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Feature Report: Bored Apes Lawsuit May Set Precedent for IP Protection in NFTs

By Gary Symons

TLL Editor in Chief

Yuga Labs is suing a conceptual artist over allegations of copyright infringement of its Bored Ape Yacht Club line of NFTs. 

The case will be among the most hotly watched for legal experts in the nascent NFT sector, as courts struggle to establish clear copyright laws for non-fungible tokens. 

The dispute centers on Ryder Ripps, an artist who is also a harsh critic of the Bored Ape Yacht Club. Ripps alleges the Bored Ape NFT images are racist, essentially depicting black and Asian people as apes, and that the imagery also contains what Ripps describes as “Nazi dog whistles;” essentially details that reference Nazi or alt right messaging. 

In launching his critique of Bored Ape Yacht Club, Ripps has also created an NFT collection called Ryder Ripps Bored Ape Yacht Club (RR/BAYC), and a website called gordongoner.com, which is based on the online moniker of one of BAYC’s founders. 

But BAYC, which has recently seen many of its images included in licensing deals, is hitting back at Ripp through a trademark infringement lawsuit, Yuga Labs, Inc. v. Ripps et al, in a US District Court in California. 

Why It Matters

Yuga vs. Ripps is, in many ways, a classic case of trademark infringement, but with a couple of unique aspects that make it a potentially important precedent in licensing and trademark law. 

Ripps is arguing that his own versions of the Bored Ape NFTs are essentially fair use under the law, as he is using them to satirize the BAYC NFTs, and to draw attention to his allegations that there are racist and fascist undertones to the BAYC images. 

The story has been followed primarily in the art and cryptocurrency press so far, including Artnet News. 

In an emailed reply to Artnet News, Ripps says that Yuga Labs has been involved in an effort to silence him and other critics. 

“The lawsuit grossly mischaracterizes the RR/BAYC project,” he wrote. “People who reserved an RR/BAYC NFT understood that their NFT was being minted as a protest against and parody of BAYC, and no one was under the impression that the RR/BAYC NFTs were substitutes for BAYC NFTs or would grant them access to Yuga’s club. I have been creating NFT artwork for the past year that scrutinizes the purpose, meaning, and social import of NFTs.”

Satire is a widely accepted defence for allegations of copyright infringement, and is the reason comedians, film makers and TV producers are not sued when they produce satirical replicas of well-known trademarks. 

When the case gets to court, Ripps would almost certainly argue that, just like those comic acts, TV shows or films, his income from the satirical NFTs he created would be covered under that same defence.

The Allegations Against Ryder Ripps

Ryder Ripps, who is now being sued by Yuga Labs, claims these two Bored Ape NFTs are among several that portray racist stereotypes.

Yuga Labs clearly doesn’t agree, and argues Ripps is not only harassing their company through a series of false allegations, but also profiting by making and selling replicas of the Bored Ape collection. 

Yuga Labs says in its lawsuit that Ripps is using his social media campaign to coordinate “a campaign of harassment based on false accusations of racism,” while at the same time using the controversy to “fuel sales of the fake RR/BAYC NFTs.”

Ripps launched his NFT collection in May, using essentially the same images, logos and marks used by BAYC. He has also not hidden the fact that he has posted and sold versions of these NFTs on a variety of NFT markets, including Foundation and OpenSea. 

At the time of writing, Ripps’ BAYC-inspired pieces have sold 10,000 pieces at 0.15ETH each, generating roughly $1.8 million. 

Yuga Labs says those profits were clearly generated by copying and selling their intellectual property. Yuga is calling for that amount in damages, plus an injunction to stop Ripps from using it in future.

Ripps’ version of BAYC sold 10,000 NFTs at 0.15 ETH each, netting him an estimated $1.8 million in profits. Yuga Labs calls these “ill-gotten” gains, and said they hope to receive the same amount in damages, as well as an injunction preventing Ripps from using any images or trademarks associated with BAYC.

