US appeals court overturns Bored Ape maker's $8.8 mln win in NFT trademark case

By Blake Brittain

July 23 (Reuters) - A U.S. appeals court on Wednesday overturned an $8.8 million judgment for Bored Ape Yacht Club non-fungible token maker Yuga Labs in its dispute with artist Ryder Ripps and his business partner Jeremy Cahen over their alleged counterfeits of the NFTs.

The 9th U.S. Circuit Court of Appeals said that Yuga had not yet proven that Ripps and Cahen's tokens — which they called satirical works of appropriation art — would confuse NFT buyers, sending the case back to California federal court for a trial on Yuga's trademark infringement and cybersquatting claims.

Ripps in a statement said the decision "underscores that appropriation is a vital tool for artists to hold powerful entities to account." Yuga called the decision "a win for the industry" that "validates the fight we took on and confirms that BAYC is a strong and recognizable brand."

Yuga accused Ripps and Cahen in a 2022 lawsuit of making millions of dollars from selling counterfeits of its Bored Ape tokens under the pretense of satire. Ripps and Cahen said that their versions of the tokens lampoon allegedly racist and anti-Semitic imagery in Yuga's NFTs and branding.

Yuga denied the allegations and said that Ripps was "spreading ridiculous conspiracy theories online and using them to sell knockoff NFTs."

U.S. District Judge John Walter ruled for Yuga before trial in 2023 and said that Ripps and Cahen's tokens were likely to create confusion in the NFT market. He awarded Yuga $1.5 million in damages, which later ballooned to more than $8.8 million with attorneys' fees and other costs.

The 9th Circuit overturned Walter's decision on Wednesday and said a trial was necessary to determine whether the fake tokens infringed Yuga's trademarks.

The appeals court agreed with Walter, however, that Ripps and Cahen were not immune from Yuga's claims based on First Amendment protections for works of art.

The case is Yuga Labs Inc v. Ripps, 9th U.S. Circuit Court of Appeals, No. 24-879.

For Yuga: Todd Gregorian of Fenwick & West

For Ripps and Cahen: Louis Tompros of Wilmer Cutler Pickering Hale & Dorr

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