Yuga Labs, the blockchain company behind some of the most popular collectibles of the NFT boom, has won a lawsuit protecting the trademark of its Bored Ape Yacht Club NFT series.
On April 21, a federal court in California ruled in favor of Yuga Labs in its case against artistic duo Ryder Ripps and Jeremy Cahen. Back in mid-2022, Ripps and Cahen released the RR/BAYC NFT collection which was comprised of thousands of quirky apes that appeared uncannily similar to those created in the wildly successful project from Yuga Labs. RR/BAYC apes were cheaper than those sold by Yuga Labs, but used similar marketing materials.
Ripps and Cahen claimed to be satirizing Yuga Labs, but the company, in its suit filed in June 2022, stated that the pair were creating confusion for consumers and deliberately aiming to harm the company.
The U.S District Court for the Northern District of California ruled that RR/BAYC’s collection didn’t stand as artistic expression protected by the First Amendment, as Ripps and Cahen had claimed, and that Yuga Labs was allowed to protect a trademark product. It agreed with Yuga Lab’s notion that RR/BAYC had deliberately tried to mislead consumers, noting that the domains, rrbayc.com and apemarket.com, both contained BAYC branding, which it found “confusingly similar” to Yuga Labs’ branding.
“The Court concludes that Defendants acted with a bad faith intent to profit,” the ruling from U.S. District Judge John Walter read. “The RR/BAYC NFTs do not express an idea or point of view, but, instead, merely point to the same online digital images associated with the BAYC collection.”
Another blow to RR/BAYC was the rejection of its argument that Yuga Labs had transferred trademark rights to those who had purchased BAYC NFTs. The court pointed out that Yuga Labs’s terms and conditions, though allowing holders personal and commercial use, do not issue “a trademark license to use the BAYC marks.”
At the time of writing, RR/BAYC had not responded to a request for comment.
This judgement comes on the heels of luxury brand Hermès landing a legal victory over digital artist Mason Rothschild, creator of the NFT project MetaBirkins. Both suits have been closely watched in the crypto art space as potential bellwethers that establish the trademark rights of NFT companies and artists.
“We’re thrilled with this win,” Yuga Labs told Artnet News. “This isn’t just a win for us. It’s a win for the entire Web3 industry to hold scammers and counterfeiters accountable.”
Jessica Neer McDonald, a copyright and trademark specialist at Neer McD PLLC also believes in the case’s broader significance. “This is important in the trademark context because there has been uncertainty as to how to categorize NFTs,” she told Artnet News. “The court in Yuga Labs v. Ryder Ripps et al finds NFTs to be more than just a digital certification, but a virtual good itself.”
The ruling states Yuga Labs is entitled to damages, though it rejected the company’s push for “enhanced damages” of $200,000. The amount of compensation will be decided at a later trial.