In the midst of a pending appeal to the Ninth Circuit, Ryder Ripps and Jeremy Cahen have lodged counterclaims against Yuga Labs, accusing the company behind the Bored Ape Yacht Club (“BAYC”) collection of non-fungible tokens of “knowingly and materially misrepresent[ing]” its rights in the BAYC NFTs, while engaging in an “outrageous retaliatory campaign” against them, including by “lying about” – and “intimidating and threatening” – them. In a lengthy answer dated December 27, counsel for Ryder Ripps and Jeremy Cahen denies the bulk of the claims asserted against them in Yuga Labs’s June 2022 trademark infringement complaint, and sets out defenses, arguing that Yuga’s claims over their RR/BAYC project are “barred by the First Amendment, including under the Rogers test” and that their use of the BAYC trademarks for the RR/BAYC project constitute fair use.
In addition to arguing that it should be shielded from Yuga Labs’s claims by the First Amendment (despite a California federal judge’s recent finding that Rogers does not apply here), Ryder Ripps and Jeremy Cahen set out more than a dozen other defenses.
AFFIRMATIVE DEFENSES – Counsel for the defendants asserts, for instance, that Yuga Labs abandoned the BAYC marks – and thus, forfeited its right to recover against the defendants – due to its alleged failure to enforce the marks, including by “licensing any rights in the asserted marks without proper monitoring or quality control” (i.e., engaging in naked licensing, which has proven to be a common point of contention when it comes to the BAYC collection as a result of the fact that Yuga Labs gives BAYC NFT holders broad rights to leverage the intellectual property of their assets). Among a couple of the other defenses set out by Ripps and Cahen …
(1) “No distinctiveness,” with the defendants claiming that Yuga Labs’s BAYC marks are “either generic or merely descriptive and have not acquired secondary meaning and therefore do not constitute distinctive, enforceable marks;” and
(2) Unclean hands on the basis that Yuga Labs engaged in “unlawful activities associated with the sale and promotion of BAYC NFTs including Yuga’s misuse of BAYC NFTs as securities, undisclosed compensation for endorsements from celebrities, and/or unlawful acts directed towards the defendants,” among others. (Yuga Labs is among the defendants in a new lawsuit, which accuses them of perpetuating a scheme to promote Bored Ape NFTs, while simultaneously running afoul of federal and state laws.)
COUNTERCLAIMS – The rest of Ripps and Cahen’s filing comes in the form of counterclaims, which the defendants use to double-down on their overarching argument that Yuga Labs’s lawsuit is part of an “attempt to silence creators who used their craft to call out a multi-billion-dollar company built on racist and neo-Nazi dog whistles” – and to introduce some new elements in the case, namely, copyright and defamation. Setting the stage, Ripps and Cahen argue that while “Yuga never acted against any of the dozens of commercial ‘ape’ NFT collections, it did engage in a relentless and systematic campaign against [them]” in response to the RR/BAYC project, which consists of “artistic criticism [that] is well founded and directly connected to Yuga’s trademarks.” Against this background, they wage the following counterclaims …
(1) Knowing Misrepresentation of Infringing Activity – “Yuga knowingly and materially misrepresented, in violation of 17 U.S.C. § 512(f), that the RR/BAYC NFTs … infringe a Yuga copyright by filing DMCA takedown notices to remove from various websites the RR/BAYC artworks,” per Ripps and Cahen. Yuga Labs “knew” that RR/BAYC NFTs “do not actually infringe any of Yuga’s copyright,” and yet, it “falsely alleged in multiple DMCA takedown notices that RR/BAYC NFTs are copies of Yuga’s BAYC NFTs and therefore infringe one or more of Yuga’s copyrights in BAYC NFTs.”
(2) Declaratory Judgment of No Copyright under 17 U.S.C. § 102(a) – The defendants claim that “an actual controversy” exists as to “whether the BAYC images are entitled to copyright protection due to the BAYC images having been generated by an automated computer algorithm where no humans were involved in determining which of the 10,000 BAYC images were selected from the more than 1.3 billion possible permutations (except perhaps with respect to a few custom BAYC images that Yuga may have produced with human involvement) the adjudication of which requires the Court to apply and interpret the copyright ownership provisions of s. 102(a).”
(3) Declaratory Judgment of No Copyright under 17 U.S.C. § 204(a) – They also allege that “an actual controversy” exists as to whether Yuga “retains copyrights in the BAYC images associated with BAYC NFTs it does not own, including based on its BAYC Terms & Conditions and public statements that BAYC NFT holders retain all intellectual property rights in their NFTs, the adjudication of which requires the Court to apply and interpret the copyright ownership provisions of s. 204(a).”
It is worth noting that as of the time of filing suit against Ripps and Cahen, Yuga Labs did not (and still does not appear to) have any copyright registrations for its ape images and thus, does claim copyright infringement in its complaint.
(4) Intentional Infliction of Emotional Distress – Ripps and Cahen claim that Yuga Labs has engaged in “an outrageous retaliatory campaign” against them, with “Yuga’s motivation to conceal its own fraud and use of racist messages and imagery confirm[ing] that Yuga’s efforts to harass, bully, and silence Mr. Ripps and Mr. Cahen were intentional and/or committed with reckless disregard for the high probability that they would cause Mr. Ripps and Mr. Cahen to suffer severe emotional distress as a result.” The defendants allege that they have, in fact, suffered “severe emotional distress because of Yuga’s intimidation campaign.”
(5) Negligent Infliction of Emotional Distress
(6) Declaratory Judgment of No Defamation – “Yuga has falsely stated that Mr. Ripps and Mr. Cahen, including through the RR/BAYC artwork, falsely criticize Yuga for using racist and neo-Nazi messages and imagery,” they assert, pointing to “Yuga’s appearance on the Full Send Podcast, where [founders] Greg Solano and Wylie Aronow described Mr. Ripps and Mr. Cahen as scammers and accused them of spreading a ‘conspiracy theory’” as one example. As such, they argue that they are “entitled to a declaration that their statements about Yuga are not and have not been defamatory.”
This counterclaim is particularly interesting given that while Yuga Labs’s lawsuit followed from a seemingly escalating effort by Ripps and co. to “bring attention to [Yuga Labs’s] use of racist, neo-Nazi, and alt-right messages and imagery” by way of the RR/BAYC project and corresponding messaging on social media, Yuga Labs has not made defamation claims against Ripps and Cahen in its complaint. (The lack of libel or slander claims in Yuga Labs’s case against Ripps and Cahen has generally been deemed to be unsurprising, as defamation claims can be particularly difficult to successfully prove, especially when it comes to public figures.)
In addition to the aforementioned declarations from the court (namely, that “Yuga knowingly misrepresented that the RR/BAYC artwork infringes [its] copyrights,” the BAYC images are “not entitled to copyright protection because they were not created by a human,” etc.), Ripps and Cahen are seeking to get the court to toss out Yuga Labs’s complaint in its entirety and an array of monetary damages.
The case is Yuga Labs, Inc. v. Ryder Ripps, et al., 2:22-cv-04355 (C.D. Cal.).
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