Michael Bodley

Months after a US court handed Yuga Labs a hefty trademark-based legal victory that set NFT holders abuzz, questions have once again swirled around the precedent it set — and what it means for current holders and creators of top crypto collectibles. 



Another instance of Yuga Labs, the Miami-headquartered Web3 company that owns blue-chip <a href="https://blockworks.co/tag/nft" target="_blank" rel="noreferrer noopener">NFT</a> collections CryptoPunks and Bored Ape Yacht Club (BAYC), looking to enforce its intellectual property rights, has attracted industry attention.



Tom Lehman, the creator of the Ethscriptions Protocol, which provides a mechanism to attach image files on-chain, <a href="https://twitter.com/dumbnamenumbers/status/1678563855071363074" target="_blank" rel="noreferrer noopener">tweeted</a> last week that he had taken <a href="https://twitter.com/crypt0naut_303/status/1678565237770059776" target="_blank" rel="noreferrer noopener">down</a> Ethereum Punk images from the protocol’s website and was “taking down” the Ethereum Punks’ website outright.



Lehman, who goes by MiddleMarch on Twitter and did not return a request for comment, said he was doing so “at the request of Yuga Labs.”&nbsp;



Amidst the flurry of NFT legal actions, Brian Frye, a professor at the University of Kentucky College of Law who has followed the issue closely, said it’s “really important to distinguish between specifically copyright and trademark when it comes to the copyright issues in the space.”



The latter issues, especially, seem to be showing few <a href="https://twitter.com/0xTycoon/status/1678641605035585536" target="_blank" rel="noreferrer noopener">signs</a> of stopping. 



A series of tweets on July 15 from the Ethereum Punks collection said Yuga Labs had undertaken “recent DMCA actions,” which the collection said were “arguably indicative of a corporate mindset and directly challenge the foundational ideals of the PUNK community.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The spirit of PUNK is predominantly rooted in values such as nonconformity, anti-authoritarianism, anti-corporatism, a DIY ethos, resistance to consumerism and corporate greed, direct action, and an unwavering commitment to never &quot;sell out&quot;.&mdash; Ethereum Punks (@ethscribedpunks) <a href="https://twitter.com/ethscribedpunks/status/1680137242675691520?ref_src=twsrc%5Etfw">July 15, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The tweets did not specify the DMCA enforcement actions in question, but framed Yuga Labs’ actions as “corporate greed.” A spokesperson for the company did not return a request for comment.&nbsp;



On the copyright front, “nothing about owning an NFT makes you any kind of copyright owner at all,” Frye said. “Trademark is a value associated with NFT projects…the real value is owning the token.”&nbsp;



Ethscriptions, which was <a href="https://twitter.com/dumbnamenumbers/status/1679081424047988736" target="_blank" rel="noreferrer noopener">hacked</a> last week, has billed itself as a decentralized protocol (not its own blockchain or layer-2) based in the Ethereum ecosystem. Approximately 123 wallet addresses were <a href="https://twitter.com/dumbnamenumbers/status/1679259067833786374?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1679259067833786374%7Ctwgr%5E838b3e26e7f293cfcad8876f589b87912978bd83%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fdecrypt.co%2F148824%2Fethscriptions-exploit-smart-contract-over-200-stolen">said</a> to have lost 202 ethscriptions in the hack.



Jessica Neer McDonald, an attorney specializing in intellectual property issues, told Blockworks that, generally speaking, discretion when it comes to usage terms can vary widely, hinging upon the issuer of the NFT collection.



“It’s so specific to the collection,” McDonald told Blockworks. “Each collection has the ability to provide — at least traditionally — licenses and permissions to use certain artwork that’s connected to a certain NFT, and that permission can really range to you’re only being given the right to personal usage versus expanding it to using it for commercial reasons.”



<h2 class="wp-block-heading">Yuga Labs NFT case against Ripps still rolling</h2>



Much of the current uncertainty has stemmed from a lawsuit Yuga Labs brought against Ryder Ripps and Jeremy Cahen, the creators &#8220;Ryder Ripps Bored Ape Yacht Club,&#8221; a satirical NFT collection impugning Bored Ape Yacht Club.



