Bored Apes, Hermès Suits Foreshadow What Is Coming In NFT Claims - Bloomberg Law

Bored Apes, Hermès Suits Foreshadow What Is Coming In NFT Claims – Bloomberg Law

In June 2022, Yuga Labs Inc., the parent company of the Bored Ape Yacht Club non-fungible token collection, filed a federal lawsuit against artist Ryder Ripps, one of most vocal critics of the BAYC NFT project.

Ripps created his own NFT project around May 2022, which he called RR/BAYC, using online digital images from the BAYC NFT collection by generating new NFTs using URLs embedded in Bored Ape Yacht Club smart contracts.

Yuga claims that Ripps and co-founder Jeremy Cahen used some of the same digital art images as the BAYC collection, and relied on Yuga’s trademarks for promotion in an alleged scheme to mislead consumers, harass Yuga, and enrich themselves.

Yuga’s complaint asserted causes of action sounding in false designation of origin, false advertising, cybersquatting, trademark infringement, unfair competition, unjust enrichment, conversion and tortious interference against RR/BAYC founders. Notably, the complaint doesn’t mention copyright infringement.

Ensuing Litigation

Whether Ripps’ copycat project transpired as alleged or is an example of protectable artistic expression, this lawsuit has plenty of precedent-setting potential and is worth following.

A notable development came from the court’s decision on the defendants’ motion to dismiss Yuga’s suit, where they argued that RR/BAYC was protected free speech under the test of Rogers v. Grimaldi, as well as that the project is entitled to nominative fair use protection.

In deciding the motion to dismiss, the US District Court for Central District of California held that the defendants failed to meet the threshold showing under Rogers because the Ninth Circuit requires the “artistic expression” be at issue and the allegedly infringing use must be part of the expressive work.

The defendants argued that they meet the artistic relevance element under Rogers because their activity, taken together—website, NFTs offered for sale, social commentary the NFTs entail—should be viewed as an expressive artistic work.

The court disagreed, observing that the defendants’ NFT sale was the only conduct at issue and that the conduct did not constitute an expressive artistic work meriting First Amendment protection.

In fact, the court found that RR/BAYC does not express an idea or point of view and only uses an exact copy of Yuga’s BAYC marks without any expressive content.

The court described the defendants’ conduct as commercial activities designed to sell infringing products, rather than expressive artistic speech protected by the First Amendment.

The California federal court’s