A Landmark NFT Lawsuit Seeks To Determine How Creators, Owners, And Investors Can

What Happened

Yuga Labs, the creator of the popular Bored Ape Yacht Club (“BAYC”) non-fungible token (NFT) collection, has sued an artist in Los Angeles federal court, accusing him of selling identical NFTs that are confusing potential buyers.

Yuga Labs asserts that 2016 Forbes 30 Under 30 alum Ryder Ripps (“Ripps”) is intentionally causing consumer confusion under the guise of satire and has earned millions in “ill-gotten profit” while “celebrating the harm he causes.”

Ripps has allegedly infringed on Yuga Labs by creating a complete copy of BAYC’s NFT images. The lawsuit alleges trademark infringement, false advertising, unfair competition and cybersquatting (the practice of registering, trafficking in, or using an Internet domain name, with bad faith intent to profit from the goodwill of a trademark belonging to someone else).

Yuga Labs also said in the complaint that Ripps targeted the company in a “campaign of harassment based on false accusations of racism.” The Yuga Labs’ creators published an angry letter referring to Ripps as a “demented troll” and claiming people are “spreading ridiculous conspiracy theories online and using them to sell knockoff NFTs.” Yuga Labs further characterized Ripps’ accusations that the BAYC creators are secret Nazis as a “crazy disinformation campaign.”

A statement on Ripps’ NFT website says, Bored Ape Yacht Club has “extensive connections” to “subversive internet nazi troll culture” and that Ripps’ NFTs recontextualize the pieces.

Although Ripps has a First Amendment constitutional right to criticize and comment on an influential project (as fair use or parody), Yuga Labs claims his work is diminishing the Bored Ape’s brand and creating confusion in the NFT markets.

Key Actors

Yuga Labs, Inc.

Ryder Ripps, Conceptual Artist

Other defendants include Jeremy Cahen and John Doe’s 1-10

Context

NFTs are unique blockchain tokens that prove ownership of a digital or physical asset, such as a piece of artwork or memorabilia.

Ripps is the creator of RR/BAYC, a NFT collection that features identical BAYC NFT images created by Yuga Labs. He does not own any of the original assets himself.

Ripps’ RR/BAYC project started from an argument with prominent NFT influencer j1mmy.eth. Ripps wanted to disprove the notion that holding an NFT gives the owner unique claim over the image and so he minted a version of j1mmy’s Bored Ape twitter profile picture.

Yuga Labs sent Ripps a DMCA (Digital Millennium Copyright Act) takedown claim but rescinded it when Ripps contested. OpenSea, the largest NFT marketplace, saw nearly $3.5 million in total volume but has removed Ripps’ collection because of “a claim of intellectual property infringement.”

The…