A judge overseeing the US court case, which centers around the near mirror-image NFTs, put an injunction in place against the collection, <a href="https://blockworks.co/news/bayc-yuga-labs-ryder-ripps-lawsuit" target="_blank" rel="noreferrer noopener">ruling in Yuga Labs’ favor and imposing monetary damages on the defendants</a>. 



At issue then was not so much copyrights, which would have been tied to individual artworks of each NFT, but trademarks.&nbsp;



“I think it was smart for Yuga’s strategy to focus on the trademarks and not get caught up on the copyright side,” McDonald said. “There’s still a lot of unanswered questions in relation to copyright: What does it mean to get an NFT? What do you get when you buy an NFT?”&nbsp;



While copyrights, in a Bored Ape Yacht Club example, would refer to rights to the image depicted in a given NFT, trademarks protect the likeness and defining characteristics of the collection more broadly — which experts say are what Yuga Labs has really been looking to lock down.



BAYC holders have extensive commercialization rights, including merchandise and side media projects. It’s unclear what would happen to those endeavors if an NFT is sold.&nbsp;



“If you think about it — to the extent you think copyright can protect the individual images in the first place&nbsp; — it’s not really obvious to me how owning the copyright to one of 1,000 images, well, I don’t know how valuable that is.” Frye said.&nbsp;&nbsp;



<h2 class="wp-block-heading">‘Copyright doesn’t protect URLs’</h2>



Bored Ape Yacht Club holders do have extensive <a href="https://www.fastcompany.com/90706534/the-bored-ape-yacht-club-apes-into-hollywood" target="_blank" rel="noreferrer noopener">rights</a> to launch commercialized endeavors around their NFTs — as long as they still own them. Past interpretations have pointed to owners having the right to make money off of their apes, including via rolling out their own merchandising. 



And no caps on that monetization were initially implied, meaning owners ought to have unlimited runway with their side-hustle projects. Yuga Labs has taken a stand against what the company has deemed as ripoff or competitive projects — not so much how its NFT owners are using their own digital property. 



From a copyright perspective, according to University of Kentucky’s Frye, exchanging an inscribed NFT onchain, or even simply storing one in a wallet, “doesn’t really” present issues, which is one reason copyright violations haven’t been a big legal focus in these kinds of disputes.&nbsp;



That’s because “copyright doesn’t protect URL,” and while it “might be infringing to a point to host the image on a file server,” what’s “inscribed on the blockchain is not infringing and can’t be infringing.”&nbsp;



The sentiment, in Frye’s estimation, applies to most such digital collectibles like Ordinals that are using three to four megabytes of data to add inscriptions. NFTs going significantly above those limits or making substantial changes to the original file could shift that calculation.&nbsp;



CryptoPunks’ <a href="https://licenseterms.cryptopunks.app/" target="_blank" rel="noreferrer noopener">terms</a> of service point out that NFT buyers own the NFT itself as long as it’s in their wallet, but Yuga Labs maintains ownership of the intellectual property at play, which the company says is provided to buyers under a “license.”



The terms of service reference the possibility of “derivative” works, which users could create (and own the fresh intellectual property), but there are restrictions around ownership and other thorny legalities at work.



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Bored Ape Yacht Club

Yuga Labs’ intensifying IP takedowns spur CryptoPunk backlash

Shalini Nagarajan

The creator of the Grumpy Cat meme has issued a cease-and-desist letter to Twitter user &#8220;SlumDOGE millionaire,” urging him to refrain from pushing a memecoin that potentially violates their intellectual property rights.



An official letter was issued to Glauber Contessoto via NFT last week addressing promotion of a token named GrumpyCat, which it sees as engaging in clear and intentional infringements.



The letter <a href="https://etherscan.io/nft/0x495f947276749ce646f68ac8c248420045cb7b5e/25255182742691602014208176915599719490038371429987235854944699893102621491201" target="_blank" rel="noreferrer noopener">states</a> Grumpy Cat Limited has neither authorized nor provided consent for the use of its trademarks in association with this particular cryptocurrency offering.



In a tweet on Tuesday, the creator of the Grumpy Cat meme called out Contessoto for endorsing unauthorized offerings that continue to infringe on GCL&#8217;s intellectual property rights. The tweet described these endorsements as a “sad attempt” to scam unsuspecting traders.



