tl;dr
A US appeals court overturned a $9 million judgment awarded to NFT company Yuga Labs in its lawsuit against artist Ryder Ripps and Jeremy Cahen, ruling Yuga Labs failed to prove likely consumer confusion from Ripps and Cahen’s NFT collection. The case returns to a California federal court for trial ...
A US appeals court has overturned a $9 million judgment awarded to non-fungible token (NFT) conglomerate Yuga Labs in its ongoing lawsuit against artist Ryder Ripps and business partner Jeremy Cahen. The Ninth Circuit Court of Appeals ruled that Yuga Labs had not sufficiently proven that Ripps and Cahen’s NFT collection was “likely to cause consumer confusion,” sending the case back to a California federal court for trial on claims of trademark infringement and cybersquatting.
Yuga Labs initially sued Ripps and Cahen in 2022, accusing their "Ryder Ripps Bored Ape Yacht Club" NFT collection of directly copying Yuga’s own Bored Ape Yacht Club collection. Ripps contended that his collection was a satirical response to what he saw as racist imagery in Yuga’s work. Following the ruling, Ripps hailed the decision as a “huge victory for artists who seek to make expressive meaningful work,” while Yuga Labs co-founder Greg Solano vowed to continue the fight in district court.
Significantly, the appeals court also established a legal precedent by affirming that NFTs qualify as “goods” under US trademark law. This recognition confirms that NFT collections can pursue legal action against others for trademark infringement. The judges agreed that Yuga Labs had trademark priority, having been the first to use Bored Ape Yacht Club marks in commerce. Solano called this an “important win for every NFT holder,” underlining the broader implications for the industry.
Previously, a federal court ruled in favor of Yuga Labs, finding that Ripps and Cahen’s NFTs could cause market confusion and initially awarded $1.6 million in damages, which escalated to $9 million following Ripps and Cahen’s lost counterclaim. However, the Ninth Circuit reversed the award, stating that Yuga’s claims failed to prove likely consumer confusion as a matter of law. The appeals panel emphasized the necessity of a federal trial to resolve the trademark infringement question.
Importantly, the judges upheld the lower court’s finding that Ripps and Cahen’s use of Yuga’s marks did not qualify as nominative fair use or protected expressive work under the First Amendment. Thus, while the monetary award was overturned, the legal battle continues, highlighting the complex intersection of intellectual property law and creative expression in the evolving NFT space.