The U.S. Court of Appeals for the Ninth Circuit ruled that non-fungible tokens (NFTs) are considered “goods” under the Lanham Act, qualifying them for trademark protection. This ruling stems from the high-profile legal battle between Yuga Labs, creators of the Bored Ape Yacht Club (BAYC) NFT collection, and artist Ryder Ripps, sending the case back to a lower court for trial. The decision sets a significant precedent for the NFT industry, affirming that brand owners can pursue trademark infringement claims against copycat NFTs, similar to protections for physical goods like sneakers or handbags.
The case originated in June 2022 when Yuga Labs sued Ripps, accusing him of devaluing their BAYC collection by selling identical NFTs under the Ryder Ripps Bored Ape Yacht Club (RR/BAYC) project. Ripps, a conceptual artist, claimed his project was “expressive appropriation art” meant to critique Yuga Labs’ branding and the NFT market’s speculative frenzy, asserting First Amendment protections. However, the Ninth Circuit rejected Ripps’ argument that his use of BAYC trademarks constituted nominative fair use or expressive work protected by the First Amendment, stating that his NFTs were commercial products likely to cause consumer confusion.
The court vacated a previous $8 million judgment against Ripps, which included disgorgement of profits, statutory damages, attorney fees, and costs, and reversed the district court’s summary judgment in favor of Yuga Labs on trademark infringement and cybersquatting claims. The Ninth Circuit found that Yuga Labs did not conclusively prove that Ripps’ actions caused consumer confusion, a key element in trademark disputes, and remanded the case for a trial to determine whether a typical NFT buyer would be misled about the legitimacy of Ripps’ collection.
The ruling has sparked varied reactions. Yuga Labs and some NFT holders celebrated the decision as a victory for intellectual property rights.
“People can now legally smack down on rip-offs and keep their brand’s value and exclusivity intact.” Conversely, Ripps framed the reversal of the summary judgment as a “resounding legal victory.”
emphasizing the court’s recognition that his First Amendment claims warranted further scrutiny.
The Ninth Circuit’s affirmation that NFTs are protectable under the Lanham Act aligns with prior district court decisions, such as Hermès v. Rothschild, which also recognized NFTs as goods subject to trademark law. The International Trademark Association (INTA) had urged the court to avoid overextending the Supreme Court’s Dastar ruling, which Ripps cited to argue that NFTs, as intangible assets, were ineligible for trademark protection. The court clarified that NFTs, while intangible, serve as commercial goods in curated online marketplaces, fulfilling the same source-identifying functions as physical products.
This decision could reshape the NFT landscape, providing brand owners with stronger legal tools to combat counterfeit digital assets. However, the trial will further explore whether Ripps’ RR/BAYC project constitutes protected speech or infringing commercial activity, potentially setting additional boundaries for NFT-related intellectual property disputes. As the case heads back to the district court, the NFT community and legal experts await further clarity on balancing artistic expression with trademark rights in the rapidly evolving digital marketplace.