“Do not be fooled by these scammers or their lies. No legal issues have been resolved. GCL will never approve such scam coins,” the creator said.



The tweet followed <a href="https://twitter.com/ProTheDoge/status/1660678190107590656">Contessoto&#8217;s claim</a> that the intellectual property concerns surrounding the Grumpy Cat token had been resolved. Etherscan shows the project has around 2,900 holders (Blockworks urges due diligence when interacting with memecoins, always do your own research!)



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><a href="https://t.co/8xiw5AL1JC">pic.twitter.com/8xiw5AL1JC</a>&mdash; Grumpy Cat (@RealGrumpyCat) <a href="https://twitter.com/RealGrumpyCat/status/1660715304341901313?ref_src=twsrc%5Etfw">May 22, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Meme creators typically don&#8217;t have copyright control over their creations, but the original copyright holders of the material used in memes can take action against memecoins or other uses of their copyrighted content.&nbsp;



“Pepe the Frog” Matt Furie <a href="https://www.theguardian.com/books/2019/jun/13/pepe-the-frog-creator-wins-15000-settlement-against-infowars" target="_blank" rel="noreferrer noopener">famously</a> sued Alex Jones’ Infowars over its sale of posters featuring the meme, winning a $15,000 settlement in 2019. A memecoin leveraging the popularity of Furie’s Pepe the Frog <a href="https://blockworks.co/news/pepe-memecoin-red-flags-abound" target="_blank" rel="noreferrer noopener">recently made headlines</a> for attracting significant investor interest.



While memecoins struggle with the concept of copyright, leveraging NFTs as a means of serving legal documents is becoming more common, particularly when faced with the challenge of unknown or unverifiable identities



Last week, Loevy &amp; Loevy attorney Mike Kanovitz <a href="https://twitter.com/MikeKanovitz/status/1659611715623960579" target="_blank" rel="noreferrer noopener">demanded a settlement</a> pseudoynmous memecoin creator Ben.eth <a href="https://www.nftscan.com/0x9133f0621b5a6900c3c6d02cb5155d3b50f712a1/32" target="_blank" rel="noreferrer noopener">via an NFT</a>, alleging wire fraud during a $7 million token pre-sale.



In a separate instance this year, a US judge ordered an anonymous group of hackers to reimburse one of their victims with $1 million USDT.



This ruling, which took place in the Southern District of Florida, <a href="https://decrypt.co/123502/plaintiff-beats-anon-hackers-served-court-papers-via-nft" target="_blank" rel="noreferrer noopener">upheld</a> the plaintiff&#8217;s decision to use NFTs to deliver the legal documents to the unidentified hackers.



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copyright

‘Grumpy Cat’ Creator Sends Cease-and-Desist NFT to Memecoin Issuer

A US judge ruled in favor of Bored Ape Yacht Club’s creator Yuga Labs in a case involving Ryder Ripps and Jeremy Cahen over their satirical NFT collection.



The court’s summary judgement granted Yuga injunctive relief and monetary damages in a <a href="https://www.courtlistener.com/docket/63458882/225/yuga-labs-inc-v-ripps/" target="_blank" rel="noreferrer noopener">ruling</a> filed April 21.



In May 2022, Ripps and Cahen created the Ryder Ripps Bored Ape Yacht Club collection, a series of NFTs that looked nearly identical to Bored Apes, which Ripps alleged <a href="https://web.archive.org/web/20220630015413/https://gordongoner.com/" target="_blank" rel="noreferrer noopener">perpetuate Nazi symbolism</a>.



Shortly after, in June, Yuga <a href="https://blockworks.co/news/alleging-copyright-infringement-bored-apes-take-satirist-to-court">filed a lawsuit against Ripps</a> and his associate, alleging that they had created and marketed &#8220;copycat NFTs&#8221; that hurt the value of the authentic ones.