Ripps’ Allegations Against Yuga Labs

Ripps’ argument is that he is using the NFTs to draw attention to what he calls racist and “dehumanizing” elements that are part of the Bored Ape images, which he details at the gordongoner.com website. 

The site details what Ripps says is clear evidence of Nazi and racist “dog whistles,” but while some followers support his conclusions, other analysts say they are far fetched and require some complex connections to make sense of his claims against Yuga. 

In fact, the name of the site itself is based on the online name for one of the Yuga Labs founders, Gordon Goner, which Ripps alleges is an offensive anagram for black people. However, others have pointed out the name could just as easily be anagrams for other completely harmless words.

Ripps also alleges the name Yuga Labs is a reference to symbols used by Nazis and alt right groups, but Yuga Labs says it’s actually just a reference to a character from the popular Zelda games on Nintendo.

In another example, Ripps says the company’s name is based off an element of alt right ideology called the Kali Yuga, “and Yuga Labs has gone to the effort to embed the traditionalist philosopher’s name, René Guénon, who is credited for bringing Kali Yuga into western thought and who is an alt-right icon inside one of their puzzles. Also embedded is the word ‘macaque’, a known racial slur.”

But Yuga says there is a far simpler explanation for their company’s name, and you don’t have to go down the rabbit hole of online alt right groups to find it.

Asked what the inspiration was for the name, Yuga said on Twitter, “We’re nerds, and Yuga is the name of a villain in Zelda whose ability is that he can turn himself and others into 2D art. Made sense for an NFT company.”

Also on his site, Ripps claims the online pseudonyms of some of the founders serve as clues to alt right connections. 

“One of the co-founders goes by Gargamel, a character from the Smurfs who is acknowledged as an antisemetic depiction of a Jewish person, also a common term used on 4chan to discuss Jews,” Ripps argues. “Since I’ve brought this up, he has gone through the effort to try to hide it.”

Gargamel himself, however, says the name came from a much simpler connection, as he told Rolling Stone magazine earlier this year, saying it was “a name I ridiculously gave myself based off the fact that my fiancée had never seen The Smurfs when we were launching this.”

Ripps’ website features many more of these types of alleged connections, or dogwhistles as he calls them, but the more relevant issue for the licensing industry is whether companies or individuals can replicate NFTs simply by claiming a defence based on Fair Comment (such as opinion columnists would commonly claim in a defamation suit) and on the defence that the creations are meant as political satire or parody. 

The Bored Apes in Licensing

Some of the Bored Apes that are currently available for licensing from owners of the NFTs, a group known as the Bored of Directors.

NFTs have become a major trend in licensing, although some might say the bloom is off that digital rose due to the recent collapse in value for cryptocurrencies and NFTs alike. Nevertheless, at the time of Ripp’s allegations against Yuga Labs in January this year, the Bored Apes collection of 10,000 NFTs was estimated to hold a value of approximately $5 billion. 

Owners of Bored Ape NFTs were also testing out the value of their investment by seeking out investment deals. In May, for example, a leading licensing agency called Brand Central announced it had entered an agreement with 10 Bored Ape Yacht Club owners.

The collective of like-minded Apes call themselves the Bored of Directors, and are working to create a portfolio of branded merchandise through licensing deals brokered by Brand Central.

Although the brand is not affiliated with Yuga Labs and does not include the official Bored Ape Yacht Club brand, logo or any affiliated marks, the Bored of Directors and their respective Apes’ likeness can be used and manipulated as necessary for consumer products.

Owners of Bored Ape Yacht Club NFTs are also free to create projects using their individual Apes and owners are granted the right to create derivative works for commercial purposes.

That ability is one of the things that provides value for some NFTs for the owners, who typically buy them online in an auction-like format. Some NFTs have risen in value to millions of dollars over the past 18 months.

