Yuga Labs. v. Ripps
| Docket Number | CV 22-4355-JFW(JEMx) |
| Decision Date | 26 October 2023 |
| Parties | Yuga Labs, Inc. v. Ripps, et al. |
| Court | U.S. District Court — Central District of California |
PRESENT: HONORABLE JOHN F. WALTER, UNITED STATES DISTRICT JUDGE.
CIVIL MINUTES -- GENERAL
PROCEEDINGS (IN CHAMBERS): FINDINGS OF FACT AND CONCLUSIONS OF LAW
On July 31, 2023, the Court conducted a court trial on the equitable remedies to be awarded to Plaintiff Yuga Labs, Inc. (“Yuga”). Eric Ball, Kimberly Culp, and Molly R Melcher of Fenwick & West LLP appeared for Yuga. Louis W Tompros and Derk Gosma of Wilmer Cutler Pickering Hale & Dorr LLP appeared for Defendants Ryder Ripps (“Ripps”) and Jeremy Cahen (“Cahen”) (collectively, “Defendants”). On August 28, 2023, pursuant to the Court's August 15, 2023 Order, the parties filed and served Proposed Post Trial Findings of Fact and Conclusions of Law. See Docket Nos. 409, 416, and 417. On September 5, 2023, the parties filed and served marked copies of the opposing parties' Proposed Post Trial Findings of Fact and Conclusions of law. Docket Nos. 418 and 419. On September 26, 2023, the parties filed and served Joint Statements regarding the Proposed Post Trial Findings of Fact and Conclusions of Law. Docket Nos. 420, 421, 424-427, and 429-30.
After carefully considering all of the evidence, the credibility of the witnesses, and the parties' pretrial and post-trial filings, the Court makes the following findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure:
Findings of Fact[1]
Yuga is the creator of one of the world's most well known and successful Non-Fungible Token (“NFT”) collections, known as the Bored Ape Yacht Club (“BAYC”). According to Yuga, the BAYC NFTs have earned significant attention from the media for their popularity and value, including being featured on the cover of Rolling Stone magazine and being dubbed the “epitome of coolness for many” by Forbes magazine. Yuga's BAYC NFTs often resell for hundreds of thousands, if not millions, of dollars, and several prominent celebrities are holders of BAYC NFTs. In addition to certain benefits that come with membership in the exclusive community of BAYC NFT holders, Yuga maintains that much of the BAYC NFT collection's value arises from their rarity because only 10,000 BAYC NFTs exist and each is entirely unique. Yuga owns several unregistered trademarks, including “BORED APE YACHT CLUB,” “BAYC,” “BORED APE,” the BAYC Logo, the BAYC BORED APE YACHT CLUB Logo, and the Ape Skull Logo (collectively, the “BAYC Marks”). Yuga has used the BAYC Marks since approximately April 2021 in connection with advertising, marketing, and promotion of its products and services nationwide and internationally through multiple platforms, including the BAYC website, NFT markets such as OpenSea, and social media platforms, such as Facebook, Instagram, and Twitter.[2]
Ripps is a visual artist and creative designer who creates artwork that comments on the boundaries between art, the internet, and commerce. According to Defendants, Yuga has deliberately embedded racist, neo-Nazi, and alt-right dog whistles in the BAYC NFTs and associated projects.[3] Beginning in approximately November 2021, Ripps began criticizing Yuga's use of these purported racist, neo-Nazi, and alt-right dog whistles through his Twitter and Instagram profiles, podcasts, cooperation with investigative journalists, and by creating the website gordongoner.com.
In approximately May 2022, Ripps, along with Cahen, created their own NFT collection, known as the Ryder Ripps Bored Ape Yacht Club (“RR/BAYC”). The RR/BAYC NFT collection point to the same online digital images as the BAYC [NFT] collection but use verifiably unique entries on the Ethereum blockchain. Defendants contend that their “use of pointers to the same images is a form of ‘appropriation art' that serves several purposes,” including: (1) bringing attention to Yuga's use of racist, neo-Nazi, and alt-right messages and imagery; (2) exposing Yuga's use of unwitting celebrities and popular brands to disseminate offensive material; (3) creating social pressure demanding that Yuga take responsibility for its actions; and (4) educating the public about the technical nature and utility of NFTs.
