategy: Total Patents
7
Patent Count
398 828 20,426882
7K 8K 9K 10K 10K 11K
2015 2016 2017 2018 2019 2020
Sources: EspaceNet, Harrity Patent 300, US Patent and Trademark Office
Circle size represents # of
patents

8. For its core shoe line, Nike has ~1,600 patents for 750+ models,
mostly design patents Nike finds easier to defend
Patent Strategy: Shoes
8
Air Jordan 84 patents
Lunarglide 26
Metcon
43
Vapormax
46
Hyperdun
k 35
Zoom 227 patents Free 211 patents AirMax 86 patents
Roshe 24 Epic 21 Air Force 10 Hyperadapt 10
Sources: EspaceNet, US Patent and Trademark Office, Nike Virtual Marking Patent Database
+ 100s more

9. The Nike Vaporfly is a great example of Nike’s patent strategy:
patent multiple parts of the shoe, from multiple angles, across
multiple countries
Patent Strategy: Vaporfly Case Study
9
Nike’s Vaporfly patents
separately cover the design
of the Upper, Mid-Sole,
Outer-Sole, and Fabrics
Claims to have 800+ utility
patents on “Air” technology
and 225 design patents on
the “Flynight” technology
used in the Vaporflys
Expecting regulatory
push-back on the
cutting-edge shoes,
Nike filed multiple,
slightly different
patents on the same
feature to maximize
options and
minimize speed to
market new versions
of the shoe (Vaporfly
Elite, 4%, Next%,
Alphafly) when
regulators catch up
Many of the Vaporfly patents are
filed with the patent offices of
numerous countries and WIPO, the
international IP organization
Sources: EspaceNet, US Patent and Trademark Office, Nike Virtual Marking Patent Database

10. Nike has 3 key trademarks that define its brand: “Nike”, the
“Swoosh”, and the mantra “Just Do It.”
Trademark Strategy: 3 Key Marks
10
• Knight originally wanted to name
his company 6th Dimension but
ultimately went with Nike, hoping
it would grow on him
• Today, Nike, named after the Greek
goddess of victory, perfectly sums
up the sports company’s mission
• The short, two-syllable, hard “K”
sound resonates memorably with
customers
• The “Swoosh”, designed by graphic
design student Carolyn Davidson in
1971 to evoke motion, was
trademarked in 1974
• Knight paid Davidson $35 for the
design that has become one of the
most memorable corporate logos in
history (as well as stock shares now
worth ~$50 million)
• Originally paired with “Nike” the
company has since de-branded,
using the simple black shape solo
• Dan Wieden (of Nike marketing
partner Wieden+Kennedy) coined
the phrase “Just Do It.”; first
featured in a Nike ad in 1988
• The phrase targeted all Americans
regardless of age, gender, or fitness
level, a new approach for athletic
companies at the time
• The phrase has become so
representative of Nike they now
put twists on it, like the BLM ad
featuring “Just Don’t Do It.”
Sources: Shoe Dog – Phil Knight, US Patent and Trademark Office

11. Nike is a lively trademarker, today actively using 250+ trademarks
for apparel, digital products, athletes, and even generic words.
Sample TMs:
Trademark Strategy: Diverse Marks
11
Flight
Waffle
Dri-Fit
Elite
Dunk
Athletes
Apparel
Digital Stores Generic Words
Sources: US Patent and Trademark Office
Original waffle
shoe expired in
1994, but Nike
maintains trade
dress rights for
“Waffle” on
footwear /
athletic clothes

12. Nike’s brand expression mainly comes through sponsored athletes
and brand ambassadors, some of its most important intangible
assets
Endorsement Strategy: Sponsored Athletes through Time
12
1974 1972 1978 1984
1986
19881993
1996
2000 2003
Sources: Forbes, Complex, Nike Public Statements

13. Nike has a reputation for working with the most fun, talented,
successful, and legendary athletes in sports
Endorsement Strategy: Only the Best Athletes
13
Personalities GOATs
Legends
Rivals
Show-stoppers

14. Nike’s current portfolio includes 50 of the top 100 highest paid
athletes in the world, with eye-popping popularity and incredible
success
Endorsement Strategy: Top Current Athletes
14
Athlete
(selection of athletes)
Sport
Year
Signed
~Total Deal
Value ($M)
Twitter
Followers
Titles MVPs All-Stars
LeBron James 2003 $$$1,000 3 X 16
Cristiano Ronaldo 2003 $$$1,000 X 9 X 14 n/a
Kevin Durant 2007 $$350 X 10
Rory McIlroy 2013 $$250 n/a
Serena Williams 2004 $150 X 23 n/a
Odell Beckham Jr. 2017 $29 X 3
Mike Trout 2014 unknown X 8
Russel Wilson 2016 unknown 1 X 6
Kylian Mbappe 2019 unknown 5 n/a
Giannis
Antetokounmpo
2017 unknown X 4
= 10 million
Sources: Forbes, Nike Public Statements, Twitter, Basketball Reference, Football Reference, Baseball Reference, Women’s Tennis Association

