Appeals Court Overturns $9M Yuga Labs Victory Against Ryder Ripps in BAYC Case

The United States Court of Appeals for the Ninth Circuit has largely overturned a district court’s $9 million judgment in favor of Bored Ape Yacht Club creator Yuga Labs, dealing a significant blow to the NFT company’s landmark trademark victory against artist Ryder Ripps and associate Jeremy Cahen.

The appeals court ruled on July 23, 2025, that critical questions about consumer confusion in trademark infringement and cybersquatting claims must be decided by a jury rather than through summary judgment.

NFTs Can Be Trademarked

The decision reverses the lower court’s findings while affirming that NFTs can be trademarked as goods under federal law.

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

Ripps claimed his project served as satirical commentary exposing alleged “neo-Nazi symbolism, alt-right dog whistles, and racist imagery” in the original collection.

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

The court permanently banned the defendants from using BAYC identifiers and ordered them to transfer all infringing materials within two weeks.

However, the appeals panel found the lower court had misapplied trademark law when determining the likelihood of consumer confusion.

The decision sends the case back to the district court for trial, potentially incurring millions in additional legal fees and damages already collected by Yuga Labs.

The ruling comes as the broader NFT market continues to decline, with trading volumes dropping 80% to $823 million in Q2 2025, from $4 billion the previous year.

Multiple major platforms have shut down their NFT operations, while lending markets have collapsed by 97% from a nearly $1 billion monthly volume.

Trademark Battleground Shifts as Appeals Court Rejects Summary Judgment

The appeals court applied the eight-factor “Sleekcraft” test to evaluate the likelihood of consumer confusion, finding mixed results that prevented a clear legal determination.

While some factors favored Yuga Labs, others supported the defendants’ position.

The court acknowledged that BAYC marks possessed both conceptual and commercial strength due to wide recognition and celebrity attention.

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

However, critical factors favored Ripps and Cahen. The addition of “RR/” to their collection name created sufficient visual and auditory differences from the original BAYC acronym.

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

NFT purchasers were deemed “inherently sophisticated” consumers given the complexity and high prices of digital collectibles.

BAYC tokens sell for millions, while RR/BAYC versions sell for $100-$200, alerting careful buyers to the apparent differences between the collections.

The court found that the defendants possessed “dual motives,” combining satirical intent with commercial exploitation.

Ripps maintained artistic credentials and included disclaimers about his critical commentary, complicating simple determinations of fraudulent intent.

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

Legal Precedent Established Despite Pyrrhic Victory for Yuga Labs

The appeals court affirmed that NFTs qualify as “goods” under the Lanham Act, establishing crucial precedent for digital asset trademark protection.

The ruling distinguished NFTs from intangible content found in physical products, noting they exist purely in digital marketplaces.

BAYC NFTs function beyond simple digital ownership certificates, serving as membership passes for exclusive online communities, granting access to branded merchandise, and facilitating participation in celebrity events.

The Patent and Trademark Office has confirmed that NFTs perform traditional source-identifying functions in commercial markets.

Yuga Labs retained trademark priority as the first commercial user of BAYC marks.

The court rejected arguments that alleged securities law violations or NFT sales agreements stripped the company’s trademark rights.

The decision dismissed the defendants’ copyright-related counterclaims while upholding the rejection of their allegations of DMCA violations.

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

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

Yuga Labs sought contempt sanctions, arguing the artist acted in bad faith to avoid compliance with asset transfer requirements.

The legal battle has spanned over three years since Ripps launched his derivative collection.

Both parties indicated plans for continued litigation, despite mounting legal costs and the broader NFT market’s steep decline from 2022 peaks, which exceeded $50 billion in annual trading volume.