Yuga alleged that Ripps promoted and sold the collection “using the very same trademarks” that BAYC’s real creator uses to sell BAYC NFTs. The NFT company said it was a deliberate effort to harm Yuga by making consumers doubt whether the RR/BAYC NFTs were affiliated with the authentic BAYC.&nbsp;



Ripps attempted to block the lawsuit in August, <a href="https://fingfx.thomsonreuters.com/gfx/legaldocs/zdvxozkynpx/IP%20BOREDAPES%20TRADEMARKS%20mtd.pdf" target="_blank" rel="noreferrer noopener">arguing</a> his NFTs were a form of appropriation art that was meant to be “artistic criticism.”&nbsp;



His arguments included claims that Yuga’s BAYC logo was an imitation of a Nazi symbol and that the company’s artwork was “embedded with dog whistles common among neo-Nazis, alt-right groups, and racist bulletins” on websites like 4chan.



Yuga’s co-founder <a href="https://medium.com/@team_69582/a-letter-from-the-founders-678e5a3431e7" target="_blank" rel="noreferrer noopener">responded</a> to Ripps’ allegations, calling him and his associates trolls that spread “ridiculous conspiracy theories.”



In December, <a href="https://blockworks.co/news/yuga-labs-at-center-of-battle-over-the-nature-of-nft-copyright">Ripps and Cahen claimed</a> that NFTs are “unique by design and cannot be copied.”



The US district judge John Walter found that Yuga has established significant brand recognition from using the BAYC marks in commerce, that Ripps infringed on unregistered marks and engaged in cybersquatting. Ripps RR/BAYCS “does not constitute an expressive artistic work protected by the First Amendment,” the judge wrote, and was likely to confuse consumers.&nbsp;



Meanwhile, a motion from Yuga motion regarding statutory damages was denied — though this was more of a technicality, determining that any damages would be decided at trial.



Copyright attorney Jessica Need McDonald concluded on <a href="https://twitter.com/NeerMcD/status/1649593777085112321" target="_blank" rel="noreferrer noopener">Twitter</a> that the case was a “big win” for Yuga.



The outcome is significant as it validates the importance of maintaining the authenticity and value of NFTs in the crypto industry.



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BAYC Creator Yuga Labs Scores Legal Victory in Ryder Ripps Lawsuit

Ornella Hernandez

<div id="highlights-block_fc5c9c58778275555f2f047b66829b83" class="highlights">
 <ul>
 <li>Bored Ape Yacht Club was the top-ranked collection by trading volume on OpenSea in the past 30 days</li>
 <li>A number of intellectual property lawyers weighed in on the significance of the case</li>
 </ul>
 
</div>



Bored Ape Yacht Club NFTs — some of the most prominent and valuable — have seen their fair share of copycats looking to profit off the success of the digital collectibles. Now, the collection’s parent company is taking a parody product to court.



Bored Ape Yacht Club&#8217;s (BAYC) backer, Yuga Labs, is suing pseudonymous critic Ryder Ripps — the mind behind the Ryder Ripps Bored Ape Yacht Club (RR/BAYC) — in federal court. The NFT (non-fungible token) artist and self-described satirist Ripps is being sued for complaints including trademark infringement, unfair competition and cybersquatting, or the practice of sitting on a domain that another entity ought to control, given the intellectual property at play. 



“This is a classic trademark infringement case,” said Teddy Bornstein, general counsel at authenticated NFT marketplace Ethernity Chain, which is not involved in the case. He <a href="https://www.reuters.com/legal/litigation/hermes-lawsuit-over-metabirkins-nfts-can-move-ahead-judge-rules-2022-05-05/" target="_blank" rel="noreferrer noopener">compared</a> it to the ongoing trademark infringement suit between fashion house Hermes and designer Mason Rothschild for creating and selling digital MetaBirkins NFTs.



In addition to Ripps, the defendant Jeremy Cahen — also known as @Pauly0x — founder of NFT marketplace Not Larva Labs, is included in the complaint. Ten other unidentified defendants are also included. The litigation does not identify Ripps, and it’s not clear whether he has been formally served.



Ripps did not immediately return a request for comment.&nbsp;



In the lawsuit, filed June 24 in the US District Court of Central California, Yuga Labs <a href="https://analytic.lol/wp-content/uploads/031138067085.pdf" target="_blank" rel="noreferrer noopener">claimed</a> Ripps seeks to “devalue” BAYCs by misusing the same trademarks to market his copycat collection in a “deliberate” effort to “cause actual and monetary harm” to the crypto investment firm and confuse consumers.&nbsp;



“This is no mere monkey business,” three Yuga Labs lawyers wrote in the lawsuit.



