Non-fungible freedom - NFTs, Trade Marks and Free Speech

Background

Readers may be familiar with the cartoon apes that have attracted celebrity attention, with the likes of Justin Bieber, Snoop Dogg and Eminem purchasing BAYC NFTs. Justin Bieber is said to have paid 300 percent more than the NFTs then market value whilst Eminem and Snoop Dogg even created a music video featuring the cartoon apes:

The BAYC NFTs have also featured on Adidas clothing and consumer goods as a result of a collaboration with the hugely successful athletics and footwear brand.

However, it hasn’t all been plain sailing. Yuga Labs felt compelled to bring proceedings against conceptual artist and designer Ryder Ripps and their business partner, Jeremy Cahen, for inter alia trade mark infringement, false advertising, unfair competition, unjust enrichment and cybersquatting. They alleged that Ripps and Cahen created a near-identical NFT collection, “Ryder Ripps Bored Ape Yacht Club" (RR/BAYC), in a deliberate attempt to damage BAYC's reputation, deceive consumers and to profit off Yuga Labs' success. It is notable that the RR/BAYC NFTs linked to the same ape images and corresponding Ape IDs on Ethereum as Yuga Lab's BAYC NFT counterparts. The image below shows Yuga Labs' BAYC ape on the left with RR/BAYC's image on the right, each using the same #1508 ID:

Image from the 23 July 2025 judgment of the US Court of Appeals for the Ninth Circuit

Ripps' and Cahen's activities took place against the backdrop of Ripps' historic criticism of Yuga Labs for using what he considered to be "neo-Nazi symbolism, alt-right dog whistles and racist imagery" in the BAYC NFTs. For some time, Ripps had been publicly criticising Yuga Labs, as well as its celebrity promoters, describing his motives for doing so as being "to dismantle the porous boundaries between art, the internet, and commerce, agitating the structure of the attention economy and revealing the flow of power in online relationships.” Ripps presented his criticisms on social media and his own website, as well as in interviews with investigative journalists. Ripps has continued to argue that he used art as a form of protest and to satirise the BAYC NFTs (somewhat echoing copyright infringement defences) and was providing a space for the public to discuss the same.

Notably, Ripps and Cahen countersued Yuga Labs, alleging it had violated the Digital Millennium Copyright Act 1998 by making misrepresentations in its take-down notices, and also sought declaratory relief that Yuga Labs had no copyright protection over the Bored Apes. Ripps and Cahen also ran a defence that Yuga Labs did not have enforceable trade mark rights and that in the event it did, their use of the BAYC NFTs was lawful under the fair-use doctrine and First Amendment (freedom of speech). These defences were rejected and the other claims dismissed by the district court and Yuga Labs was ultimately granted summary judgment on its claims along with 1.6 million USD being awarded for disgorgement of profits and statutory damages, which increased to almost 9 million USD after taking account of legal fees and costs. Ripps and Cahen were then permanently enjoined (i.e. prevented) from further marketing, promoting or selling products or services using the BAYC marks.

Ruling of the Court of Appeals for the Ninth Circuit

The District Court's ruling has now been partially overturned by the Ninth Circuit, which felt that proof of consumer confusion was, at this stage, insufficient. The three judges unanimously decided that whilst NFTs could be "goods" under the Lanham Act and that Yuga Labs could show earlier use of the BAYC marks in commerce, there hadn’t been proof that the RR/BAYC NFTs were likely to cause consumer confusion. Considering the factors established in Sleekcraft, the judges felt that some factors supported a likelihood of confusion, whereas others did not or were neutral. As such, the case will go back to the Federal Court in California where it will be determined whether the fake NFTs did in fact infringe Yuga Labs' trade marks and whether the cybersquatting claim can prevail. Ripps and Cahen's arguments as to free speech will however not be reconsidered.

Comment

The Federal Appeals Court has recognised NFTs as "goods" protectable under US trade mark law and the judgment, notwithstanding being sent back to the California Federal Court for a trial, sends a clear message on the limits of freedom of speech in the context of commercial exploitation.

A key underlying tension in this case is the commercial use of satire and the question of when a protest work becomes "use in the course of trade". In the UK, use in the course of trade is a threshold issue for trade mark infringement. If Ripps’ and Cahen's activities were replicated in the UK, it is likely the courts would find that there was use of BAYC marks in trade. As noted above, the RR/BAYC NFTs linked to the same BAYC ape images and corresponding Ape IDs on Ethereum and a buyer of an RR/BAYC NFT would be presented with the following "artist statement":

Image from the 23 July 2025 judgment of the US Court of Appeals for the Ninth Circuit

In terms of recognising NFTs as 'goods' or services', it is interesting to consider this recent US decision in the context of the UK's approach.

The UK Intellectual Property Office ("UKIPO") issued guidance in 2023 setting out exactly how a party should make a trade mark application for virtual goods, services provided in the metaverse and/or NFTs. Like the EUIPO, the UKIPO considers virtual goods to fall into Class 9 given that they ultimately consist of data. As such, if a party wishes to pursue an argument for trade mark infringement relating to an NFT, the trade marks relied on must be registered for goods and/or services that contain an indication of the asset to which the NFT relates. If not, the term will be inherently vague and should not have been registered. Examples of appropriate wording might be "digital art authenticated by non-fungible tokens [NFTs]", "downloadable digital files authenticated by non-fungible tokens [NFTs]", and "downloadable software that is authenticated by NFTs.” Virtual services should be covered by appropriate terminology in Class 35 or, if the services concern membership of a club or entry to an event which is linked to an NFT, the appropriate class would be 41, that being entertainment services.

It will be interesting to see what impact the Federal Court's decision will have on allegations of trade mark infringement in the virtual world. We eagerly await the outcome, and will keep an eye on the UK courts' application of similar issues.