The digital art world, often a place of wild speculation and even wilder claims, just saw a significant legal tremor. A long-running dispute between Yuga Labs, the creators of the famous Bored Ape Yacht Club NFTs, and conceptual artist Ryder Ripps, hit a new turn. The U.S. Court of Appeals for the Ninth Circuit weighed in, offering a ruling that feels like a split decision in a boxing match.
- The court ruled that NFTs are “goods” under the Lanham Act, allowing for trademark protection. This means that Yuga Labs can claim trademark protection for its NFTs.
- Despite the trademark protection win, the court sent the case back to a lower court to determine if consumers were actually confused by Ripps’ work. Yuga Labs still needs to prove consumer confusion.
- Ryder Ripps, the artist, viewed the outcome as a victory, claiming his work is expressive appropriation art. The court, however, disagreed with his fair use and First Amendment arguments.
At its heart, this case is about who owns what in the digital space. Yuga Labs sued Ripps back in June 2022. They accused him of hurting their brand. Ripps had sold his own collection of NFTs, called Ryder Ripps Bored Ape Yacht Club, or RR/BAYC. These NFTs used images identical to the original Bored Apes. Yuga Labs saw this as a direct challenge, a kind of digital counterfeiting.
The legal fight has been a long one, stretching over three years. Ripps had appealed an earlier decision. That ruling said he owed Yuga Labs nearly $9 million in penalties and other costs. It was a hefty sum, certainly enough to make anyone sit up and take notice.
NFTs as Goods, Not Just JPEGs
Here’s the big news, the part that will echo through the crypto world. The Ninth Circuit Court, in its recent ruling, stated that NFTs are “goods” under the Lanham Act. This law governs trademarks and unfair competition in the United States. What does this mean for Bored Apes and other digital collectibles? It means Yuga Labs can claim trademark protection for its NFTs.
Think of it this way. If someone makes fake designer handbags or knock-off sneakers, the original brand can sue them for trademark infringement. This ruling suggests that NFT brand owners now have a similar legal footing. It sets a precedent. If you create a popular NFT collection, you might be able to sue someone who creates a nearly identical one. That’s a powerful tool for intellectual property in the digital age.
For a long time, the legal status of NFTs felt a bit like the Wild West. Were they art? Collectibles? Just links to images? This court decision brings some clarity. It says, at least in this context, they are products. They are items that can be protected under existing trademark laws. This could reshape how creators and collectors view their digital assets.
So, Yuga Labs got a win on that front. The court agreed that their Bored Ape NFTs deserve trademark protection. This part of the ruling is a clear signal to anyone thinking of copying popular NFT collections. The law is starting to catch up to the technology.
The Consumer Confusion Question
But here’s where the ruling gets interesting, and perhaps a bit more complicated. Despite affirming trademark protection, the court did not give Yuga Labs a complete victory. They did not grant what’s called “summary judgment.” This means the case isn’t over. It’s going back to a lower court for a full trial.
Why? The court wants to know if a typical NFT buyer would actually be confused. Would they think Ripps’ RR/BAYC collection was legitimate, or somehow affiliated with Yuga Labs? The three-judge panel wrote, “The panel could not conclude as a matter of law that a reasonably prudent consumer in the marketplace was likely to be confused as to the origin of the goods bearing Yuga’s marks.”
This is a crucial point. It means Yuga Labs still needs to prove consumer confusion. They have to show a “fact-finder” at trial, which could be a jury or another judge, that Ripps’ collection actually misled buyers. This is a higher bar than simply showing identical images.
And there’s more. The court also vacated the prior $9 million penalty against Ripps. The injunction that had blocked sales of RR/BAYC was also lifted. So, while Yuga Labs got a big win on the principle of trademark protection, the immediate financial and operational consequences for Ripps were rolled back. It’s a nuanced outcome, to say the least.
Ripps’ View and the Road Ahead
Ryder Ripps, the artist at the center of this, saw the mixed result as a “resounding legal victory.” He’s a conceptual artist, known for working with big names like Kanye West. Ripps stated that his RR/BAYC series is “expressive appropriation art.” He described it as a “deliberate repurposing of Bored Ape Yacht Club imagery to critique Yuga Labs’s branding strategies and the speculative frenzy around NFTs.”
He argued that his work falls under First Amendment protections. He believes it’s a form of pointed commentary that should not be stopped at the summary judgment stage. It’s a classic artist’s defense, claiming fair use and freedom of expression.
However, the court’s ruling directly contradicts Ripps’ claim on this point. The ruling states that Ripps’ use of the BAYC trademarks “did not constitute nominative fair use and was not ‘expressive work’ protected by the First Amendment.” So, while Ripps may feel victorious, the court did not agree with his core legal arguments regarding fair use or First Amendment protection for his specific actions.
Ripps told The Block that he might appeal the court’s rejection of some of his legal arguments. He also shared some rather colorful details about past settlement talks with Yuga Labs. He called some of Yuga’s demands “absurd.”
“Yuga basically wanted to microchip my entire family, it was that absurd,” Ripps alleged. He added, “They are spending tens of millions of dollars to harass me because I effectively made fun of their stupid racist monkey cartoon scam.” He also pointed out, “The fact there are million of derivatives of BAYC and they only have gone after me should say enough. This isn’t a real business protecting IP.” Yuga Labs did not comment on the ruling.
So, where does this leave us? The ruling confirms that NFTs can be protected by trademark law. This is a significant step for the digital asset space. It means creators have more tools to defend their intellectual property. But the case also shows that simply having identical images isn’t enough. You still need to prove that consumers are actually confused. This ongoing legal dance between art, commerce, and digital rights will certainly keep us watching.
