In a significant ruling for the NFT space, artist Ryder Ripps and his associate Jeremy Cahen have been ordered to pay $1.5 million in damages to Yuga Labs. The long-standing legal dispute centered on Ripps' NFT collection, RR/BAYC, which bore a striking resemblance to Yuga Labs' Bored Ape Yacht Club (BAYC) NFTs. To date, this is considered one of the biggest lawsuits in the NFT Space.
The court's Findings of Fact and Conclusions of Law stated that the use of Yuga's BAYC Marks in Ripps' collection was "intentional" and done "in bad faith…with the expectation of profiting from that use." The court also stated that the Defendants:
“failed to offer any persuasive evidence at trial to support their argument”
As a result, Ripps must transfer control of the RR/BAYC smart contract to Yuga Labs. He also has to disgorge all profits associated with the sale of RR/BAYC NFTs.
Overall, the court validated Yuga's ownership claim of the BAYC Marks. This means the recognition of their use in various commercial endeavors, including online gaming and merchandise marketing.
In addition to the $1.5 million in damages, the judge granted Yuga Labs a permanent injunction against Ripps and Cahen, prohibiting further infringing activities. The burden of proof also shifted to the defendants to demonstrate which of their sales were not attributable to their infringing activity.
This verdict has significant implications for the NFT community, emphasizing the importance of respecting intellectual property rights. Ripps' argument of "appropriation art" was not accepted by the court, which ruled that the RR/BAYC collection lacked constructive commentary, criticism, or differentiation from Yuga Labs' BAYC NFTs.
More importantly, this case serves as a cautionary tale in the NFT space. We believe it underlines the need for creators to respect intellectual property rights. Of course, this also translates into not engaging in activities that could damage the reputation of existing projects.