Since last June, Yuga Labs has been entangled in a nasty, but necessary legal battle against an NFT spin-off project, “RR/BAYC,” that has had the $4 billion USD parent to Bored Ape Yacht Club (BAYC) fighting to hold those behind the project accountable for allegations of trademark infringement.

Ryder Ripps, the artist behind the project, in addition to the project’s co-founder, Jeremy Cahen, have been accused of knowingly infringing upon Yuga Labs’ trademarks by allegedly developing, marketing, and selling counterfeit NFTs that are designed to confuse collectors in the Web3 space who might believe there is an association with BAYC. 

Yuga also initiated a second lawsuit on January 23 of this year against the project’s developer, Thomas Lehman, who was responsible for coding and building the smart contracts underlying RR/BAYC. 

On Tuesday, however, that lawsuit against Lehman came to an end, as both parties were able to reach a settlement agreement, with Mr. Lehman essentially retracting any and all previously disparaging claims made against Yuga/BAYC and agreeing to destroy any owned assets that has a BAYC trademark displayed on it. 

“I am happy to have resolved the Yuga Labs, Inc. v. Lehman trademark lawsuit in the [U.S. District Court] Northern District of New York,” Lehman told CoinDesk. “It was never my intention to harm Yuga Labs’ brand, and I reject all disparaging statements made about Yuga Labs and its founders and appreciate their many positive contributions to the NFT space.”

A spokesperson for Yuga Labs also shared the company’s enthusiasm regarding Mr. Lehman’s decision to denounce his previous involvement in the RR/BAYC project, while agreeing to disgorge and/or destroy any RR/BAYC NFTs he previously owned. 

Justice For All – Or Web3’s Version of “Big Tech Bullying?”

While there does seem to be some form of “justice” here, the overall question has yet to be answered with respect to the role trademark law and the First Amendment play in the realm of digital assets and collectibles. 

While the Yuga Labs, Inc. v. Lehman trademark lawsuit has been settled, does the outcome of the settlement agreement actually matter? 

As it currently stands in the grand scheme of Yuga’s lawsuit against Ripps, no, it doesn’t – and for a very plausible reason. 

Frankly, at the end of the day, the only lawsuit that really matters here is the ongoing, initial lawsuit that Yuga is bringing against Ripps. 

This case, along with the soon-to-be revealed decision in the Hermès/MetaBirkins case are the two hottest legal cases facing the digital art space right now, and will ultimately set the stage and legal precedent for litigating digital collectibles and trademark infringement issues and pleading a First Amendment defense. 

One of the major areas of contention involves the Ninth Circuit’s landmark Rogers Test, which the court only applies when “artistic expression is at issue” and requires defendants like Ripps to make a “threshold showing that [their] allegedly infringing use is part of an expressive work protected by the First Amendment.”

However, a California federal judge stated in his December 16 Order that Rogers doesn’t apply in this case, because RR/BAYC NFTs “do not express an idea of point of view,” but rather, only involves Ripps’ sale of a “collection of NFTs that point to the same online digital images as the BAYC collection.”

In December, Ripps, by and through counsel, filed his Answer and counterclaims against Yuga, accusing the company of “knowingly and materially misrepresenting” its IP rights in its BAYC NFTs.

Specifically, he alleged that Yuga’s “naked licensing” of its IP has created so much confusion, that this failure to enforce the marks in a more comprehensive manner, is grounds for “abandonment.”

While it’s all fine and dandy that Yuga settled up with Mr. Lehman, the terms of the settlement only seem to communicate a one-sided victory that doesn’t actually speak to any of the crucial issues at bar that are present in the ongoing litigation between Yuga and Ripps. 

If anything, the timing of the resulting settlement agreement between Mr. Lehman and Yuga is just plain weird and doesn’t add anything of value – except to the detriment of a now former supporter of the RR/BAYC project.

While the terms of Mr. Lehman’s settlement with Yuga are confidential, a federal court filing on Feb. 7 confirmed Mr. Lehman’s concession to both Yuga’s ownership of the BAYC trademark and his alleged infringement on those marks through his participation in the RR/BAYC project. 

And Cahen’s response to the now settled lawsuit between Lehman and Yuga illustrates one such reason as to why, stating his belief that Mr. Lehman was “bullied into submission” by Yuga – labeling it as a “powerful multibillion dollar corporation who wants to threaten the livelihood of him and his family.”

“Yuga Labs is abusing the court system, by pursuing defamation via frivolous trademark infringement litigation. The notion that Tom Lehman is not an ardent supporter of R/BAYC and the individuals who are behind it is false. He was forced to burn his digital art pieces as part of his settlement terms. This is corporate fascism manifest,” he told ARTnews in a statement. 

But is he wrong? Is this Web3’s illustration of “big tech” trying to silence creators it doesn’t like? 

Or rather, works like parody and the like that exist only to challenge the status quo and everything we embrace in modern day culture? 

Time will certainly tell, as the ongoing trial in the Hermès/MetaBirkins came to an end on Monday.

Now we await what will come to be a groundbreaking, landmark decision involving trademark law, the First Amendment, and how both are applied to digital collectibles and art. 

The initial (and now only) case at bar is Yuga Labs, Inc. v. Ryder Ripps, et. al., 2:22-cv-04355 (C.D. Cal.). 

• You can read the June 24, 2022 Complaint filed by Yuga Labs here
• You can read the August 15, 2022 Motion to Strike Complaint filed by Ryder Ripps here
• You can read the October 3, 2022 Notice of Motion and Motion to Strike refiled by Ryder Ripps here
• You can read the October 17, 2022 Opposition to Motion to Dismiss, Strike filed by Yuga Labs here
• You can read the December 16, 2022 Order re: Motion to Dismiss, Strike filed by the Court here
• You can read the December 27, 2022 Answer and Counterclaims filed by Ryder Ripps here. 

In the now settled Yuga Labs, Inc. v. Lehman (1:23-cv-00085):

• You can read the January 20, 2023 Complaint filed against Thomas Lehman here, with the attached Exhibit.
• You can view the January 23, 2023 Summons issued to Thomas Lehman here.
• You can read the January 24, 2023 Corporate Disclosure Statement filed by Yuga Labs here.
• You can purchase the February 7, 2023 Order Dismissing the Case here.