Ryder Ripps Ordered To Pay $1.5 Million to Yuga Labs in Damages
All RR/BAYC NFTs are now considered assets belonging to Yuga Labs, according to new court documents, filed on Oct. 25, 2023
Since late 2022, the public (and legal) feud between Yuga Labs and Ryder Ripps has served as one of the biggest lawsuits plaguing the NFT space to date, presenting the questions of whether or not Ripps’ “satirical” take on Yuga’s BAYC NFT collection – RR/BAYC – infringed upon Yuga’s BAYC trademarks (“BAYC Marks”) and whether Yuga was using “naked licensing” to sleep on its trademark ownership rights.
From wild accusations of antisemitism and Nazi racism to justifying conduct as “satire” and “free speech” under the First Amendment to the U.S. Constitution, the long-awaited analysis in the matter of Yuga Labs, Inc. v. Ryder Ripps, Jeremy Cahen, and DOES 1-10, has finally come to an end – with some last minute clean-up from both parties.
Who Won?
As outlined in the court’s Findings of Fact and Conclusions of Law, the Defendants, including Ryder Ripps, have been ordered by the court to compensate Yuga Labs with damages amounting to over $1.5 million, concluding that the use of Yuga’s BAYC Marks was “intentional” and done in “bad faith…with the expectation of profiting from that use.”
As a result, Ryder Ripps was also ordered by the court to not only transfer control of the RR/BAYC smart contract directly to Yuga Labs but to disgorge any and all profits associated with the sale of RR/BAYC NFTs.
We broke down the court’s ruling below:
Trademark Ownership
Even though the BAYC Marks remain unregistered, the court validated Yuga’s claim of ownership. They concluded that Yuga not only owns the BAYC Marks, but has also actively utilized them in commercial endeavors – spanning online gaming, IRL events, merchandise marketing, product introductions, and partnerships/collaborations.
Addressing the claim that Yuga was using “naked licensing” with respect to its trademark ownership rights, the court dismissed this assertion, stating that Yuga never abandoned its trademark rights nor sat idly by.
The Battle for Domain Names
Throughout the proceedings, Yuga maintained its claim that Defendants were “cybersquatting” with respect to the domains in question – RRBAYC.com and APEMARKET.com.
The court agreed with Yuga’s assertion of cybersquatting, stating that the domains in question were either “identical or alarmingly similar” to Yuga’s original BAYC trademarks. This near-exact resemblance, the court opined, would more than likely create confusion among consumers as to the origin and connection between RR/BAYC and Yuga’s BAYC branding and collection.
Throughout the Decision, the court frequently stated and often highlighted the Defendants’ malicious intent to operate in bad faith, including the decision to register the website domains containing Yuga’s registered trademarks, as well as selling the RR/BAYC NFTs – only after Yuga introduced their BAYC NFT collection into the stream of commerce.
“Fair Use” Doesn’t Work Here
A pivotal aspect of the judgment was the court’s rejection of the defense’s appeal for the U.S. Supreme Court’s landmark ‘Rogers’ test, which addresses whether the use of a registered trademark is considered to be “fair use” under the First Amendment to the U.S. Constitution.
The court clarified that the sale of RR/BAYC NFTs by the Defendants did not constitute “expressive artistic work” worthy of First Amendment protection, comparing the sale of the NFTs to that of a “counterfeit handbag.”
Due to the fact that the RR/BAYC NFT collection completely lacked any constructive commentary, criticism, new perspectives, or insights that would even allow for additional consideration in determining some type of difference between those NFTs and Yuga’s overall brand, including the OG BAYC NFT collection.
What Is Yuga Labs Entitled To?
With the primary issues of the case settled, the court is now steering its focus on equitable remedies – those that are not just monetary damages, but rather, other remedies such as restitution, specific performance, and any injunctions.
In other words, Yuga is seeking answers that speak to whether or not the Defendants would be compelled to perform a certain act or refrain from a certain act, in addition to disgorging any profits received.
This involved determining the exact amount Yuga Labs should receive from the defendants’ profits, ascertaining statutory damages linked to the Defendants’ cybersquatting, and finalizing the extent of a permanent injunction, halting all of their activity immediately.
Ultimately, the court determined that Yuga was entitled to the disgorgement of the Defendants’ profits, and the burden of proof shifted to the Defendants to demonstrate which of its total sales were not attributable to their infringing activity.
Yuga’s economics and damages expert, Lauren Kindler, testified that as of February 1, 2023, the Defendants had generated over $1.5 million in profits, which also included:
- Over $1.3 million in profits from the initial sales of RR/BAYC NFTs;
- $117,309 in profits from resales of RR/BAYC NFTs; and
- $106,055 worth of those NFTs that were never minted and are still under the control and possession of the Defendants.
The court also stated that the Defendants “failed to offer any persuasive evidence at trial to support their argument” – no expert testimony regarding their profits, their costs, or what portion, if any, of their profits might be attributable to something other than their infringement of Yuga’s BAYC Marks.
“Failed to offer any persuasive evidence at trial to support their argument.”
Court statement
Statutory (Monetary Damages) For Cybersquatting
The court looked to several factors, including “the egregiousness or willfulness of the…cybersquatting,” the use of false contact information to hide its infringing activities, the misleading status as a “serial” cybersquatter, and other behavior from defendants that show “an attitude of contempt towards the court or the proceedings.”
Here, Yuga requested the maximum amount of statutory damages that could be awarded in a cybersquatting case – $200,00, or $100,000 for each of two domain names (RRBAYC.COM and APEMARKET.com) for the Defendants’ willful cybersquatting, even after the court held the Defendants liable for cybersquatting.
Turning to precedent, set forth by several cases the court referenced, it concluded that Yuga is entitled to $200,000 in statutory damages or $100,000 for each of the Defendants’ violations of the ACPA.
The court, which can grant injunctions to prevent continued violations, ruled that Yuga is also entitled to a permanent injunction against the Defendants.
Additionally, the court ruled that this case was “exceptional”, entitling Yuga Labs to be awarded attorneys’ fees, for an amount that will need to be decided by the lower court, with the requirement that Yuga provides the Defendants “with all billing records and other documents” that it relies on in its request for reasonable attorneys’ fees and costs by November 1, 2023.
Editor’s note: This article was written by an nft now staff member in collaboration with OpenAI’s GPT-4.