US Appeals Court Reverses $9M NFT Judgment Sends Case Back for Trial on Consumer Confusion

A US appeals court has overturned a $9 million judgment awarded to Yuga Labs in its trademark dispute with artist Ryder Ripps and his partner Jeremy Cahen over the "Ryder Ripps Bored Ape Yacht Club" NFT collection, sending the case back to a California federal court for further proceedings. The Ninth Circuit Court of Appeals ruled that Yuga Labs failed to demonstrate that Ripps’ NFTs were likely to cause consumer confusion with the original Bored Ape Yacht Club NFTs. However, the court affirmed that Yuga’s NFTs qualify as “goods” under US trademark law, establishing a precedent that could shape future intellectual property disputes in the NFT space [1].

The original lawsuit, filed in 2022, accused Ripps of copying Yuga’s high-profile NFT collection, while Ripps defended his work as satirical critique of what he described as racist elements in the original art. The appeals court’s decision clarified that while Yuga retains trademark priority due to its earlier commercial use of the Bored Ape Yacht Club marks, the issue of infringement requires further trial to resolve. This outcome underscores the complexity of balancing artistic expression with trademark protections in the digital art market [1].

Greg Solano, a co-founder of Yuga Labs, stated the company remains committed to defending its trademarks in district court. The ruling, though reversing the monetary judgment, affirmed Yuga’s legal standing by rejecting claims that Ripps’ use of the Bored Ape marks was protected under the First Amendment or constituted fair use. This nuanced position highlights the judiciary’s cautious approach to applying traditional intellectual property frameworks to emerging technologies [1].

The case has broader implications for the NFT industry. By classifying NFTs as protectable goods, the court’s decision signals that digital assets may be subject to similar trademark protections as physical products. This could influence how creators and platforms navigate rights and responsibilities in a rapidly evolving market. However, the ruling also reflects the challenges of applying conventional legal standards to decentralized and borderless digital ecosystems [1].

The reversed judgment was initially awarded after a 2023 federal court ruling found Ripps guilty of cybersquatting and trademark infringement. The appeals court’s reversal emphasizes the importance of evidence demonstrating actual consumer confusion, a threshold that Yuga must now meet in the retrial. Meanwhile, Ripps has framed the appellate decision as a “huge victory for artists” who engage in critical or transformative work [1].

The ongoing litigation illustrates the legal uncertainties surrounding NFTs and digital art. While the court’s precedent strengthens Yuga’s position in protecting its brand, it also acknowledges the creative and satirical potential of NFTs. The case is expected to return to the district court for a trial where both parties will need to present evidence to substantiate their claims. This outcome may prompt other NFT creators and brands to reassess their strategies for balancing innovation with legal compliance [1].

Source: [1] [Appeals Court Reverses Yuga Labs NFT Judgment] https://coinmarketcap.com/community/articles/6881f735935dcd19160c2853/