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

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 newly filed lawsuit. 

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 asserted that Ripps and Cahen are selling copycat NFTs in order to mislead consumers, the defendants claimed 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’s Terms and Conditions which state 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. 

Ripps’ lawyers initially filed 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 ruled, 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.”

“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. 

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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