US Appeals Court Overturns $9M Yuga Labs Win in NFT Dispute

A US appeals court has overturned a $9 million judgment previously awarded to Yuga Labs in its lawsuit against artist Ryder Ripps and business partner Jeremy Cahen, reopening the high-profile legal battle over alleged NFT trademark infringement.

The Ninth Circuit Court of Appeals ruled on Wednesday that Yuga Labs had not yet demonstrated its claim that the “Ryder Ripps Bored Ape Yacht Club” NFT collection was likely to confuse consumers about its connection to Yuga’s flagship Bored Ape Yacht Club (BAYC). 

The case will now return to a California federal court for trial, where Yuga will need to prove its allegations of trademark infringement and cybersquatting against Ripps and Cahen.

Yuga initially sued Ripps and Cahen in 2022, arguing that the pair’s NFT collection was a direct imitation of its BAYC collection. Ripps has maintained that his collection was a form of satire, intended to critique what he described as racist imagery embedded in Yuga’s designs.

Trademark Protections for NFTs Upheld

While overturning the damages award, the appeals court also issued a significant decision in favor of Yuga Labs, ruling that NFTs qualify as “goods” under US trademark law. This precedent-setting determination could impact future disputes, enabling NFT creators to bring trademark claims against collections with similar designs.

The court confirmed that Yuga had trademark priority, recognizing it as the first to use the BAYC marks in commerce. Yuga Labs co-founder Greg Solano celebrated this aspect of the ruling on X.

He called the court’s ruling an “important win for every NFT holder” and emphasized the protection it grants to Bored Ape NFT owners under trademark law.

Yuga Labs Case Heads Back to Trial

In 2023, a federal court sided with Yuga Labs, ruling that Ripps and Cahen’s NFTs were likely to cause market confusion and initially awarding $1.6 million in damages, later increased to $9 million. However, the Ninth Circuit found that the prior ruling had not conclusively demonstrated a likelihood of consumer confusion, requiring a full trial to resolve the claims.

Despite sending the case back for trial, the judges rejected Ripps and Cahen’s arguments that their use of Yuga’s trademarks constituted “nominative fair use” or was protected as “expressive work” under the First Amendment, narrowing the scope of their defense as the case proceeds in federal court.