A United States district court judge recently ordered NFT artists Ryder Ripps and Jeremy Cahen to pay Bored Ape Yacht Club (BAYC) creator Yuga Labs a significant sum of $1.57 million in disgorgement and damages. This ruling brings an end to a long-standing “copycat” NFT lawsuit that has garnered attention in the crypto community.
The judge’s decision, outlined in an order dated October 25, follows a partial summary judgment granted to Yuga Labs on April 21. The lawsuit alleged that Ripps and Cahen violated copyright laws by creating copycat versions of BAYC collectibles. Yuga Labs, a prominent NFT firm, argued that the defendants’ actions infringed upon their intellectual property rights.
District court Judge John Walter awarded Yuga Labs $1.37 million in disgorgement of the defendants’ profits. In addition, $200,000 was awarded in statutory damages related to cybersquatting violations. The judge also determined that the case constituted an “exceptional case,” allowing Yuga Labs to recover attorney fees and costs from the NFT artists.
According to the judge, a trademark case is deemed exceptional when a party has taken positions characterized as “malicious, fraudulent, deliberate, or willful.” In this case, he deemed the trademark infringement by Ripps and Cahen as malicious, leading to the awarding of attorney fees and costs to Yuga Labs.
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The defendants attempted to argue that their copycat BAYC versions were merely “satire” and “parody.” However, Judge Walter rejected these claims, ruling that the defendants intentionally infringed Yuga Labs’ BAYC trademarks with a clear intent to profit from them. The judge also highlighted that the defendants continued to market and promote their copycat versions even after the initial judgment was delivered against them in April.
This lawsuit was initially filed by Yuga Labs against the two artists in June 2022. It has since undergone various legal proceedings, including an October 16 hearing in a United States appeals court. During this hearing, Ripps and Cahen’s lawyers argued that the lawsuit should be dismissed based on the grounds of free speech under California’s anti-SLAPP statute. However, the three-judge panel did not appear convinced by their arguments.
The Bored Ape Yacht Club (BAYC) is widely considered one of the most valuable NFT collectibles on the popular NFT marketplace OpenSea. Since April 2021, BAYC has generated significant trading volume, amassing 1.32 million Ether (ETH) or approximately $2.38 billion. The average floor price for BAYC collectibles stands at 27.4 ETH, equivalent to $49,200, according to data from OpenSea.
This ruling serves as a reminder of the importance of intellectual property rights in the rapidly growing NFT space. NFT creators and artists should be cautious not to infringe upon existing trademarks or copyrights to avoid legal repercussions. It also highlights the potential risks associated with attempting to profit from the popularity of established NFT projects through copycat versions, as demonstrated by this lawsuit.
As the NFT market continues to evolve and mature, legal disputes surrounding intellectual property rights are expected to become more common. It is crucial for both NFT creators and investors to have a thorough understanding of these legal implications to ensure a fair and compliant ecosystem for all participants.
