Judge Rules in Favor of Yuga Labs in Ryder Ripps Trademark Infringement Case

A California judge awarded Yuga Labs a partial summary judgement in a case the company brought against artist Ryder Ripps and his business partner Jeremy Cahen for trademark infringement.

In the decision, John F. Walter, the U.S. District Judge of Central California, ruled in Yuga’s favor on its first cause of action for “false designation of origin” and its third cause of action for “cybersquatting.”

In plainer terms, Walter had to decide if Ripps and Cahen violated the Lanham Act of 1946, the primary federal trademark statute in the US. The law forbids trademark infringement, trademark dilution, and false advertising. Walters was tasked with applying the Rogers Test, a court precedent established in 1989 that allows for trademark infringement to protect free creative expression.

Yuga Labs filed their complaint last June, after Ripps began selling RR/BAYC NFTs that were identical to Yuga Labs’ Bored Ape Yacht Club collection. Ripps claimed that the RR/BAYC NFTs were a form of appropriation art meant to undermine BAYC, which he has said he believed to be threaded with alt-right, Neo Nazi dog whistles and imagery. Yuga Labs, which has denied that their project contains references to esoteric right-wing ideology, sued Ripps for trademark infringement and cybersquatting, with their main contention being that Ripps was confusing potential customers with his knockoff project.

Violation of the Lanham Act requires that the plaintiff prove that they have ownership over their trademark and that the defendant’s use of this trademark was likely to cause consumer confusion. There are eight tests to judge if a violation has taken place, such as the similarity between the marks the plaintiff and the defendant used and the defendant’s willing intent to use protected trademarks (as opposed to accidentally producing a similar mark). The judge weighed in favor of Yuga Labs on almost all of these eight tests.

“In this case, the Court concludes that confusion is likely given the complexity and required sophistication to understand the blockchain and verify provenance,” Walter wrote in his decision. “Defendants knew that their RR/BAYC NFTs were likely to be confused with Yuga’s BAYC NFTs and that at least some purchasers of their RR/BAYC NFTs would have difficulty identifying the RR/BAYC NFTs as a different and distinct product from Yuga’s BAYC NFTs.”

The judge found that Ripps and Cahen violated the Lanham Act and that moreover, the RR/BAYC project did not pass the Rogers test. The primary issue is that the judge did not see the gesture of appropriation as expressive, writing “the RR/BAYC NFTs do not express an idea or point of view, but, instead, merely point to the same online digital images associated with the BAYC collection.”

Further, the judge said that Ripps and Cahen’s “NFT marketplace sales [on OpenSea and Foundation] and Ape Market website contain no artistic expression or critical commentary.” While the judge acknowledged that Ripps and Cahen provided almost daily commentary about their campaign and the project on Twitter and other platforms, he said that on the marketplaces themselves, the defendants’ listings were “designed to sell infringing products, not expressive artistic speech protected by the First Amendment.”

One could argue that Twitter is a critical part of the wider NFT market, the primary venue where NFTs are advertised and trust is built, and therefore Ripps and Cahen’s commentary there is relevant context establishing “creative artistic speech.” However, the judge said that the lack of such speech on the marketplaces themselves made that the “sale of RR/BAYC NFTs is no more artistic than the sale of a counterfeit handbag, making the Rogers test inapplicable.”

Yuga Labs is entitled to monetary damages and injunctive relief, which will be decided in court, though the judge blocked Yuga Labs’s motion for enhanced damages and attorneys’ fees.

“In a landmark legal victory for web3, a federal judge found that Ryder Ripps and Jermey Cahen infringed Yuga Lab’s intellectual property,” read an emailed statement from a Yuga Labs representative. “This isn’t just a win for us, it’s a win for the entire web3 industry to hold scammers and counterfeiters accountable.”

Ripps, however, told ARTnews that he is “looking forward to” appealing this decision, and is already in the process of appealing Judge Walter’s December decision to deny Ripps’ Anti-SLAPP motion.