A new partial judgement from a California court is helping to clarify trademark procedures in the cryptosphere. On 21 April, a judge ruled in favour of Yuga Labs, a blockchain technology company that hosts the famed Bored Ape Yacht Club (BAYC) collection of NFTs (non-fungible tokens), against artists Ryder Ripps and Jeremy Cahen, who created and released a “copycat” collection last year.
Judge John F. Walter declared that Ripps and Cahen had violated the Lanham Act of 1946, the US government’s primary trademark statute, citing “false designation of origin” and “cybersquatting” after applying the “Rogers Test”, a 1989 court precedent that permits trademark infringement in incidences of creative expression, Artnet reported.
Yuga Labs filed suit in June of last year upon discovering that Ripps was selling NFTs that appeared indistinguishable from the BAYC collection. Ripps insisted that his and Cahen’s collection was satirical in nature, a commentary on the alt-right inferences he believed were embedded in the Bored Ape imagery. Yuga Labs sued Ripps for trademark infringement, alleging that customers would mistake his collection for the originals and that Ripps had profited to the tune of millions of dollars, tarnishing the BAYC collection's reputation in the process.
While the defendants attempted to claim that NFTs were not subject to the Lapham Act due to their intangibility, judge Walter disagreed, ruling that NFTs still qualify as goods under the law.
The decision is sure to have significant ramifications in the Web3 industry, which has historically skirted the issues of counterfeit and copyright. Ripps will owe damages to Yuga Labs, though the amount will be determined in a forthcoming trial. According to Ripps’s attorney, Louis Tompros, a lawyer representing Ripps and Cahen, told NFT Plazas that his clients intend appeal the ruling.
Legal victory notwithstanding, BAYC NFT prices have been on a steady decline in recent months, precipitated by a $2.8m mass liquidation by one of the tokens' biggest collectors, a user named “franklinisbored”. The market for the collection's associated cryptocurrency, Apecoin, has remained relatively steady.
