Appeals Court Overturns Yuga Labs $9 Million Victory Against Ryder Ripps

Court Reverses Major NFT Trademark Ruling

A US appeals court has overturned a $9 million judgment awarded to NFT company Yuga Labs in its trademark lawsuit against artist Ryder Ripps and business partner Jeremy Cahen. The Ninth Circuit Court of Appeals ruled Wednesday that Yuga Labs failed to prove its claims that Ripps and Cahen's NFT collection would likely cause consumer confusion.

The three-judge panel sent the case back to a California federal court for a full trial on Yuga Labs' trademark infringement and cybersquatting allegations.

Background of the Yuga Labs vs Ryder Ripps Case

Yuga Labs sued Ripps and Cahen in 2022 over their NFT collection called "Ryder Ripps Bored Ape Yacht Club." The company alleged this collection was a direct copy of its flagship Bored Ape Yacht Club NFTs. Ripps defended his work as satirical commentary on what he claimed was racist imagery in Yuga's original collection.

The legal battle has been ongoing for nearly three years, with significant financial stakes and important precedents for the NFT industry at stake.

Artist Claims Victory for Creative Expression

Ripps responded to the ruling in a statement to media outlets, calling it a "huge victory for artists who seek to make expressive meaningful work." The decision provides relief for the artist who faced substantial financial penalties under the original judgment.

Yuga Labs co-founder Greg Solano posted on social media that the company would "now finish the fight in the district court," indicating plans to pursue the case through trial.

Legal Precedent Set for NFT Trademark Protection

Despite overturning the damages award, the appeals court delivered a significant win for Yuga Labs by ruling that NFTs qualify as "goods" under US trademark law. This decision establishes important legal precedent that could enable NFT collections to pursue trademark protection against similar projects.

The judges determined that Yuga Labs "had trademark priority because it was the first to use the Bored Ape Yacht Club marks in commerce." This ruling strengthens the position of original NFT creators in future trademark disputes.

Original Federal Court Decision Reversed

A federal court initially ruled in Yuga Labs' favor in 2023, finding that Ripps and Cahen's NFTs were likely to create market confusion. The court initially awarded Yuga Labs $1.6 million in damages, which later increased to $9 million after Ripps and Cahen lost a counterclaim.

The Ninth Circuit Court of Appeals reversed this $9 million award, determining that Yuga's trademark infringement and cybersquatting claims did not prove consumer confusion as a matter of law.

Case Returns to Trial Court

The appeals court mandated that a federal court trial is necessary to determine whether the Ripps NFTs actually infringed on Yuga's trademark rights. This means both parties will need to present evidence and arguments in a full trial setting.

However, the judges supported the lower court's finding that Ripps and Cahen's use of Yuga's marks did not constitute nominative fair use and was not protected as expressive work under the First Amendment.

Implications for the NFT Industry

This ruling carries significant implications for the broader NFT industry, particularly regarding trademark protection and artistic expression. The decision that NFTs qualify as goods under trademark law could influence how future NFT-related intellectual property disputes are handled.

The case highlights the ongoing tension between original creators' rights and artists' freedom to create commentary or satirical works in the digital asset space. As the NFT market continues to evolve, this legal precedent may shape how courts approach similar disputes.

What's Next in the Legal Battle

With the case returning to district court for trial, both Yuga Labs and Ryder Ripps will need to prepare for a comprehensive legal proceeding. The trial will focus on whether consumer confusion actually occurred and whether trademark infringement can be proven.

The outcome of this trial could establish further precedents for NFT trademark law and determine the extent to which satirical or commentary NFT projects can reference existing collections without facing legal consequences.

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