15. Nike, and its partner Wieden+Kennedy, leverage their relationships
with icons to build THE sports brand via memorable marketing
Marketing Strategy
15
• Nike first partnered with the newly
formed ad agency Wieden+Kennedy in
1982, and the two Portland-area
companies have grown together since
• Dan Wieden coined the phrase “Just do
it.”, featured in a Nike ad in 1988
• Nike and Wieden+Kennedy are famous
for ads featuring iconic athletes (”Bo
Knows”), famous celebrities (Spike Lee in
“Is it the shoes?”), and powerful
messages (“Just don’t do it”)
• Nike spots appear 21x in a top marketing
blog1 compilation of the best ~300 ads of
all-time, 2x as many as 2nd place Apple
Sources: Shoe Dog – Phil Knight, YouTube
Notes: 1) Morning Brew – Marketing compilation

16. The investment in IP, expression, and brand building is significant,
but Nike understands the ROI through strong brand loyalty
Brand Building Investment and Payoff
16
$32.38B
The 16th most
valuable brand in the
world
$2.3
$2.6 $2.7
$3.0 $3.2 $3.3 $3.3
$3.6 $3.8
37% 37%
35% 35%
32%
31% 32% 31%
30%
2011 2012 2013 2014 2015 2016 2017 2018 2019
Demand
Creation
Expense
($B)1
DCE % of
Revenues
Nike Marketing Spend
2011-2019
Nike Brand Value2
2019
Sources: Nike Annual Reports, Interbrand
Notes: 1) Consists of advertising & promotion costs, incl. costs of endorsement contracts, complimentary product, TV, digital and print advertising and
media costs, brand events, and retail brand presentation; 2) According to Interbrand’s Global Brand Ranking
Nike’s revenues have been
expanding faster than DCE

17. When something or someone threatens Nike’s intangibles and/or IP,
it is quick to respond and defend its position
IP Protection
17
• Nike filed most recent lawsuit in
Sep 2019; litigation is ongoing
• 4th in a series of lawsuits Nike /
Converse have filed asserting a
range of IP rights for “Skecher-
izing” the Chuck Taylor and Flyknit
designs and infringing on a Nike
method-of-manufacture
• Nike successfully defended its
patents as novel and nonobvious in
a Skechers countersuit
• Nike and adidas have been locked
in a legal battle over the Flyknit
(Nike) / Primeknit (adidas) tech
since 2012
• In the latest update (June 2020),
the US Federal Court of Appeals
upheld 2 Nike patents on the tech
• Separately, in 2014 Nike sued 3
designers for $10M, accusing them
of breaching their noncompetes in
bringing trade secrets to adidas
• Nike and adidas confidentially
settled out of court
• Nike even protects its IP from
former athletes, prohibiting them
from using their identifying logos:
• After leaving for New Balance in
2019, Kawhi Leonard sued Nike
for use of his “klaw” logo, but a
judge decided Nike’s design is an
“independent piece of IP” distinct
from Leonard’s original sketch
• Nike owns Roger Federer’s “RF”
logo, and did not let Federer’s
new sponsor, Uniqlo, use the
symbol for many years
VS.
Sources: The Fashion Law, Reuters

18. Given its IP and intangible assets, Nike is pursuing growth through
product innovation, expansion of digital complements, and brand
capital
Path to the Future
18
Nike is living up to Bowerman’s
“waffle trainer” roots, continuing
to push the boundaries of shoes
and other apparel
Nike is investing in its digital
product line with the goal of
creating the Nike platform that will
keep customers engaged
Nike is doubling down on its brand,
opening new concept stores (e.g.
Nike Rise) and cutting ties with
Amazon and other wholesalers
Core Product
Innovation
Expansion of Digital
Complements
Renewed Mono-
Brand
Focus
376 457 527 566 618 648
2015 2016 2017 2018 2019 2020
Nike Digital Patent Portfolio1
Notes: 1) Patents with the words ”digital”, “app”, and/or “online” in the abstract

19. These strategies seem to be working, as Nike has weathered
quarantine better than most retail, driven by its core shoe business
+ digital growth
Signs of Success
19Notes: Nike Annual Reports
Footwear
%
Other
%
Nike Brand Revenue by Category
2014-2020
Total
Nike Brand Revenue by Channel
2014-2020
Direct
%
Wholesale
%
Total
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20. Thank you for reading “Innovation in the Nike Context”! I welcome
feedback at chris.gunther@northwestern.kellogg.edu
Contact
20
Chris Gunther
MBA + MS Design Innovation Candidate | Northwestern
University Kellogg School of Management