It’s official: a US judge in California has ruled that Yuga Labs should be granted a legal victory in the case against Ryder Ripps and Jeremy Cahen, who by using the trademarks of the Bored Ape NFTs were intended to confuse consumers.
Full details below.
The case involving the Bored Ape NFTs
As anticipated above, a US court in California granted Yuga Labs, the company behind the prestigious Bored Ape Yacht Club (BAYC) NFT collection, a legal victory in the form of a partial summary judgment in its case against Ryder Ripps and Jeremy Cahen.
But what is the case in question? It turns out that Ripps and Cahen are the duo behind the RR/BAYC NFT collection, which featured the same monkeys and in similar poses as Bored Ape.
Not only that, the duo also used marketing materials similar to BAYC. Specifically, it appears that the two created RR/BAYC as a satirical and critical response to Yuga Labs. In fact, according to their claims, the BAYC NFT collection contains “racist dog whistles,” “4chan memes,” and “hidden Nazi images.”
Obviously, the founders of BAYC denied these allegations altogether, and as a result Yuga, in June 2022, sued Ripps and Cahen, claiming that the two were deliberately confusing consumers under the guise of satire, generating millions in unfair profits and creating considerable damage to the Bored Ape NFT collection.
The court’s decision in the Bored Ape NFT case
With regard to what was explained above, the US District Court for the Northern District of California ruled that Yuga Labs owns the BAYC trademarks, which are valid and enforceable.
As for the defendants, the court says that they used the BAYC marks, referring to the images, to sell RR/BAYC NFTs without Yuga Labs’ consent and in a “manner likely to cause confusion.”
In fact, the NFTs in the RR/BAYC collection show the appearance of a product similar to Bored Apes NFTs, which tends to confuse consumers who intend to purchase a real BAYC NFT or track its value with token tracking tools.
In addition, the court ruled that the defendants’ use of the BAYC trademarks was not a case of fair use, much less an artistic expression named Rogers Test, as Yuga’s BAYC trademark has always been very strong in the market and the RR/BAYC project was intended to mislead.
The court also ruled that the domain names registered and used by the defendants, respectively, rrbayc.com and apemarket.com, were also potentially confusing. Hence, the court concluded that the defendants’ actions were driven by a “malicious intent to profit” and that the two could be charged with cybersquatting.
Consequently, Yuga Labs argued that it should receive the sum of $200,000 in statutory damages for cybersquatting. However, the court rejected this claim and stated that the determination of damages would be made during a pending trial.
Ripps and Cahen’s defense and cybersquatting
For their part, Ripps and Cahen attempted to argue that because NFTs are intangible, they are not protected by the Lanham Act, the law governing trademarks, service marks and unfair competition, providing protection against infringement and false advertising.
However, the court rejected this defense, stating that NFTs, as virtual goods, still qualify as goods under the Lanham Act because of their unique, traceable, and brand-associated characteristics.
In addition, we see that, in a separate case, Yuga reached a settlement in February with RR/BAYC website and smart contract developer Thomas Lehman, who had stated the following:
“It was never my intention to harm the Yuga Labs brand, and I reject all disparaging statements made about Yuga Labs and its founders and appreciate their many positive contributions to the NFT space.”
In any case, what is cybersquatting, the illegal practice that Ripps and Cahen are accused of in the Bored Apes NFT case? According to the definition, cybersquatting, also known as domain squatting, refers to the practice of registering a domain name that resembles a known organization or person without their permission.
Hence, in the most general cases, the domain registrant buys the latter in bad faith, with the aim of profiting from the goodwill of the person or organization or causing reputational damage these.
To remedy this unfortunately growing illegal practice, there is the Anti-Cybersquatting Consumer Protection Act (ACPA) in the United States. For international disputes, on the other hand, there is the Uniform Domain-Name Dispute-Resolution Policy (UDRP). In particular, we see that between January and October 2020, the World Intellectual Property Organization (WIPO) handled thousands of cybersquatting cases.
Source: https://en.cryptonomist.ch/2023/04/24/yuga-labs-wins-case-over-bored-ape-nft/