Yuga Labs Wins Key Ruling in Ryder Ripps Trademark Case

Yuga Labs Wins Key Ruling in Ryder Ripps Trademark Case
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A U.S. district court in the central district of California found in the case of Yuga Labs, Inc. -v- Ripps et al. that Ryder Ripps' RR/BAYC collection infringed on Yuga Labs' copyrights and trademarks in a 22-page ruling issued on April 21.

Yuga Labs was granted (in part) a Motion for Summary Judgment in false designation of origin and cybersquatting claims, as reported by Jessica Neer McDonald, trademark and copyright attorney and founder of the IP law firm NeerMcD PLLC (@NeerMcD).

What It Means

False designation of origin means Ripps falsely claimed that his product was associated with the Yuga Labs brand, and cybersquatting means Ripps registered a domain name similar to the BAYC brand to profit from it or damage Yuga Labs' reputation, both of which are against the law.

The Deets

  • Yuga Labs was granted summary judgment in false designation of origin and cybersquatting claims.
  • Yuga Labs owns the unregistered BAYC Marks, which are valid and enforceable.
  • NFTs are goods for the purposes of the Lanham Act (trademarks).
  • Ryder Ripps' various defenses ('I'm a conceptual artist; this is free speech criticism via art') were thrown out.
  • None of the defenses as to celebrity endorsements or securities violations are related to the trademark dispute.
  • Yuga Labs is entitled to monetary damages and injunctive relief, with the determination of damages to be made at trial.

The Details

The court found that the BAYC marks are used in commerce, as required under trademark law. The court also rejected the claim that Yuga Labs had transferred or abandoned its trademark rights through naked licensing and failure to report. And the naked licensing argument (naked licensing occurs when a trademark owner lets others use a trademark without maintaining control over how the trademark is used) is invalid because under its Terms and Conditions, Yuga Labs grants each Bored Ape Yacht Club NFT holder a copyright license for both personal use and commercial use with respect to their respective BAYC ape image, but not a trademark license to use the BAYC marks.

Although Yuga does not have a copyright registration for the ape skull logo, a registration is not required to own a copyright. So the defendants' defense that their RR/BAYC project was "art" as commentary on Yuga' Labs' alleged racist messages and imagery in reality took advantage of the brand recognition and goodwill from using Yuga Labs' BAYC marks. And there was no expression of an idea or point of view, so the use of the BAYC marks was not artistically relevant to their art, and even if it was, the use was still misleading.

In addition, the Court concludes that although NFTs are virtual goods, they are, in fact, goods for purposes of the Lanham Act. The court ruling was based on the precedent set in Hermes International v. Rothschild, which concluded that the Lanham Act does not require goods to be tangible for liability to apply. “While virtual goods are intangible items that exist in a digital space, they are also items that have specific uses and values that are dependent on the consumer” [page 7 of 22]. So treating the NFTs as mere ownership receipts treats the NFTs as only written instructions while ignoring their documented commercial value, association, or creative content.

ā— Why It Matters

The significance of the ruling is far-reaching, with Yuga Labs' Bored Ape Yacht Club existing as one of the premier collections in the NFT space. This court decision provides clarity on trademarks and sets a precedent for legal protections in the context of digital ownership.

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