The creator of the Bored Ape Yacht Club non-fungible tokens (NFTs) needs to better prove that a « satirical » version of these tokens was meant to mislead would-be buyers, a U.S. appeals court said Wednesday, overturning a lower court ruling and sending the case back to that lower court for a new trial.
The U.S. Court of Appeals for the Ninth Circuit ruled that a District Court finding that Ryder Ripps’ NFT collection harmed Yuga Labs’ trademarked NFTs needs to be reconsidered, though without weighing in on whether there was indeed trademark infringement — only that Yuga needed to do a better job of demonstrating that under the law at a new trial, a court document said.
Ryder Ripps and Jeremy Cahen, the duo behind the RR/BAYC NFT collection, had previously argued that their tokens were meant to be a satirical response to the actual BAYC. Yuga Labs sued in 2022, alleging trademark infringement and cybersquatting.
A partial summary judgement by a district judge found that Yuga does own trademarks to its Bored Ape Yacht Club NFT collection and that Ripps’ RR/BAYC NFT collection did cause confusion as the images did look similar. Ripps appealed the final ruling, which included an over $8 million fine to be paid to Yuga. The appeals court said that while Yuga does have priority on the trademark due to being the first to use « the Bored Ape Yacht Club marks, » it had not proven that Ripps’ NFTs were causing confusion.
Nevertheless, Yuga Labs must return to trial. « Yuga may ultimately prevail on these claims, but to do so it must convince a factfinder at trial, » the filing said.