A U.S. District Judge in California recently issued a judgment in favor of Yuga Labs, the creators of the popular Bored Ape Yacht Club (BAYC), against Ryder Ripps and Jeremy Cahen, awarding Yuga Labs over $1.5 million in damages. This significant legal victory came as a result of the court’s determination that Ripps and Cahen had profited from the sale of Ryder Ripps’ Bored Ape Yacht Club NFTs, which the court found to infringe on Yuga Labs’ trademark.
Yuga Labs will receive $1.5 million in damages
Court documents revealed that the defendants, Ryder Ripps and Jeremy Cahen, had argued that their use of Yuga Labs’ BAYC trademarks was not infringement but rather an exercise of “satire” and “parody.” However, the court ruled against their defense. In the wake of this legal ruling, Yuga Labs issued a statement stating that after the final ruling by the court against Ryder Ripps and Jeremy Cahen for infringing Yuga Lab’s intellectual property, they have been ordered to cease all sales and marketing of their counterfeit NFTs.
In addition to that, Ryder Ripps must also pay about $1.5 million in damages, Yuga Labs’ attorney fees, transfer their fake apes’ smart contract, and surrender related online assets. Judge John Walter, presiding over the case, granted Yuga Labs’ request for the defendants to pay $200,000 in damages for cybersquatting violations, amounting to $100,000 per domain. Adding to that, the judge also issued a permanent injunction against the defendants. The court’s ruling emphasized that the defendants acted in “bad faith intent to profit” from their actions.
It was found that they did not possess any trademark or intellectual property rights related to the domain names, and the domain names did not consist of their legal names. Specifically, the court cited rrbayc.com and apemarket.com as the domain names in question. Ripps and Cahen had argued that their use of the Bored Ape Yacht Club logos or “marks” was protected under the First Amendment and fair use. However, the court refused to approve their motion to dismiss and granted Yuga Labs a summary judgment for trademark infringement and cybersquatting claims.
Implications for the NFT community and BAYC
Cybersquatting, as defined in court documents, refers to registering a domain name associated with a well-known company or brand with the intent to later sell it for a profit. The court underscored that the defendant’s interest in the domain names was primarily to redirect customers searching for Yuga Labs’ mark to their commercial website, and they had concealed their registration of the domain names using a proxy registration service. Yuga Labs welcomed the legal victory, stating, “This victory not only defeats scammers but supports creators advancing web3 experiences worldwide.”
The court also dismissed the defendants’ counterclaim, where they accused Yuga Labs of making false accusations of infringement and using racist and neo-Nazi imagery in its BAYC NFTs. In response, the court ruled that Yuga owned the BAYC Marks, emphasizing their validity and protectability. The court found that Ripps and Cahen did not have a legitimate reason for their prior use of the domains because they registered their domains after Yuga Labs had already launched the Bored Ape Yacht Club NFTs collection.
Launched in April 2021, the Bored Ape Yacht Club consists of 10,000 randomly generated NFTs on the Ethereum blockchain. These non-fungible tokens (NFTs) are unique digital assets associated with digital and physical content, providing proof of ownership. Among the privileges offered to Bored Ape Yacht Club holders is unlimited copyright to use their apes in their media or designs. Notably, last summer, Seth Green, a star from “Family Guy,” paid $300,000 to recover a stolen Bored Ape NFT that had been lost in a phishing attack.