Yuga Labs Responds to Motion to Dismiss in RR/BAYC Lawsuit

Yuga Labs is pushing back against the motion to dismiss that Ryder Ripps and Jeremy Cahen filed this summer, arguing that it has, in fact, plausibly pled its trademark infringement in the closely-watched lawsuit, and the defendants’ “purported defenses provide no escape.” In an opposition that it lodged with the U.S. District Court for the Central District of California on October 17, Yuga Labs, the company behind the Bored Ape Yacht Club (“BAYC”) NFTs, asserts that the defendants “do not dispute that they are using Yuga Labs’ BAYC marks to sell identical NFT products” – the RR/BAYC NFTs – on “the same marketplaces Yuga Labs sells its NFTs,” making this is a “textbook” case of trademark infringement and “explicitly misleading use of these marks.” 

Further setting the stage in its opposition, counsel for Miami-based Yuga claims that faced with the trademark lawsuit, Ripps and Cahen “cower behind their argument that their willful infringement is protected ‘art,’ [b]ut the First Amendment does not protect scams designed to mislead consumers,” and their actions are “pure commerce, not protected speech.” The defendants are using the BAYC trademarks to “sell their own competing products, trading off of Yuga Labs’ goodwill, and misleading consumers about the source and features of their products,” Yuga contends. 

And if the defendants’ motion is not denied, Yuga – which is reportedly in the midst of a U.S. Securities and Exchange Commission probe – argues that it would “‘turn trademark law on its head’ and allow anyone to rebut trademark infringement claims with the flimsy and false claim that the infringement is ‘art.’”

With these allegations out of the way, Yuga turns to its trademark infringement claim, stating that the defendants do not challenge in their motion that it has adequately alleged that their use of the BAYC marks by way of the RR/BAYC project will result in a likelihood of confusion. Specifically, the defendants do not challenge a number of the likelihood of confusion factors, per Yuga, including “the strength of the [BAYC] mark[s],” or Yuga Labs’ exclusive right to use them” – or the “relatedness of the goods,” with Ripps conceding that “they are selling the same type of product (NFTs) with the identical underlying Bored Ape images.” Beyond that, Yuga asserts that the defendants “concede they sold their copycat NFTs using the same ‘marketing channels’ as Yuga Labs.” 

By making use of the BAYC marks “to sell identical products to the same consumers on the same markets,” Yuga alleges that the defendants have caused “actual confusion, initial interest confusion, and post-purchase confusion.” 

“Grasp at the Rogers Defense”

“Knowing that they cannot dispute that they have confused consumers,” Ripps and co. “grasp at the Rogers defense,” per Yuga, which asserts that their sale of RR/BAYC NFTs is “no more artistic than the sale of a counterfeit handbag, making the Rogers test inapplicable.” According to Yuga, the RR/BAYC NFTs “do not express an idea or point of view, [as] they are merely tokens that ‘point to the same online digital images associated with the BAYC collection.’” Any “so-called criticism” that Ripps argues is behind the RR/BAYC project, namely, criticism of the allegedly “racist and neo-Nazi” nature of the NFTs, “is not the subject of the [trademark-centric] complaint,” Yuga holds. And such criticism is “readily separated from the sales and marketing of RR/BAYC NFTs,” Yuga further states. 

Not done, Yuga insists that the “defendants’ sale and promotion of the RR/BAYC NFTs” – which see them “merely re-packag[e] the exact same images underlying Yuga Labs’ authentic BAYC NFTs” – is little more than “a business venture to trade on Yuga Labs’ brand value, resulting in a massive windfall for the defendants.”

Even if the Rogers test is applicable here, Yuga maintains that the defendants fail to satisfy it, as their use of the BAYC marks is “not artistically relevant to Ripps’ so-called ‘art’ under the first prong of the Rogers test.” As for the second prong, Yuga argues that the defendants’ use of the BAYC marks is, in fact, “explicitly misleading,” as they “promote and sell [their] RR/BAYC NFTs using the very same trademarks that Yuga Labs uses to promote and sell authentic Bored Ape Yacht Club NFTs,” and do not distinguish their use of such identical marks from Yuga.

