A new partial judgment from a California court helps clarify trademark proceedings in the cryptosphere. On April 21, a judge ruled in favor of Yuga Laboratoriesa blockchain technology company that hosts the Bored Ape Yacht Club’s (BAYC) famous 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 said Ripps and Cahen violated the Lanham Act of 1946, the US government’s primary trademark law, citing “false designation of origin” and “cybersquatting” after applying the “Rogers Test”, a 1989 court precedent that allows trademark infringement in cases of creative expression, clean art reported.
Yuga Laboratories complaint lodged in June last year after discovering that Ripps was selling NFTs that looked indistinguishable from the BAYC collection. Ripps insisted that his and Cahen’s collection were satirical in nature, a commentary on alt-right inferences he believed to be embedded in Bored Ape imagery. Yuga Labs sued Ripps for trademark infringement, alleging that customers would confuse its collection with the originals and that Ripps profited millions of dollars, thus tarnishing the reputation of the BAYC collection.
While defendants attempted to argue that NFTs were not subject to the Lapham Act due to their intangibility, Justice Walter disagreed, ruling that NFTs were still considered property under the law.
The decision will certainly have significant ramifications in the Web3 industry, which has historically skirted issues of infringement and copyright. Ripps will owe Yuga Labs damages, although the amount will be determined in an upcoming trial. According to Ripps’ attorney, Louis Tompros, an attorney representing Ripps and Cahen, said NFT Squares that his clients intend to appeal the decision.
Notwithstanding the legal victory, BAYC NFT’s prices have seen a steady decline in recent months, precipitated by a massive $2.8 million liquidation by one of the biggest token collectors, a user named “franklinsbored”. The market for the cryptocurrency associated with the collection, Apecoin, remained relatively stable.
