9th Circuit Marches Forward to the Future Finding Digital Assets Are Protected Under Trademark Law

The Ninth Circuit ruled that NFTs are not just digital collectibles but legally recognized goods under the Lanham Act. Yuga Labs, Inc. v. Ryder Ripps and Jeremy Cahen, Case No. 24-879 (9th Cir. July 23, 2025). NFTs are intangible, fully virtual, authenticating software code that is associated with separate digital or physical content. Although the Ninth Circuit found that there were genuine issues of material fact that precluded summary judgment on the issue of likelihood of confusion, the court recognized that NFTs are commercial products with tangible value subject to trademark protection. This means that NFT creators and projects can now claim trademark rights in their collections’ names, logos, and associated marks.

Background

The creator, Yuga Labs, Inc. of the popular Bored Ape Yacht Club non-fungible tokens (“BAYC NFTs”) sued an artist, Ryder Ripps, and Jeremy Cahen in Los Angeles federal court, accusing them of selling copycats that are confusing potential buyers. Yuga created the BAYC NFTs through a smart contract recorded on the blockchain Ethereum. Each BAYC NFT has a cartoon of a bored ape and a sequential unique identifier called an ape ID. Ripps and Cahen launched the “Ryder Ripps Bored Ape Yacht Club” (RR/BAYC) collection using the same ape images and ape IDs. The lawsuit said Ripps and other parties minted and sold identical copies of Bored Apes and used misleading labeling and tracking information to make them seem legitimate. Yuga sued Ripps and Cahen for trademark infringement and unlawful cybersquatting (registering internet domains of well-known names, often in hopes of reselling at a profit).

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 Labs, Inc. 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 reversed the district court’s decision granting summary judgment for Yuga on its trademark-infringement and cybersquatting claims, concluding that there were genuine issues of material fact regarding the question of likelihood of confusion. The court recognized, however, that NFTs are commercial products with tangible value subject to trademark protection. The court also affirmed the district court’s rejection of the Defendants’ counterclaims.

Is this Decision a Gamechanger? Yes.

The court determined NFTs are goods protected under the Lanham Act. The Court concluded that NFTs are goods under the Lanham Act based on a US Patent & Trademark Office report that determined them as such. The report determined that trademarks perform the same functions in NFT markets as they do in other markets: They identify the source of goods and services and distinguish the goods and services of one party from those of others. For example, trademarks can be used to indicate the source of underlying assets associated with NFTs, such as digital art, video clips of iconic sports moments, or physical shoes. Trademarks can also indicate the source of services, such as unique entertainment experiences or club memberships, access to which is represented by NFTs. The Court also distinguished NFTs from intangible content in a tangible good, which is not afforded separate trademark protection from a tangible good. The Court explained that NFTs exist only in the digital world, and they are associated only with digital files. NFTs are marketed and actively traded in commerce, and are purchased as commercial goods in online marketplaces. Customers of the BAYC NFTs also receive membership passes to social clubs, Yuga’s merchandise, and celebrity events. Here, 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 determined the BAYC have valid enforceable trademark rights. 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.

The court determined that Yuga did not establish as a matter of law there was consumer confusion. 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.” In applying the likelihood of confusion test, under the Sleekcraft factors, 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 court determined that Defendants’ actions were not protected under the First Amendment and fair use defense. The Ninth Circuit also affirmed the district court’s rejection of Defendants’ First Amendment and fair use defenses. Defendants had argued that their RR/BAYC project was protected as artistic expression and satire under the First Amendment and constituted fair use. The Court rejected these defenses. Specifically, the Court found that the defendants used the Yuga marks not merely to reference Yuga’s NFTs, but as trademarks (to create, promote, and sell their own NFTs). And, therefore Defendants’ use of the BAYC NFTs marks “went well beyond commentary.”

While the Court remanded for a determination of whether the Defendants infringed Yuga’s marks, it clarified that NFTs are protected under trademark law in the Ninth Circuit.

This decision only further illustrates what courts are grappling with—finding a common ground between established intellectual property law and emerging technologies.