Ornella Hernandez

Yuga Labs, creators of the Bored Ape Yacht Club (BAYC) NFT collection at the center of a trademark dispute, were hit with a counterclaim, according to court documents filed on Monday.



Artist Ryder Ripps and his business partner Jeremy Cahen, known as Pauly0x on Twitter, asked the court to declare that BAYC images are not entitled to copyright protection due to “having been generated by an automated computer algorithm where no humans were involved in determining which of the 10,000 BAYC Images were selected,” in their <a href="https://storage.courtlistener.com/recap/gov.uscourts.cacd.855658/gov.uscourts.cacd.855658.65.0.pdf" target="_blank" rel="noreferrer noopener">newly filed lawsuit</a>.&nbsp;



The relationship between NFTs and intellectual property (IP) has been an ongoing debate. The new countersuit comes during the ongoing Yuga Lab’s trademark infringement lawsuit launched in June against Ripps and Cahen, the founders of the RR/BAYC NFT project.



While Yuga Labs <a href="https://blockworks.co/news/alleging-copyright-infringement-bored-apes-take-satirist-to-court" target="_blank" rel="noreferrer noopener">asserted</a> that Ripps and Cahen are selling copycat NFTs in order to mislead consumers, the defendants <a href="https://storage.courtlistener.com/recap/gov.uscourts.cacd.855658/gov.uscourts.cacd.855658.65.0.pdf">claimed</a> that, by definition, NFTs are “unique by design and cannot be copied.”



They further argue that Yuga does not have copyrights over the images associated with BAYC NFTs based on the project&#8217;s Terms and Conditions which <a href="https://boredapeyachtclub.com/?gclid=CjwKCAiA76-dBhByEiwAA0_s9R7Yx348TRCOEckTvQC06A2MoC4YtazMJMWMc7BiZMphwmu8egj3BRoC4nYQAvD_BwE#/terms" target="_blank" rel="noreferrer noopener">state</a> that BAYC NFT holders retain all intellectual property rights in their NFTs, “from the underlying Bored Ape, the Art, completely.”



Yuga Labs previously won a small legal victory on Dec. 16 when the U.S. District Court of Central California denied the defendant’s motion to dismiss the case.&nbsp;



Ripps’ lawyers initially <a href="https://ryder-ripps.com/legal/2022-08-15-Anti-SLAPP-Motion-to-Strike.pdf" target="_blank" rel="noreferrer noopener">filed</a> what’s known as an anti-SLAPP (Strategic Lawsuit Against Public Participation) motion against Yuga Labs in August to stop the lawsuit. The RR/BAYC project is considered expressive artistic work that should be protected by the First Amendment,” the defendants claimed. The court <a href="https://storage.courtlistener.com/recap/gov.uscourts.cacd.855658/gov.uscourts.cacd.855658.62.0.pdf" target="_blank" rel="noreferrer noopener">ruled</a>, however, that the anti-SLAPP motion was not applicable because “the RR/BAYC NFTs do not express an idea or point of view,” and instead they “point to the same online digital images associated with the BAYC collection.”



A Yuga Labs spokesperson told Blockworks via email at the time, that the defendants’ arguments amounted to “heinous lies” that are “unrelated to the case.”



&#8220;Our lawsuit to hold Ripps and Cahen accountable for their obvious and blatant theft of Yuga Labs’ trademarks rightfully moves forward with this ruling,” the spokesperson said.



As the new lawsuit progresses, with the possibility of going to trial, its developments are likely to set a precedent for the greater NFT ecosystem given the market value of the intellectual property at issue.&nbsp;



The Bored Ape Yacht Club NFT collection has the second-highest trading volume on OpenSea of all time, at 703,000 ETH, behind CryptoPunks with 1 million ETH worth of sales.



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Yuga Labs at Center of Battle Over the Nature of NFT Copyright

<div id="highlights-block_62bd9d5e9cc85" class="highlights">
 <ul>
 <li>Bored Ape Yacht Club was the top-ranked collection by trading volume on OpenSea in the past 30 days</li>
 <li>A number of intellectual property lawyers weighed in on the significance of the case</li>
 </ul>
 
</div>



Bored Ape Yacht Club NFTs — some of the most prominent and valuable — have seen their fair share of copycats looking to profit off the success of the digital collectibles. Now, the collection’s parent company is taking a parody product to court.



Bored Ape Yacht Club&#8217;s (BAYC) backer, Yuga Labs, is suing pseudonymous critic Ryder Ripps — the mind behind the Ryder Ripps Bored Ape Yacht Club (RR/BAYC) – in federal court. The NFT (non-fungible token) artist and self-described satirist Ripps is being sued for complaints including trademark infringement, unfair competition and cybersquatting, or the practice of sitting on a domain that another entity ought to control, given the intellectual property at play.&nbsp;



“This is a classic trademark infringement case,” said Teddy Bornstein, general counsel at authenticated NFT marketplace Ethernity Chain, which is not involved in the case. He <a href="https://www.reuters.com/legal/litigation/hermes-lawsuit-over-metabirkins-nfts-can-move-ahead-judge-rules-2022-05-05/" target="_blank" rel="noreferrer noopener">compared</a> it to the ongoing trademark infringement suit between fashion house Hermes and designer Mason Rothschild for creating and selling digital MetaBirkins NFTs.



