Yuga Labs’ win in Bored Apes NFT counterfeiting case upheld by US appeals court

Oct 31 (Reuters) – A U.S. appeals court has affirmed a ruling denying artist Ryder Ripps’ bid to dismiss California state-law claims brought by Bored Ape Yacht Club non-fungible token maker Yuga Labs over his alleged counterfeiting of its NFTs.

The 9th U.S. Circuit Court of Appeals said on Monday that Ripps and his business partner Jeremy Cahen were not protected from Yuga’s allegations by a California law protecting free speech. Last week a federal judge in Los Angeles determined that Ripps and Cahen owe Yuga more than $1.5 million in damages.

Representatives for Ripps, Cahen and Yuga declined on Tuesday to comment on the appeals court’s decision.

Yuga accused Ripps and Cahen in a lawsuit last year of making millions of dollars from counterfeiting its Bored Ape tokens under the guise of an art project. Ripps has described his copies as 1st Amendment-protected works of appropriation art that lampoon supposedly racist and antisemitic imagery in Yuga’s NFTs and branding.

U.S. District Judge John Walter said last week that Ripps and Cahen must pay Yuga all of their profits from the copies after finding in April that they were “no more artistic than the sale of a counterfeit handbag” and likely to confuse consumers.

The 9th Circuit appeal concerned Walter’s ruling last year denying Ripps’ and Cahen’s request to dismiss Yuga’s state-law claims under California’s anti-SLAPP statute, which protects conduct “in furtherance of” free speech from frivolous lawsuits.

A unanimous three-judge panel upheld Walter’s ruling on Monday. The panel said the conduct at issue in Yuga’s lawsuit — Ripps’ alleged misuse of its trademarks to sell NFTs — was not “in furtherance of” free speech.

“While Ripps’s broader artistic project may further his rights of free speech, it merely provides context for the alleged conduct underlying Yuga Labs’ claims,” the judges wrote in a joint opinion. “Ripps’s free speech activity may be relevant to those claims, but it is not the basis for them.”

The case is Yuga Labs Inc v. Ripps, 9th U.S. Circuit Court of Appeals, No. 22-56199.

For Yuga on appeal: Todd Gregorian of Fenwick & West

For Ripps on appeal: Thomas Sprankling of Wilmer Cutler Pickering Hale and Dorr

Read more:

US appeals court weighs NFT ‘counterfeiting’ in Bored Ape case

Artist owes $1.5 mln in damages for fake Bored Ape NFTs, judge says

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