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A California U.S. district court ruled on Wednesday that NFT artists Ryder Ripps and Jeremy Cahen must pay $1.57 million to Bored Ape Yacht Club (BAYC) creator Yuga Labs for profiting from infringing BAYC.
The judge’s decision came after a partial judgment on April 21, favoring Yuga Labs. It accused the defendants, Ripps and Cahen, of copyright violations for making copycat versions of BAYC collectibles.
Judge John Walter granted Yuga Labs $1.37 million for the defendants’ profits, plus an extra $200,000 for cybersquatting violations.
Moreover, Yuga Labs will receive attorney fees and costs from the NFT artists because the judge found the trademark infringement an “exceptional case.”
“A trademark case is generally considered exceptional for purposes of awarding of attorneys’ fees when a party has taken positions that can be characterized as “malicious, fraudulent, deliberate or willful,” Walter said.
After the court ruling, a Yuga Labs spokesperson said Ripps and Cahen had been instructed to cease selling and promoting their counterfeit NFTs.
“They must pay $1.575 million in damages, Yuga’s attorneys’ fees, transfer their fake apes’ smart contract, and relinquish related online assets,” the spokesperson said.
Court documents shared by Yuga Labs show that Ripps and Cahen argued their use of Yuga’s BAYC trademarks was not infringement but “satire” and “parody.” They also claimed that the BAYC logos, or “marks,” were protected by the First Amendment and fair use.
Judge Walter rejected this claim, pointing out that the defendants kept promoting their copycat BAYC versions even after the April partial summary judgment had been delivered against them.
“Having weighed all the factors in light of the undisputed evidence, the court concludes that defendants acted with a bad faith intent to profit. Defendants do not have any trademark or other intellectual property rights in the domain names and the domain names do not consist of the legal names of defendants,” the court heard.
“[The defendants’] only interest in the domain name is to divert customers who may have been searching for [p] laintiff’s mark to their own commercial website. In addition, defendants concealed their registration of the domain names through the use of a proxy registration service.”
The court also rejected Ripps and Cahen’s claim that Yuga Labs had falsely accused them of infringement and using racist and offensive imagery in its BAYC NFTs.
“With respect to Yuga’s false designation of origin claim, the Court determined that, although the BAYC Marks are unregistered, Yuga owns the BAYC Marks and those Marks are valid and Protectible,” the court said.
The court found that Ripps and Cahen had registered the domains without a legitimate reason because they did so after Yuga had already launched the BAYC NFTs collection.
BAYC, launched in April 2021, consists of 10,000 randomly generated NFTs on the Ethereum blockchain. Like other NFTs, BAYC tokens are unique, linked to digital and physical content and provide proof of ownership. BAYC members get unlimited copyright to use their apes in their work.
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