Ripps maintains his intentions have been transparent: to use “satire and appropriation to protest and educate people regarding The Bored Ape Yacht Club and the framework of NFTs,” according to his <a href="https://rrbayc.com/" target="_blank" rel="noreferrer noopener">website</a>.&nbsp;



He’s been protesting BAYC since December 2021, alleging racist beliefs and Nazi symbolism and <a href="https://web.archive.org/web/20220630015413/https://gordongoner.com/" target="_blank" rel="noreferrer noopener">documenting</a> his investigations. On May 17, Yuga Labs attempted to delist the RR/BAYC collection from the Foundation NFT platform via a Digital Millennium Copyright Act (DMCA) notice.



In response, Ripps tweeted he never meant to deceive RR/BAYC buyers and anticipated further legal action.



“You can’t copy an NFT,” he wrote.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">It will be a ground breaking case in defining the nature of NFT, I seek to establish how you cant copy an NFT, every mint is a context shift, in my particular case this is an artistic statement on the nature of NFT, satire against Yuga Labs&#39; practice &amp; protest against the content&mdash; RYDER-RIPPS.ETH 🔜 (@ryder_ripps) <a href="https://twitter.com/ryder_ripps/status/1526654123260555264?ref_src=twsrc%5Etfw">May 17, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Bornstein, the Ethernity Chain lawyer, asserts Yuga Labs’ isn’t concerned about sales going down due to knockoffs. Rather, “they want Ryder Ripps to stop harassing them” and generating negative publicity.



Bornstein also noted that even though Yuga Labs applied to register various trademarks with the US Patent and Trademark Office, including the BAYC name and its skull logo, the filing has not been completed. Nevertheless, the company is still the owner of the Bored Ape Yacht Club brand.



Laura Cole, a Florida-based blockchain attorney, echoed the sentiment that BAYC may feel it has a duty to file this lawsuit to protect its logo and its brand. Cole told Blockworks if a company doesn’t “proactively” protect its brand from trademark violators, then its reputation may suffer.



In addition to the trademark and copyright issues, she added, the case will boil down to contract law and terms of service — referring to the terms between buyers and sellers, with respect to the use of the NFT content and associated benefits.



The RR/BAYC terms of service indeed act as a disclaimer, of sorts, that his NFTs are “re-minted” versions. Ripps also claimed Yuga Labs’ terms for BAYC token holders are “unclear and do not meet current copyright standards.”&nbsp;



Jeffrey Blockinger, general counsel for Quadrata, a Web3 identity passport network, told Blockworks that Yuga Labs may indeed be setting a precedent.&nbsp;



“Under trademark law, the owner of a mark must defend against all unauthorized uses or the mark becomes more difficult to defend in future circumstances,” Blockinger said.&nbsp;



He isn’t surprised, the attorney said, to see litigation involving NFT intellectual property rights, because most industry participants have little to no experience with traditional copyrighted content.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Considering the nascent stage of NFTs as an asset class, the resolution of these cases will provide more certainty about the associated IP rights and should encourage further investment,” he said.
</blockquote>



An investigative video posted to YouTube earlier this month that has since gone viral, titled the Bored Ape Nazi Club, questioned the motivations and alleged racist history of the project’s creators. The founders have denied the claims.&nbsp;



The video’s creator, Philion, clarified via Twitter that while he did use Ripps’ research, Ryder had “nothing to do with the creation of the documentary.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Just want to clarify: Ryder had nothing to do with the creation of the documentary other than cross referencing the facts on his website. My video was in no way shape or form financially motivated or an endorsement on Ryder’s project’s behalf. The video is demonetized and&mdash; Philion (@thirdeyeoftruth) <a href="https://twitter.com/thirdeyeoftruth/status/1541073757812494338?ref_src=twsrc%5Etfw">June 26, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Yuga Labs <a href="https://medium.com/@team_69582/a-letter-from-the-founders-678e5a3431e7" target="_blank" rel="noreferrer noopener">issued</a> a response to the “disinformation campaign” via Medium.



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