A US court of Appeals has sent Yuga Labs, the creator of the Bored Ape Yacht Club (BAYC) non-fungible token (NFT) collection, back to the district court for its lawsuit against artist Ryder Ripps and business partner Jeremy Cahen.
That same year, Yuga Labs filed a trademark infringement lawsuit against Ripps and Cahen, alleging that the duo had deceived buyers by offering NFTs falsely equivalent to the BAYC collection under the pretext of satire. Additionally, the company claimed that Ripps and Cahen had damaged their reputation with their accusations.
Initially, a judge declared that the plaintiff was entitled to $1.6 million in damages from the duo. However, it was later raised to $9 million after Ripps and Cahen lost their counterclaim.
Notably, Ripps and Cahen countersued Yuga Labs under the Digital Millennium Copyright Act (DMCA), seeking declaratory relief that the company had no copyright protection over the Bored Apes.
The defendant’s counterclaims were dismissed by the district court for a “lack of subject-matter jurisdiction,” granting summary judgment for the company on its two claims and the defendant’s DMCA counterclaim.
According to the Wednesday ruling, the three-judge panel affirmed in part and reversed in part the district court’s judgment and remanded the case. The panel held that an NFT can be trademarked under the Lanham Act, which protects marks used with “any goods or services.”
Nonetheless, they reversed the district court’s grant of summary judgment on the company’s trademark infringement and cybersquatting claims, arguing that Yuga Labs “did not prove as a matter of law that the defendants’ actions were likely to cause consumer confusion.”
Meanwhile, the ruling determined that the duo’s use of Yuga Labs’ marks did not “constitute nominative fair use” and was not “expressive work” protected by the First Amendment.
“As to the trademark claim, (…) 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,” the court document reads.
