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.