Bored Ape Yacht Club nonfungible token maker Yuga Labs Inc. prevailed in its trademark lawsuit against artists Ryder Ripps and Jeremy Cahen, as a California federal judge ruled that their use of the Bored Ape logo to sell look-alike NFTs violated federal trademark law.
US District Judge John F. Walter also ruled that a trademark-free speech balancing test doesn’t protect the artists’ “RR/BAYC” NFT project.
The April 21 decision comes months after Hermès International SA convinced a Manhattan jury that a digital artist violated trademark law by selling “MetaBirkin” NFTs that depicted images of Birkin handbags covered in faux fur. That case was the first to examine how NFTs and IP laws intersect.
A Yuga Labs spokesperson said in a statement that the ruling “isn’t just a win for us, it’s a win for the entire web3 industry to hold scammers and counterfeiters accountable.”
The artists “stand by their view that the RR/BAYC artistic project is protected by the First Amendment and that Yuga does not have valid and enforceable trademarks in NFTs,” said Ripps’ attorney Louis Tompros of Wilmer Cutler Pickering Hale & Dorr LLP, adding that they expect to appeal the ruling.
Yuga Labs, which created the Bored Ape Yacht Club NFTs in 2021, sued Ripps and Cahen for trademark infringement last June, alleging that the artists created NFTs that used the same images and trademarks as the original NFTs. The Bored Ape NFTs, digital assets that are bought and sold with blockchain technology, skyrocketed in value during the 2021 crypto boom, making billions of dollars in sales.
Ripps and Cahen argued that their RR/BAYC NFTs are an artistic project that points out allegedly racist dog whistles embedded in the Bore Ape NFTs.
Walter, writing for the Los Angeles-based Central District of California, was unconvinced by the artists’ argument that Yuga Labs didn’t have valid trademarks because NFTs are intangible goods. Citing rulings from the Hermès case, the judge said that “although NFTs are virtual goods, they are, in fact, goods for the purpose of the Lanham Act,” the federal trademark law.
The judge said that the majority of factors in an eight-factor legal test used to determine whether the RR/BAYC NFTs were likely to cause consumer confusion weighed in favor of Yuga Labs. He determined that the company was entitled to damages and injunctive relief, but the exact amount would be determined at trial.
The artists failed to meet a “threshold legal showing” under what’s known as the Rogers test that their project was part of an artistically expressive work, Walter said. “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.”
Even if the artists had met the bar for artistic relevance, though, their use of the Bored Ape trademarks still would have failed the test because it was explicitly misleading, the judge said.
Fenwick & West LLP and Clare Locke LLP represent Yuga Labs.
The case is Yuga Labs Inc. v. Ripps, C.D. Cal., No. 2:22-cv-04355, summary judgment 4/21/23.
