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In a significant legal ruling, NFT artists Ryder Ripps and Jeremy Cahen have been ordered by a United States district court judge to pay Bored Ape Yacht Club creator, Yuga Labs, a substantial sum of $1.57 million in disgorgement and damages. Additionally, they are required to cover Yuga Labs’ legal fees, marking the culmination of a protracted copyright infringement lawsuit involving NFTs. The court’s decision, issued on October 25, 2023, stems from a partial summary judgment granted in favor of Yuga Labs on April 21.
Copyright Violations Alleged
The lawsuit was initiated by Yuga Labs, which alleged that Ripps and Cahen, the defendants, had engaged in copyright violations by creating copycat versions of its highly sought-after Bored Ape Yacht Club (BAYC) collectibles.
Substantial Awards Granted
District Court Judge John Walter, presiding over the case, deemed that Yuga Labs was entitled to $1.37 million as disgorgement of the defendants’ profits, in addition to $200,000 in statutory damages related to cybersquatting violations.
Exceptional Case and Attorney Fees
One notable aspect of the judge’s decision was the recognition that the trademark infringement in this case constituted an “exceptional case.” Judge Walter clarified, “A trademark case is generally considered exceptional for purposes of awarding attorneys’ fees when a party has taken positions that can be characterized as ‘malicious, fraudulent, deliberate, or willful.'” This finding allowed Yuga Labs to recover attorney fees and costs from the NFT artists.
Satire and Parody Defense Rejected
The defendants had argued that their copycat BAYC versions were created as “satire” and “parody.” However, Judge Walter dismissed this defense, ruling that the defendants had intentionally infringed upon Yuga’s BAYC trademarks with the clear intent to profit from them. Notably, even after the partial summary judgment was issued against them in April, the defendants continued to market and promote their copycat BAYC versions.
Origins of the Legal Battle
The legal battle between Yuga Labs and the two artists began when Yuga Labs filed a lawsuit against them in June 2022. In an attempt to have the lawsuit dismissed, Ripps and Cahen’s lawyers invoked California’s anti-SLAPP (Strategic Lawsuit Against Public Participation) statute, arguing that the legal action infringed on their right to free speech. However, during an October 16 hearing in a United States appeals court, a three-judge panel did not appear persuaded by the lawyers’ arguments, leading to the eventual ruling in favor of Yuga Labs.
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