On July 24, 2022, Yuga filed a Complaint against Defendants, alleging causes of action for: (1) false designation of origin (15 U.S.C. § 1125(a)); (2) false advertising (15 U.S.C. § 1125(a)); (3) cybersquatting (15 U.S.C. § 1125(d)); (4) common law trademark infringement; (5) common law unfair competition; (6) unfair competition (Cal. Bus. & Prof. Code §§ 17200 et seq.); (7) false advertising (Cal. Bus. & Prof. Code §§ 17500 et seq.); (8) unjust enrichment; (9) conversion; (10) intentional interference with prospective economic advantage; and (11) negligent interference with prospective economic advantage. Docket No. 1. In its Complaint, Yuga alleges that Defendants have misused the BAYC Marks as part of a scheme to harass Yuga, mislead consumers, and unjustly enrich themselves. According to Yuga, in response to the popularity of the BAYC NFTs:
Defendant Ryder Ripps, a self-proclaimed “conceptual artist,” recently began trolling Yuga Labs and scamming consumers into purchasing RR/BAYC NFTs by misusing Yuga Labs' trademarks. He seeks to devalue the Bored Ape NFTs by flooding the NFT market with his own copycat NFT collection using the original Bored Ape Yacht Club images and calling his NFTs “RR/BAYC” NFTs. Brazenly, he promotes and sells these RR/BAYC NFTs using the very same trademarks that Yuga Labs uses to promote and sell authentic Bored Ape Yacht Club NFTs. He also markets these copycat NFTs as falsely equivalent to an authentic Bored Ape Yacht Club NFT. He then goes on to use Yuga Labs' marks to promote his coming “Ape Market” NFT marketplace, which requires a person to purchase one of his infringing NFTs to join the Ape Market. This is no mere monkey business. It is a deliberate effort to harm Yuga Labs at the expense of consumers by sowing confusion about whether these RR/BAYC NFTs are in some way sponsored, affiliated, or connected to Yuga Labs' official Bored Ape Yacht Club, in violation of the Lanham Act and related state law.
On December 16, 2022, the Court issued an Order denying Defendants' Anti-SLAPP Motion and denying Defendants' Motion to Dismiss except with respect to Yuga's unjust enrichment cause of action, and that cause of action was dismissed without prejudice (“December 16, 2022 Order”). Docket No. 62. On December 21, 2022, Defendants filed a Notice of Appeal, appealing the Court's denial of their Anti-SLAPP Motion.[4] Docket No. 63. The Ninth Circuit heard oral arguments on October 16, 2023, and no decision has been issued.
On December 27, 2022, Defendants filed their Answer and Counterclaims. Docket No. 65. Defendants alleged six claims against Yuga: (1) knowing misrepresentation of infringing activity; (2) declaratory judgment of no copyright under 17 U.S.C. § 102(a); (3) declaratory judgment of no copyright under 17 U.S.C. § 204(a); (4) intentional infliction of emotional distress (“IIED”); (5) negligent infliction of emotional distress (“NIED”); and (6) declaratory judgment of no defamation. In their Counterclaims, Defendants allege that Yuga's lawsuit against them is Yuga's “attempt to silence creators who used their craft to call out a multi-billion-dollar company built on racist and neo-Nazi dog whistles.” Counterclaims, ¶ 1. Specifically, Defendants allege that they “brought attention to Yuga's conduct by creating a satirical conceptual art and performance project called the “Ryder Ripps Bored Ape Yacht Club,” which included a collection of NFTs and associated online commentary.” Counterclaims, ¶ 2. Defendants also allege that although Counterclaims, ¶ 3.
On March 17, 2023, the Court granted Yuga's Special Motion to Strike Counterclaims and granted in part and denied in part Yuga's Motion to Dismiss Counterclaims (“March 17, 2023 Order”). Docket No. 156. In the March 17, 2023 Order, the Court struck pursuant to California's Anti-SLAPP statute and dismissed without leave to amend and with prejudice Defendants' fourth and fifth counterclaims. The Court also concluded that, to the extent Defendants' fourth and fifth counterclaims were not subject to California's Anti-SLAPP statute, they were dismissed without leave to amend and with prejudice pursuant to Rule 12(b)(6). In addition, the Court dismissed Defendants' second and third counterclaims without leave to amend and with prejudice pursuant to Rule 12(b)(6). Finally, the Court dismissed without prejudice Defendants' sixth counterclaim after Defendants withdrew that counterclaim.
On April 21, 2023, the Court issued an Order granting in part and denying in part Yuga's Motion for Summary Judgment (“April 21, 2023 Order”). Docket No. 225. In its Order, the Court granted Yuga summary judgment as to its first cause of action for false designation of origin under 15 U.S.C. § 1125(a) and as to its third cause of action for...
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