NFTs qualify for trademark protection, Ninth Circuit rules, sending Yuga Labs case back for trial

The U.S. Court of Appeals for the Ninth Circuit issued a significant ruling on Wednesday in the longstanding case between Yuga Labs, creators of the Bored Ape Yacht Club NFT collection, and Ryder Ripps, a conceptual artist who sold a collection of identical images as "expressive appropriation art." 

Yuga originally sued Ripps in June 2022, accusing him of devaluing the original collection by selling NFTs through his project, Ryder Ripps Bored Ape Yacht Club (often stylized as RR/BAYC), which featured identical images as the original BAYC collection. The complex legal battle has progressed over three years to the Ninth Circuit, after Ripps appealed a prior ruling that he owed Yuga Labs nearly $9 million in penalties and other costs. 

The court, in its ruling issued Wednesday, found that NFTs are "goods" under the Lanham Act, which governs trademarks and unfair competition, deciding that Yuga Labs is entitled to trademark protections for its Bored Ape NFTs. This ruling could have significant implications for NFT law moving forward, setting a precedent that brand owners can sue NFT lookalikes as easily as counterfeit sneakers or handbags. 

However, despite the ruling also throwing out many of Ripps' legal arguments, the court did not give Yuga Labs summary judgment in the case, instead sending the case back to a lower court for a trial to determine whether a typical NFT buyer would be confused about the legitimacy of Ripps' collection. The $9 million penalty and an injunction that blocked RR/BAYC sales were both vacated by the ruling. 

"The panel could not conclude as a matter of law that a reasonably prudent consumer in the marketplace was likely to be confused as to the origin of the goods bearing Yuga’s marks," the three-judge panel wrote in its decision. 

The panel said Yuga would need to prove its claim that the RR/BAYC caused consumer confusion to a fact-finder at trial; this may be a jury or another judge, depending on what the parties request and how the district court structures the remand. 

Ripps responds

Ripps, a conceptual artist and designer who has worked with the likes of Kanye West, framed the mixed result as a "resounding legal victory" in a statement. "Ryder Ripps’s RR/BAYC series is expressive appropriation art — a deliberate repurposing of Bored Ape Yacht Club imagery to critique Yuga Labs’s branding strategies and the speculative frenzy around NFTs," Ripps wrote. "The Ninth Circuit’s ruling affirms that such pointed commentary falls squarely within First Amendment protections and cannot be curtailed at the summary‐judgment phase."

Yet the Court's ruling states outright that Ripps' use of the BAYC trademarks "did not constitute nominative fair use and was not 'expressive work' protected by the First Amendment." 

Ripps told The Block that he may appeal the court's rejection of some of the legal arguments he and his lawyers presented thus far. He also said prior settlement talks with Yuga Labs had gone nowhere, calling some of Yuga's demands "absurd." 

"Yuga basically wanted to microchip my entire family, it was that absurd," Ripps alleged. "They are spending tens of millions of dollars to harass me because I effectively made fun of their stupid racist monkey cartoon scam." 

"The fact there are million of derivatives of BAYC and they only have gone after me should say enough," Ripps added. "This isn't a real business protecting IP."

Yuga Labs was unable to be immediately reached for comment by The Block following the ruling. 

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