Ninth Circuit Classifies NFTs as Goods, Strengthens Trademark Protections in Digital Markets

The U.S. Court of Appeals for the Ninth Circuit has issued a landmark ruling that redefines the legal landscape for Non-Fungible Tokens (NFTs), affirming their classification as “goods” under U.S. trademark law. This decision, in the case between Yuga Labs and artist Ryder Ripps, underscores the growing integration of traditional intellectual property (IP) rights into the digital asset ecosystem. Yuga Labs, creators of the Bored Ape Yacht Club (BAYC) NFT collection, successfully defended their trademark protections against Ripps’ “lookalike” NFTs, which were marketed as “expressive appropriation art.” The court’s ruling rejects claims of fair use and First Amendment immunity, setting a precedent that prioritizes brand protection over unregulated artistic expression in commercial NFT markets [1].

Central to the decision is the categorization of NFTs as “goods,” a classification that extends the scope of the Lanham Act—a cornerstone of U.S. trademark law—to the digital realm. This move effectively grants NFTs the same legal safeguards as physical products, enabling creators to combat unauthorized replication and consumer deception. The court emphasized that Ripps’ project, despite its artistic intent, competed directly with Yuga Labs’ offerings and risked misleading buyers. While the case was remanded to a lower court to assess whether “consumer confusion” occurred, the Ninth Circuit’s stance reinforces the principle that trademark rights are enforceable even in decentralized digital markets [1].

The ruling carries significant implications for the Web3 ecosystem. For NFT creators, it validates the commercial value of digital collectibles and provides a legal framework to defend against copycats. Collectors now benefit from enhanced assurance of authenticity, while marketplaces face heightened obligations to enforce IP policies. Legal professionals must adapt to the evolving interplay between blockchain technology and IP law, as this case establishes a benchmark for future disputes. The decision also signals to investors and brands that the NFT space is maturing, fostering conditions for sustainable growth [1].

However, challenges persist. The decentralized and global nature of NFTs complicates enforcement, particularly across jurisdictions. Pseudonymous actors and the immutability of blockchain records create hurdles for traditional legal remedies. Yet, the ruling could catalyze innovations in on-chain IP solutions, such as smart contracts for automated dispute resolution, and industry-wide standards to mitigate conflicts. These developments are critical to balancing artistic freedom with consumer protection, ensuring that the digital economy remains both dynamic and equitable [1].

The next phase of the Yuga Labs vs. Ripps case will focus on determining whether Ripps’ NFTs caused actual consumer confusion. Outcomes here will shape the practical application of the court’s broader ruling. Regardless, the Ninth Circuit’s classification of NFTs as “goods” marks a pivotal shift, affirming that Web3’s growth must coexist with established legal principles. This case underscores the importance of aligning technological innovation with legal clarity, offering a blueprint for resolving future disputes in the digital age [1].

The ruling’s impact extends beyond this specific case, influencing how NFTs are perceived as assets. By treating them as goods, courts acknowledge their economic significance and the need to protect the investments of creators and collectors alike. As the NFT market evolves, this precedent will likely encourage more robust IP strategies, from proactive trademark registrations to transparent terms of use for NFT holders. The balance struck between artistic expression and commercial rights in this case sets a tone for future debates, ensuring that creativity thrives within a framework of accountability and fairness [1].

Source: [1] [NFT Trademark Protection: Crucial Legal Victory Reshapes Digital Asset Rights] [https://coinmarketcap.com/community/articles/6881549632a78631289125a4/]