On July 23, 2025, the Ninth Circuit Court of Appeals issued a pivotal decision in Yuga Labs Inc. v. Ryder Ripps et al., a case that the digital art and non-fungible tokens (NFTs) communities have been following closely. The ruling not only addressed the boundaries of trademark law in the context of NFTs but also clarified the limits of expressive speech and fair use in digital marketplaces.
Background
Yuga Labs, Inc. burst onto the scene with its Bored Ape Yacht Club (BAYC) NFT collection, quickly becoming a cultural phenomenon. Each BAYC NFT represents a unique digital ape character, granting its holder not only ownership of the digital asset but also access to an exclusive community, intellectual property rights to their specific ape’s artwork, and opportunities for real-world benefits like merchandise and events. The BAYC brand rapidly amassed significant goodwill and commercial value, with individual NFTs trading at very high values.
Ryder Ripps, a conceptual artist, and Jeremy Cahen, launched the “Ryder Ripps Bored Ape Yacht Club” (RR/BAYC) collection. The RR/BAYC NFTs were, in essence, nearly identical copies of the original BAYC images. Ripps claimed his project was a satirical commentary on Yuga Labs’ alleged use of problematic imagery embedded within the BAYC collection. He asserted his work was a form of “appropriation art” intended to expose and critique these perceived issues.
Yuga sued Ripps and Cahen for trademark infringement and unlawful cybersquatting. Defendants countersued Yuga under the Digital Millennium Copyright Act (DMCA) and also sought declaratory relief that Yuga had no copyright protection over the BAYC NFTs.
The district court granted summary judgment in favor of Yuga on its trademark and cybersquatting claims, dismissed the defendants’ counterclaims, and awarded Yuga over $8 million in damages, including disgorgement of profits, statutory damages, attorney fees, and costs. Defendants appealed to the Ninth Circuit.
The Ninth Circuit’s Decision
The Ninth Circuit declared unequivocally that NFTs qualify as “goods” under the Lanham Act, the primary federal trademark statute in the United States. The court rejected the argument that NFTs are merely “digital deeds” or authentication codes. Instead, it emphasized that consumers experience NFTs as commercial products with tangible value. The opinion highlighted that BAYC NFTs, for instance, are not just linked to digital art; they function as “membership passes,” granting access to exclusive social clubs, branded merchandise, and events. The court noted that NFTs are “marketed and actively traded in commerce,” reinforcing their commercial nature.
The court further found that Yuga Labs owns valid and enforceable trademark rights over its BAYC marks and has priority due to first use in commerce. It rejected defendants’ claims that Yuga lost rights through selling BAYC NFTs or that they are unregistered securities affecting trademark enforceability.
However, the court reversed the lower court’s grant of summary judgment on trademark infringement and cybersquatting. While the district court had found a likelihood of consumer confusion as a matter of law, the Ninth Circuit disagreed, concluding that Yuga Labs “did not prove as a matter of law that defendants’ actions were likely to cause consumer confusion.” Applying the likelihood of confusion test using the Sleekcraft factors (such as similarity of the marks, proximity of the goods, marketing channels used, and evidence of actual confusion), the Ninth Circuit concluded that some factors supported a likelihood of confusion, others did not, and some were neutral. Therefore, the issue required a trial, not summary judgment.
The Ninth Circuit also affirmed the district court’s rejection of Ripps’ First Amendment and fair use defenses. Ripps had argued that his RR/BAYC project was protected as artistic expression and satire under the First Amendment and constituted fair use. The appellate court rejected these defenses, finding that Ripps’ use of the BAYC marks “went well beyond commentary” and was primarily aimed at creating, promoting, and selling their own NFTs associated with the same artwork as Yuga’s NFT collection.
Important Takeaways for the NFT Industry
The Ninth Circuit’s decision carries several key lessons and signals for the NFT ecosystem, brands, creators, and legal practitioners.
First and foremost is the fundamental precedent that NFTs are protectable as trademarks. The court made clear that NFTs are not just digital collectibles or certificates but legally recognized goods under U.S. trademark law. This aligns NFTs with physical products in terms of brand protection and enforcement. This recognition enables NFT creators and projects to claim trademark rights in their collections’ names, logos, and associated marks, expanding their intellectual property arsenal.
Second, likelihood of consumer confusion must be proven at trial. Even with a strong brand, claiming trademark infringement against similar NFT projects requires convincing evidence that consumers are likely to be confused about the source or sponsorship of goods. Summary judgment is unlikely in such nuanced cases; courts will carefully assess factors through a trial or detailed fact-finding. This means NFT holders asserting infringement must prepare robust evidence showing real marketplace confusion.
Third, use of marks for competing NFT sales is not fair use or protected speech. The decision confirms that the First Amendment does not protect the commercial use of someone else’s marks for selling similar NFTs. Unlike purely artistic or critical commentary, commercial exploitation intended to capitalize on another brand’s goodwill faces tough scrutiny.
Fourth, the decision represents industry validation for brands. Yuga Labs called the ruling “a win for the industry,” validating BAYC as a strong, recognizable brand deserving of protection. This decision empowers NFT brands to invest more in branding and legal protection as commercial products with tangible value beyond mere collectibles.
In sum, the Ninth Circuit’s decision in Yuga Labs is a pivotal ruling that reshapes the legal landscape for NFTs and digital creators. By affirming that NFTs are trademarkable goods and clarifying the limits of expressive speech defenses, the court has provided much-needed guidance for an industry often operating in legal gray areas. While the case now returns to the district court for trial, its precedential value is already clear.
