Court admits NFTs are "protected goods," but reverses ruling against Ryder Ripps

The U.S. Ninth Circuit Court has legally recognized the protection of NFTs as commercial goods, but reversed the ruling against Ryder Ripps for alleged trademark infringement in the RR/BAYC case.

The recent ruling issued by the Court is key for the digital asset ecosystem: NFTs are considered “protected assets” under current legislation.This means that, for legal purposes, non-fungible tokens enjoy the same legal protection as trademarks or intellectual property. 

However, this determination was not enough to uphold the previous sentence against the artist Ryder Ripps, who was accused of imitating the renowned collection. Bored Ape Yacht Club (Bayce), developed by Yuga Labs, with its Ryder Ripps Bored Ape Yacht Club project, known as RR/BAYC.

Although a district court ruled in favor of Yuga Labs in April 2023 and awarded $8,8 million in compensation, the Ninth Circuit recently reversed that verdict. According to the opinion, it was not sufficiently demonstrated that Ripps had caused confusion among consumers or directly infringed the trademark. Therefore, the case was ordered reopened and retried in district court.

Legal recognition of NFTs

The court's decision firmly establishes that NFTs can be treated as protected goods under the law, paving the way for their consideration in future disputes over commercial rights. In particular, it emphasized that these digital assets They have a unique identity, a defined owner and a specific economic value.. Therefore, they may be subject to legal rights similar to those of physical works or trademarks.

This recognition provides a framework for protecting digital collections like BAYC, which have built significant communities and financial interests. 

At the same time, the court made it clear that the "protected property" category does not automatically imply infringement in cases where the artistic work is related to parody, criticism, or expressive appropriation.

The constitutional approach: freedom of expression under debate

One of the central points of the recent ruling concerns the guarantees of the First Amendment to the U.S. Constitution. The court recognized that certain uses of protected content—such as those for artistic, satirical, or critical purposes—must be carefully analyzed before being dismissed for commercial infringement.

Ryder Ripps, in a statement to The Block, defended his RR/BAYC series as appropriation art. “A deliberate repurposing of Bored Ape Yacht Club images to criticize Yuga Labs’ branding strategies and the speculative frenzy surrounding NFTs.”He said. 

For Ripps, the ruling represents an explicit endorsement of the constitutional limits of summary judgment, which prohibits reducing complex artistic expressions without full analysis.

Ripps's assertion is supported by the court's judgment, which avoided sweeping rulings on intent or confusion and opted to return the case to a court that would allow for a more in-depth examination of the arguments.

Yuga Labs' reaction: the brand as a defensible asset

Greg Solano, co-founder of Yuga Labs, shared his position on the social network X after learning of the Court's decision. “The Ninth Circuit affirmed: BAYC’s NFTs are protectable trademarks, which is an important victory for all NFT holders.”, wrote.

Solano also expressed confidence that his company will win the next stage. “We will win in the district as we won before.”, he noted, mentioning that the judge previously imposed a fine of more than $9 million on the founders of the RR/BAYC project for damages to their NFT brand.

Although the court reversed that ruling, it did not invalidate the possibility of a penalty, leaving the assessment in the hands of the district court. For Yuga Labs, the legal recognition of its trademark as protectable under the law strengthens its position against imitations that, they claim, undermine the integrity of the project and the trust of its owners.

Between brands and critics: the legal challenge in the digital age

The recent decision by the U.S. Ninth Circuit Court creates a more nuanced legal framework for the treatment of digital assets. On the one hand, it supports the notion that NFTs can constitute protectable property from a commercial point of view. On the other hand, it introduces the principle that Freedom of expression may allow critical or artistic uses of content linked to registered trademarks.

For experts, this balance will be key in the new trial against Ryder Ripps, which will determine whether its RR/BAYC project constitutes a protected parody or an imitation harmful to consumers. In this regard, the court emphasized that trademark infringement in the digital environment cannot be assumed without clear evidence of confusion or malicious intent.

Thus, the Ninth Circuit's ruling neither definitively acquits nor condemns any of the parties, but it does clarify two crucial points: NFTs are legally protectable objects, and in contexts of criticism or expression, their use may be protected by constitutional guarantees.

This ruling therefore raises new questions about the role of digital art in times of tokenized ownership. How do we distinguish between legitimate criticism and commercial copying? How far can trademark rights extend without infringing on freedom of expression?

While these questions will be debated in district court, the crypto ecosystem is witnessing one of the most significant trials regarding the legal and artistic future of NFTs.