Bored Apes Creator Yuga Labs Scores NFT Intellectual Property Victory

In a landmark legal battle, Bored Apes Yacht Club (BAYC) created Yuga Labs has emerged victorious against artist Ryder Ripps in the high-stakes dispute over NFTs.

On October 25, 2023, the court delivered a verdict that not only clarifies the ownership of NFTs but also sends a clear message about the protection of intellectual property rights in the digital age.

Yuga Labs vs. Ryder Ripps

The legal feud between Yuga Labs and Ryder Ripps, which has been brewing since late 2022, has been nothing short of a spectacle.

It pitted the creators of the wildly popular Bored Ape Yacht Club (BAYC) NFT collection, Yuga Labs, against Ryder Ripps, the artist behind the controversial RR/BAYC NFTs that copied the original BAYC NFTs. This legal clash raised important questions about trademark infringement, the concept of "naked licensing," and the limits of free speech in the realm of digital art.

A Bored Ape. Source: Luckytrader

The court's verdict, delivered after months of legal wrangling, left no room for ambiguity. The defendants, including Ryder Ripps, were ordered to pay damages exceeding $1.5 million.

This ruling was a resounding declaration that the use of Yuga's BAYC marks was not only intentional but also conducted in "bad faith" with the expectation of profiting from it. Additionally, the court ordered that control of the RR/BAYC smart contract be transferred to Yuga Labs and that all profits from the sale of RR/BAYC NFTs be returned.

Trademark Ownership

The court also recognized Yuga's active use of the BAYC marks in a variety of commercial ventures, including online gaming, real-world events, merchandise marketing, product launches and partnerships. Importantly, the court dismissed the claim that Yuga was engaged in "naked licensing," emphasizing that Yuga had never abandoned its trademark rights.

Throughout the legal proceedings, Yuga Labs contended that the Defendants engaged in "cybersquatting" by registering domain names such as RRBAYC.com and APEMARKET.com. The court sided with Yuga, noting that these domains were either identical or alarmingly similar to Yuga's original BAYC trademarks.

This similarity could undoubtedly cause confusion among consumers regarding the connection between RR/BAYC and Yuga's BAYC brand and collection. The court repeatedly emphasized the Defendants' malicious intent to operate in bad faith, including registering domains with Yuga's trademarks and selling RR/BAYC NFTs after Yuga's collection was introduced.

"Fair Use" Doesn't Work

A pivotal aspect of the court's judgment was its rejection of the defense's appeal to the U.S. Supreme Court's 'Rogers' test. This test addresses whether the use of a registered trademark can be considered "fair use" under the First Amendment.

An RR/BAYC NFT for sale. Source: Blockhead

The court firmly asserted that the sale of RR/BAYC NFTs did not constitute "expressive artistic work" deserving of First Amendment protection. It likened the sale of these NFTs to the sale of a counterfeit handbag, citing the absence of constructive commentary, criticism, new perspectives, or insights that would distinguish them from Yuga's brand.

What Is Yuga Labs Entitled To?

With the primary issues of the case resolved, the court turned its attention to equitable remedies beyond monetary damages. Yuga Labs sought answers about compelling the defendants to perform or refrain from certain acts, as well as being entitled to a portion of the profits. The court determined that Yuga was entitled to the profits, shifting the burden of proof to demonstrate which sales were not attributable to their infringement.

Yuga's expert testified that, as of February 1, 2023, the Defendants had generated over $1.5 million in profits from RR/BAYC NFTs, including profits from initial sales, resales and un-minted NFTs still in their possession. The court highlighted the Defendants' failure to offer persuasive evidence to support their argument.

NFT Legal Battle: Lessons Learned

This landmark legal battle between Yuga Labs and Ryder Ripps carries significant implications for the NFT space and beyond. It underscores the importance of protecting intellectual property in the digital age and sets a precedent for addressing trademark infringement and cybersquatting in the world of NFTs.

As the dust settles on Yuga Labs v. Ryder Ripps, the NFT community and creators alike are left with valuable lessons on respecting intellectual property rights and the limits of artistic expression. This case serves as a reminder that the world of NFTs, while innovative and transformative, is not immune to legal scrutiny and the protection of creators' rights.