In furtherance of its effort to argue that the defendants fail to meet the two prongs of the Rogers test, counsel for Yuga points to the Hermès v. Rothschild case, in which the court denied MetaBirkins-creator Mason Rothschild’s motion to dismiss Hermès’ trademark lawsuit over the allegedly infringing NFTs. “After a thorough Rogers analysis, the Court determined that even though defendant altered the name of the mark (from Birkins to Metabirkins) and the appearance of the NFT images was different from the real bags, Hermès alleged sufficient facts of explicit misleadingness to survive a motion to dismiss,” Yuga states. “In particular, Hermès alleged the strength of its own mark, evidence of actual confusion, and the junior user’s bad faith in adopting the mark.” 

Yuga argues that its allegations about the defendants’ “explicitly misleading conduct” in this case are “even stronger” than in Hermès. Here, Yuga contends that the defendants “did not even change the mark in many instances, the underlying images went unaltered, and they advertised the RR/BAYC NFTs, using BAYC marks (often without any reference to ‘RR’), as equivalent to the official BAYC NFTs.” 

The Role of Disclaimers

Touching on another issue present in the Hermès case (Rothschild’s use of a disclaimer on the MetaBirkins website), Yuga states that the existence of a disclaimer on the rrbayc.com reservation site “does not negate the confusion that the defendants caused on other websites or other uses of BAYC marks where [they] marketed or sold the infringing NFTs without the disclaimer.” And taking a step back, Yuga argues that the fact that the defendants “felt the need to include a disclaimer (however ineffectual) demonstrates their awareness that their use of BAYC marks was confusing.” (Hermès takes issue with Rothschild’s use of a disclaimer, including his allegedly inconsistent use of it across platforms, and his “excessive use” of the HERMÈS trademark in the disclaimer, which the luxury brand says creates “a confusing impression among consumers as to Hermès’ sponsorship of the MetaBirkins NFTs and the MetaBirkins website.”)

While the defendants “make much of minor changes to the marks including by only sometimes tacking on ‘RR’ before ‘BAYC,’ making only a slight, and occasional, change to a mark is still likely to result in confusion,” per Yuga. And still yet, the plaintiff claims that “consumers do not necessarily know what ‘RR’ means and could reasonably assume it is a new product or co-branding.” 

Yuga similarly argues against the defendants’ assertion that their use of the BAYC marks is nominative fair use, asserting that the defendants’ use of BAYC marks not only goes beyond that “extent reasonably necessary,” their use is “not ‘truthful’ or referential because [they] are not selling Yuga Labs’ BAYC NFTs.” Instead, they are using BAYC marks to “market and sell their own competing knockoff NFTs.” 

The BAYC-maker also asserts that it has similarly pled its cybersquatting, false advertising, unfair competition, conversion, tortious interference, and unjust enrichment claims, and that the defendants have “abused the anti-SLAPP statute to air their false assertions against Yuga Labs’ founders and distract from infringing actions they took against Yuga Labs that are the subject of this lawsuit.” As such, Yuga argues that the defendants’ motion presents no argument requiring the court to strike or dismiss Yuga Labs’ claims, and thus, should be denied. 

Yuga’s filing comes almost four months after it filed its lawsuit against Ripps and his business partner Jeremy Cahen, accusing them of running afoul of federal trademark law by creating and selling NFTs that bear “the very same trademarks that Yuga Labs uses to promote and sell authentic BAYC NFTs.” Ripps and co. responded with a motion to strike and motion to dismiss in August, in which they argued that Yuga is looking to silence them for calling out the allegedly “racist and neo-Nazi” nature of the popular – and expensive – collection of NFTs. In the anti-SLAPP motion that they filed with the U.S. District Court for the Central District of California this summer, Ripps and Cahen claim that Yuga Labs’s lawsuit is little more than “an attempt to silence an artist who used his craft to call out a multi-billion-dollar company built on racist and neo-Nazi dog whistles” by way of “the satirical NFT collection” that Ripps created, called the “Ryder Ripps Bored Ape Yacht Club.” 

The case is Yuga Labs, Inc. v. Ryder Ripps, et al., 2:22-cv-04355 (C.D. Cal.).