Ninth Circuit Reverses Yuga Labs 9M Judgment Citing Insufficient Consumer Confusion Evidence

The U.S. Court of Appeals for the Ninth Circuit has reversed a $9 million trademark infringement judgment previously awarded to NFT company Yuga Labs in its 2022 lawsuit against artist Ryder Ripps and entrepreneur Jeremy Cahen. The appeals court ruled that Yuga Labs failed to provide sufficient evidence of consumer confusion, a critical element in trademark cases, and remanded the matter to a California federal court for a full trial [1]. This decision overturns a 2023 lower court ruling that had found Ripps and Cahen liable for trademark infringement and awarded Yuga Labs $1.6 million in damages, later increased to $9 million after the defendants’ Digital Millennium Copyright Act (DMCA) counterclaims were dismissed [1].

The dispute centered on Ripps and Cahen’s NFT collection, “Ryder Ripps Bored Ape Yacht Club” (RRBAYC), which Yuga Labs alleged was designed to mimic the branding of its popular Bored Ape Yacht Club (BAYC) series. The lower court had determined that the RRBAYC collection violated Yuga’s trademark rights by creating a likelihood of consumer confusion. However, the Ninth Circuit panel emphasized that the evidence to support this claim was incomplete. The three-judge panel noted that while Yuga Labs held trademark priority for the BAYC name and imagery due to its earlier commercial use, unresolved factual disputes about consumer behavior and intent necessitated a trial [1].

The appeals court also upheld the lower court’s dismissal of Ripps and Cahen’s copyright counterclaims. These included allegations that Yuga Labs lacked copyright protection for its Bored Ape artwork and claims under the DMCA. The panel agreed with the district court’s determination that these arguments lacked sufficient factual basis and were appropriately dismissed [1]. Despite this, the reversal of the trademark infringement judgment creates a pivotal legal shift. Yuga Labs now retains its claim to trademark priority for BAYC but must now prove its case of consumer confusion in court.

The ruling highlights the complexities of applying traditional intellectual property law to digital assets. Yuga Labs has argued that RRBAYC’s near-identical branding was a commercial ploy to exploit its brand’s success, while Ripps has defended his work as a satirical critique of what he calls “racist undertones” in the original BAYC imagery [1]. The appeals court’s decision to remand the case for trial underscores the challenges of balancing intellectual property rights with artistic expression in the NFT space.

Greg Solano, a co-founder of Yuga Labs, confirmed the ruling on X, signaling the company’s intent to pursue its legal claims further. The outcome could influence broader debates about NFT-related trademarks, particularly as courts navigate the intersection of digital ownership and traditional legal frameworks. With the case now in the discovery phase, the focus will shift to whether Yuga Labs can present concrete evidence of consumer deception or if the defendants can demonstrate that their project was a legitimate critique rather than a commercial imitation [1].

Sources:

[1] [title1: US Court Overturns Yuga Labs $9 Million Lawsuit] [url1: https://www.cryptopolitan.com/us-court-overturns-yuga-labs-9mn-lawsuit/]

[2] [title2: Appeals Court Reverses Yuga Labs NFT Judgment] [url2: https://coinpaper.com/10132/appeals-court-reverses-yuga-labs-nft-judgment]