- Late Friday, Judge John Walter granted summary judgment in part to Yuga Labs in its trademark infringement lawsuit against Ryder Ripps and Jeremy Cahen, for their sale of “RR/BAYC” NFTs.
- The only thing surprising about this decision was its timing, published late Friday.
- Judge Walter had already signaled, in rejecting Ripps’ Anti-SLAPP motion back on Dec. 16, 2022, that Yuga Labs’ had a viable theory of trademark infringement if evidence supported its allegations against Ripps and Cahen. And, yesterday, Judge Walter concluded the evidence not in dispute substantiated Yuga’s claims.
- There will now be a trial on damages suffered by Yuga Labs from both trademark infringement and cybersquatting unless the case settles (which seems unlikely, given how contentious and personal the lawsuit has become).
Highlights from Judge Walter’s decision
Trademark Infringement: “In this case, Defendants knowingly and intentionally used Yuga’s BAYC Marks. Because Defendants knowingly and intentionally used Yuga’s BAYC Marks, and in the absence of any contrary evidence, the Court concludes that Defendants used the BAYC Marks in an effort to confuse consumers. Glow Industries, Inc. v. Lopez, 252 F. Supp. 2d 962, 1002 (C.D. Cal. 2002) (holding that “[k]nowing adoption of a mark closely similar to another is a sound basis for inferring an intent to deceive”).
“In addition, the Court concludes that Defendants intentionally designed the RR/BAYC NFTs and sales websites to resemble Yuga’s branding. For example, Defendants listed the RR/BAYC NFTs on rrbayc.com under the very same Ape ID number associated with BAYC NFTs, despite having their very own unique and different ID numbers.”
No First Amendment defense: “In this case, the Court concludes that the Rogers test does not apply. The Ninth Circuit only applies the Rogers test when “artistic expression is at issue,” and requires defendants to make a “threshold legal showing that its allegedly infringing use is part of an expressive work protected by the First Amendment.” Gordon, 909 F.3d at 264; see also Rogers v. Grimaldi, 875 F.2d 94, 999 (2nd Cir. 1989). Although Defendants’ argue that the larger RR/BAYC “project” is an expressive artistic work protected by the First Amendment, Defendants’ sale of what is admittedly a collection of NFTs that point to the same online digital images as the BAYC collection is the only conduct at issue in this action and does not constitute an expressive artistic work protected by the First Amendment. In particular, the RR/BAYC NFTs do not express an idea or point of view, but, instead, merely point to the same online digital images associated with the BAYC collection. Indeed, even Defendants’ token tracker uses an exact copy of Yuga’s BAYC Marks without any expressive content.
“Similarly, Defendants’ NFT marketplace sales and Ape Market website contain no artistic expression or critical commentary. For example, the title of Defendants’ Foundation sales page was simply “Bored Ape Yacht Club,” and a Google search of “BAYC Foundation.app” resulted in a link entitled “Bored Ape Yacht Club – Foundation.app” that redirected to Defendants’ Foundation sales page. These are all commercial activities designed to sell infringing products, not expressive artistic speech protected by the First Amendment. Moreover, Defendants concede that the Ape Market contained no speech – artistic or otherwise – because it never had any content. As Yuga has pointed out, and the Court agrees, Defendants’ sale of RR/BAYC NFTs is no more artistic than the sale of a counterfeit handbag, making the Rogers test inapplicable. See, e.g., Tommy Hilfiger Licensing, Inc. v. Nature Labs, LLC, 221 F. Supp. 2d 410, 415 (S.D.N.Y. 2002).
In addition, even if the Court applied the Rogers test, the Court concludes that Defendants’ use of the BAYC Marks is not artistically relevant to Defendants’ “art.” Although there is a low bar for artistic relevance, as Yuga has pointed out, it is not infinitely low. For example, in Twentieth Century Fox Television v. Empire Distribution, Inc., 875 F.3d 1192, 1196-97 (9th Cir. 2017), the court found that using the “Empire” mark in the title of a TV show was artistically relevant, but contemplated that it would not be artistically relevant for a “pretextual expressive work meant only to disguise a business profiting from another’s trademark,” which is precisely what Defendants are doing in this case.
Moreover, even if the Court applied the Rogers test and concluded that the BAYC Marks are artistically relevant, the Court concludes that Defendants’ use of the BAYC marks is explicitly misleading.
Cybersquatting: “Having weighed all the factors in light of the undisputed evidence, the Court concludes that Defendants acted with a bad faith intent to profit.
“Defendants do not have any trademark or other intellectual property rights in the domain names and the domain names do not consist of the legal names of Defendants. Defendants did not have a bona fide prior use of the domains because they registered the domains after Yuga had already launched its BAYC NFTs collection. Defendants’ websites were not for a noncommercial or fair use purpose. Instead, Defendants registered their domains, which included Yuga’s marks, for commercial gain to divert customers from purchasing BAYC NFTs.”