A California-based U.S. court has granted a partial summary judgment in favor of Yuga Labs, the creator of the widely-acclaimed Bored Ape Yacht Club (BAYC) NFT collection, in its legal battle against Ryder Ripps and Jeremy Cahen, the team behind the controversial RR/BAYC NFT collection.
RR/BAYC NFT Collection Accused of Consumer Confusion and Malicious Intent
Ripps and Cahen developed the RR/BAYC NFT collection as a satirical critique of Yuga Labs, featuring primates striking poses similar to the Bored Apes and utilizing marketing material akin to BAYC.
The duo accused BAYC NFTs of containing racist undertones, 4chan memes, and concealed Nazi imagery – allegations that BAYC founders vehemently deny.
In June 2022, Yuga Labs filed a lawsuit, claiming that Ripps and his associates were intentionally causing consumer confusion under the guise of satire, amassing millions in unjust profits and deriving satisfaction from the damage inflicted on BAYC’s reputation.
Court Upholds Validity and Enforceability of BAYC Trademarks
The U.S. District Court for the Northern District of California ruled that Yuga Labs possesses valid and enforceable trademarks for BAYC. The court found that the defendants sold RR/BAYC NFTs using BAYC marks without Yuga Labs’ consent. Their approach likely confused consumers who purchase genuine BAYC NFTs or track their value with token-tracking tools.
The court also determined that the defendant’s use of BAYC marks did not constitute fair use or artistic expression under the Rogers Test, as BAYC’s marks held significant market strength, and the RR/BAYC project aimed to deceive.
The court further established that the domain names registered and used by the defendants – rrbayc.com and apemarket.com – possessed the potential to generate confusion. Accordingly, the judge concluded that the defendant’s actions were motivated by malicious intent to profit, and deemed their behavior as cybersquatting.
Although Yuga Labs sought $200,000 in statutory damages for cybersquatting, the court dismissed this claim and ruled that damages would be determined in an upcoming trial.
NFTs Protected Under Lanham Act
Ripps and Cahen contended that NFTs, being intangible, were not covered by the Lanham Act, which governs trademarks, service marks, and unfair competition, and offers protection against infringement and false advertising.
The judge disagreed, asserting that NFTs, as virtual goods, qualify as goods under the Lanham Act due to their distinct, traceable, and brand-associated attributes.
In a related case, Yuga Labs settled with Thomas Lehman, the developer responsible for RR/BAYC websites and smart contracts in February. Lehman stated, “It was never my intention to harm Yuga Labs’ brand. I reject all disparaging statements made about Yuga Labs and its founders and appreciate their many positive contributions to the NFT space.”
By granting Yuga Labs a legal victory, the court’s decision reinforces the importance of trademark protection in the rapidly evolving NFT market. It reminds creators that creators must operate within legal boundaries while developing and marketing their digital assets.