The Wild West of NFT Law Makes IP Protection Difficult

NFTs themselves a very new phenomenon, but already the sector has opened up a variety of thorny questions about what constitutes misappropriation of intellectual property. 

One of the issues is that there is no body of law specifically created for NFTs, and so IP owners typically have to demand the NFT be taken down under the Digital Millennium Copyright act. 

Yuga Labs did exactly that with Ripps’ RR/BAYC NFTs. 

Ripps himself says that within a few days of his posting the NFTs, Yuga issued a DMCA takedown request, and the works were removed, but Ripps argued, “The current terms of ownership set forth by Yuga Labs to BAYC token holders are unclear and do not meet current copyright standards,” and he claimed Yuga withdrew their request some hours later. 

In that, Yuga Labs is hardly alone, as literally hundreds of artists have unsuccessfully tried to stop others from posting and selling NFTs of their artwork without permission. 

In April, The Licensing Letter took a deep dive into NFT licensing fraud in a Special Report called Licensing Law: IP Theft and Fraud Rampant In NFT Markets.

In one case, the estate of artist Dan Howard spent months playing legal “Whack-a-Mole,” repeatedly issuing demands to take down NFTs that were based on Howard’s work without the estate’s permission. However, the images were simply reposted again and again, and the estate gave up on that tactic. 

The same thing happened to artist RJ Palmer, famous for his Pokemon-based art that landed him a job on the film Detective Pikachu, and who is an outspoken critic of NFT platforms that fail to protect artists. 

Palmer has worked to get NFTs on his art taken down several times, but every time one NFT is taken down, 10 more appear. Palmer now says he’s joining a class action suit. Jon Neimester, a concept artist who works on the popular video game Smite, is collecting evidence for a class-action lawsuit, which Palmer plans to join when it’s filed.

Some artists have even said they are no longer issuing DMCA takedown requests because, in addition to being fruitless and time consuming, it actually makes more sense to see how much money the stolen IP is earning, and then use that as a basis for damages in a lawsuit. 

That, incidentally, might be what Yuga Labs is doing in this case. 

Parody vs. IP Protection

In addition to the difficulty of taking down NFTs based on non-authorized IP, there is the additional issue of a defence based on satire or parody. 

In some cases, the courts have ruled that artists or comedians were exempt from an allegation of IP theft because their derivative work was seen to be Fair Comment under the parody defence. 

In the NFT world, that might include the work of the artist Shl0ms, who assembled the logos of all Fortune 100 companies into a registered trademark sign, writing in the description of the project that “in the event that this NFT does become the first to be the subject of a cease & desist letter from a major corporation, it will only skyrocket in both historical importance and value.”

In one example, a writer who wrote the book “The Cat NOT in the Hat” lost his case when the rights holders for Dr. Seuss sued, seeking an injunction against publication. The book basically copied the writing style of Dr. Seuss to write about the murder trial of O.J. Simpson, which was a parody of the trial itself, but the court found that the writer could not use Dr. Seuss’ writing style and imagery when the book was not a parody of Dr. Seuss, but rather of something else. 

In general, anyone who copies the copyright or trademark belonging to someone else, and does so to profit from the confusion over that IP, can be found to have violated copyright law. 

The courts typically rely on a concept called Likelihood of Confusion, as in a case when a company was successfully sued by champagne maker Dom Perignon for the release of a popcorn line called Dom Popignon. While the mark was clearly a parody or satire of the champagne producer’s luxury-oriented IP, the court found the popcorn maker would likely profit from an association and a likelihood of confusion with the famous Dom Perignon brand. 

That is exactly the precedent Yuga Labs is trying to set in its case against Ripps, alleging he is using both the fame of the Bored Ape Yacht Club, combined with a controversy based on false allegations, to boost the value of his own RR/BAYC NFTs. 

If successful, the suit may become part of a body of law that can provide new protections against copyright infringement by similar artists and NFT creators in future. 

Brands Taking A Deep Dive Into NFT Market

Special Report: The Downside of NFTs

 


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