Referee Rules RR/BAYC NFTs infringed Yuga’s BAYC copyright

A US court in California has handed Yuga Labs, the company behind the popular 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.

Ripps and Cahen are the duo behind the RR/BAYC NFT collection, which featured primates in similar poses to Bored Apes, and also used marketing materials similar to BAYC. The two created RR/BAYC as a satirical and critical response to Yuga Labs, and have said that the BAYC NFT contains racist dog whistles, 4chan memes, as well as hidden Nazi imagery. While this narrative has resonated in certain circles on the internet, BAYC’s founders completely deny it.

Yuga sued in June 2022, alleging that Ripps and his associates deliberately created consumer confusion under the guise of satire, generating millions in unfair profits while taking pride in the damage they inflicted on BAYC with their claims.

The US District Court for the Northern District of California found that Yuga Labs owns the BAYC trademarks, which are valid and enforceable, and that the defendants used the BAYC marks – citing the images – to sell RR/BAYC NFTs without Yuga Labs’ consent and in a “manner likely to cause confusion”, with similar product appearance confusing consumers intending to purchase an actual BAYC NFT or track its value with token tracking tools.

In addition, the court held that the defendants’ use of the BAYC marks was not a case of fair use, nor artistic expression under something called the Rogers Test, because Yuga’s BAYC marks were 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 – rrbayc.com and apemarket.com – have the potential to cause confusion with the judge concluding that the defendants’ actions are driven by a malicious intent to make money and that the two are engaged. in cybersquatting.

Yuga Labs argued that it should receive $200,000 in statutory damages for cybersquatting. However, the court rejected this claim and declared that the assessment of compensation would be made during a pending trial.

Ripps and Cahen also attempted to argue that because NFTs are intangible, they are not protected under the Lanham Act, which regulates trademarks, service marks and unfair competition, and provides protection against infringement and false advertising.

The judge disagreed, arguing that NFTs, like virtual goods, still qualify as goods under the Lanham Act because of their unique, traceable, and branded characteristics.

In a separate case, Yuga Labs reached a settlement in February with the developer of the RR/BAYC websites and smart contracts, Thomas Lehman.

“It was never my intention to harm Yuga Labs’ brand, and I reject any disparaging statements about Yuga Labs and its founders and appreciate their many positive contributions to the NFT space,” Lehman said at the time.