Appeals Court Reverses $9 Million Yuga Labs Win Against Ryder Ripps in BAYC Dispute

The United States Court of Appeals for the Ninth Circuit has primarily reversed a district court’s $9 million ruling in favor of Bored Ape Yacht Club creator Yuga Labs, representing a significant setback for the NFT company’s landmark trademark win against artist Ryder Ripps and his associate Jeremy Cahen.

The appeals court determined on July 23, 2025, that essential issues regarding consumer confusion in trademark infringement and cybersquatting claims should be resolved by a jury instead of through summary judgment.

We just received an update from the Ninth Circuit Court of Appeals regarding the RR BAYC case.
The Ninth Circuit confirmed: BAYC NFTs are protectable trademarks, which is a significant victory for every NFT holder.
We will now continue the fight in the district court, where the judge has already imposed fines…

— Garga.eth (Greg Solano) (@CryptoGarga) July 23, 2025

NFTs Can Be Trademarked

This ruling overturns the findings of the lower court while affirming that NFTs can be registered as trademarks under federal law.

Ripps and Cahen launched the “Ryder Ripps Bored Ape Yacht Club” collection in May 2022, utilizing identical cartoon images as Yuga’s original BAYC NFTs.

Ripps asserted that his project acted as satirical commentary aimed at revealing purported “neo-Nazi symbolism, alt-right dog whistles, and racist imagery” within the original collection.

The district court initially granted Yuga Labs over $8 million in damages, attorney fees, and costs after determining trademark infringement and cybersquatting violations occurred.

The court issued a permanent injunction against the defendants, prohibiting them from using BAYC identifiers and mandating the transfer of all infringing materials within two weeks.

However, the appeals panel concluded that the lower court had incorrectly applied trademark law in assessing the likelihood of consumer confusion.

This decision remands the case back to the district court for trial, which could lead to millions in additional legal fees and damages already awarded to Yuga Labs.

The ruling arrives as the overall NFT market continues to experience a downturn, with trading volumes plummeting 80% to $823 million in Q2 2025, down from $4 billion the previous year.

NFT trading declines for the fifth consecutive quarter, dropping a massive 80% to $823M as major platforms exit the market and the lending sector collapses 97% to $50M in monthly volume. #NFT #NFTTrading https://t.co/fat3I4TA4a

— Cryptonews.com (@cryptonews) July 8, 2025

Several major platforms have ceased their NFT operations, while lending markets have fallen by 97% from nearly $1 billion in monthly volume.

Trademark Battleground Shifts as Appeals Court Rejects Summary Judgment

The appeals court employed the eight-factor “Sleekcraft” test to assess the likelihood of consumer confusion, yielding mixed results that hindered a definitive legal conclusion.

While some factors were in favor of Yuga Labs, others supported the defendants’ stance.

The court recognized that BAYC marks exhibited both conceptual and commercial strength due to their widespread recognition and celebrity interest.

Both parties marketed NFTs in the same marketplace, with RR/BAYC tokens associated with identical Bored Ape images and identification numbers.

However, significant factors favored Ripps and Cahen. The inclusion of “RR/” in their collection name introduced sufficient visual and auditory distinctions from the original BAYC acronym.

The defendants primarily marketed through their own rrbayc.com website rather than Yuga’s established platforms.

NFT buyers were classified as “inherently sophisticated” consumers due to the complexity and high costs of digital collectibles.

BAYC tokens are priced in the millions, while RR/BAYC versions are priced between $100-$200, alerting discerning buyers to the evident differences between the collections.

The court determined that the defendants had “dual motives,” merging satirical intent with commercial gain.

Ripps maintained artistic credentials and included disclaimers regarding his critical commentary, complicating straightforward assessments of fraudulent intent.

The judge dismissed the defendants’ nominative fair use and First Amendment defenses, ruling that they “used the marks as marks” to identify sources for their goods rather than merely referencing Yuga’s products for critique.

However, the marks aren’t so similar. While the defendants utilized Yuga’s marks in their NFTs, they sold the majority through their own website, which clearly identified their collection as RR/BAYC—favoring the defendants. pic.twitter.com/TEpsndywoG

— Michael Eshaghian, Esq. (@LAIPAttorney) July 24, 2025

Legal Precedent Established Despite Pyrrhic Victory for Yuga Labs

The appeals court confirmed that NFTs qualify as “goods” under the Lanham Act, establishing vital precedent for the trademark protection of digital assets.

The ruling differentiated NFTs from intangible content associated with physical products, emphasizing their existence solely in digital marketplaces.

BAYC NFTs serve purposes beyond mere digital ownership certificates, acting as membership passes for exclusive online communities, providing access to branded merchandise, and enabling participation in celebrity events.

The Patent and Trademark Office has verified that NFTs fulfill traditional source-identifying roles in commercial markets.

Yuga Labs maintained trademark priority as the initial commercial user of BAYC marks.

The court dismissed claims that alleged violations of securities law or NFT sales agreements undermined the company’s trademark rights.

The ruling rejected the defendants’ copyright-related counterclaims while upholding the dismissal of their DMCA violation allegations.

Yuga’s takedown notices appropriately invoked trademark rather than copyright protections.

Ripps previously attempted to obstruct court orders by destroying private wallet keys containing RR/BAYC tokens in December 2023.

Yuga Labs sought contempt sanctions, asserting that the artist acted in bad faith to evade compliance with asset transfer obligations.

The legal dispute has extended over three years since Ripps introduced his derivative collection.

In a minor victory for Yuga, the Court confirmed the dismissal of the defendants’ DMCA and DJ counterclaims. pic.twitter.com/02nu7EtEnH

— Michael Eshaghian, Esq. (@LAIPAttorney) July 24, 2025

Both parties have indicated intentions to pursue further litigation, despite escalating legal expenses and the significant decline of the broader NFT market from its 2022 highs, which surpassed $50 billion in annual trading volume.

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