In addition to Ripps, the defendant Jeremy Cahen — also known as @Pauly0x — founder of NFT marketplace Not Larva Labs, is included in the complaint. Ten other unidentified defendants are also included. The litigation does not identify Ripps, and it’s not clear whether he has been formally served.



Ripps did not immediately return a request for comment.&nbsp;



In the lawsuit, filed June 24 in the US District Court of Central California, Yuga Labs <a href="https://analytic.lol/wp-content/uploads/031138067085.pdf" target="_blank" rel="noreferrer noopener">claimed</a> Ripps seeks to “devalue” BAYCs by misusing the same trademarks to market his copycat collection in a “deliberate” effort to “cause actual and monetary harm” to the crypto investment firm and confuse consumers.&nbsp;



“This is no mere monkey business,” three Yuga Labs lawyers wrote in the lawsuit.



Ripps maintains his intentions have been transparent: to use “satire and appropriation to protest and educate people regarding The Bored Ape Yacht Club and the framework of NFTs,” according to his <a href="https://rrbayc.com/" target="_blank" rel="noreferrer noopener">website</a>.&nbsp;



He’s been protesting BAYC since December 2021, alleging racist beliefs and Nazi symbolism and <a href="https://gordongoner.com/" target="_blank" rel="noreferrer noopener">documenting</a> his investigations. On May 17, Yuga Labs attempted to delist the RR/BAYC collection from the Foundation NFT platform via a Digital Millennium Copyright Act (DMCA) notice.



In response, Ripps tweeted he never meant to deceive RR/BAYC buyers and anticipated further legal action.



“You can’t copy an NFT,” he wrote.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">It will be a ground breaking case in defining the nature of NFT, I seek to establish how you cant copy an NFT, every mint is a context shift, in my particular case this is an artistic statement on the nature of NFT, satire against Yuga Labs&#39; practice &amp; protest against the content&mdash; RYDER-RIPPS.ETH 🔜 (@ryder_ripps) <a href="https://twitter.com/ryder_ripps/status/1526654123260555264?ref_src=twsrc%5Etfw">May 17, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Bornstein, the Ethernity Chain lawyer, asserts Yuga Labs’ isn’t concerned about sales going down due to knockoffs. Rather, “they want Ryder Ripps to stop harassing them” and generating negative publicity.



Bornstein also noted that even though Yuga Labs applied to register various trademarks with the US Patent and Trademark Office, including the BAYC name and its skull logo, the filing has not been completed. Nevertheless, the company is still the owner of the Bored Ape Yacht Club brand.



Laura Cole, a Florida-based blockchain attorney, echoed the sentiment that BAYC may feel it has a duty to file this lawsuit to protect its logo and its brand. Cole told Blockworks if a company doesn’t “proactively” protect its brand from trademark violators, then its reputation may suffer.



In addition to the trademark and copyright issues, she added, the case will boil down to contract law and terms of service — referring to the terms between buyers and sellers, with respect to the use of the NFT content and associated benefits.



The RR/BAYC terms of service indeed act as a disclaimer, of sorts, that his NFTs are “re-minted” versions. Ripps also claimed Yuga Labs’ terms for BAYC token holders are “unclear and do not meet current copyright standards.”&nbsp;



Jeffrey Blockinger, general counsel for Quadrata, a Web3 identity passport network, told Blockworks that Yuga Labs may indeed be setting a precedent.&nbsp;



“Under trademark law, the owner of a mark must defend against all unauthorized uses or the mark becomes more difficult to defend in future circumstances,” Blockinger said.&nbsp;



He isn’t surprised, the attorney said, to see litigation involving NFT intellectual property rights, because most industry participants have little to no experience with traditional copyrighted content.



<blockquote class="wp-block-quote">“Considering the nascent stage of NFTs as an asset class, the resolution of these cases will provide more certainty about the associated IP rights and should encourage further investment,” he said.</blockquote>



An investigative video posted to YouTube earlier this month that has since gone viral, titled the Bored Ape Nazi Club, questioned the motivations and alleged racist history of the project’s creators. The founders have denied the claims.&nbsp;



The video’s creator, Philion, clarified via Twitter that while he did use Ripps’ research, Ryder had “nothing to do with the creation of the documentary.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Just want to clarify: Ryder had nothing to do with the creation of the documentary other than cross referencing the facts on his website. My video was in no way shape or form financially motivated or an endorsement on Ryder’s project’s behalf. The video is demonetized and&mdash; Philion (@thirdeyeoftruth) <a href="https://twitter.com/thirdeyeoftruth/status/1541073757812494338?ref_src=twsrc%5Etfw">June 26, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Yuga Labs <a href="https://medium.com/@team_69582/a-letter-from-the-founders-678e5a3431e7" target="_blank" rel="noreferrer noopener">issued</a> a response to the “disinformation campaign” via Medium.



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