Key Takeaways:
- NFTs and digital assets are becoming a mainstream part of commerce, and companies should treat NFT-related branding like any other product or service
- The Ninth Circuit confirmed that NFTs are protectable goods under the Lanham Act
- NFTs should be included in brand protection strategies alongside names, logos, taglines and other traditional identifiers
- NFTs derive their value from authenticated blockchain ownership rather than the underlying digital content
Non-fungible tokens (NFTs) became a hot commodity at the start of the decade, in part due to the headlining popularity of Yuga Labs’ 2021 Bored Ape Yacht Club (“BAYC”), a digital artwork collection of NFTs featuring “bored” cartoon apes. Each token not only gave the owner rights to the underlying bored ape artwork but also served as a membership pass to access exclusive clubs, events and other benefits. BAYC quickly evolved from niche collectibles into high value digital goods, with some selling at their peak for millions of dollars. As a result, BAYC became a recognizable brand and ecosystem under names, images, and logos, including “BORED APE YACHT CLUB,” “BAYC,” and “BORED APE” for the digital artwork collection and associated services.
However, it was not the artwork itself that drove the commercial value of each BAYC piece – it was the underlying digital token which held a unique, verified blockchain ledger of the token’s ownership and transfer history. Even though the artwork itself can be copied, the blockchain ledger itself cannot be duplicated, meaning ownership cannot be faked. Practically speaking, NFT buyers are purchasing an authenticated ledger, not the actual artwork or content displayed by the token. This distinction was central to the Ninth Circuit’s analysis in Yuga Labs, shaping how the court understood the commercial nature of NFTs and why they function as goods in the marketplace.
The rise in BAYC’s popularity attracted imitators, like artists Ryder Ripps and Jeremy Cahen, who launched a copycat NFT collection called Ryder Ripps Bored Ape Yacht Club (“RR/BAYC”). Not only was the collection’s name nearly identical, RR/BAYC also used the same bored ape characters and similar logos for their NFTs. Ripps and Cahen described the collection as satire intended to critique the imagery in Yuga Labs’ work, but Yuga Labs viewed it as a deliberate attempt to sell counterfeit BAYC tokens. Yuga Labs sued Ripps and Cohen in 2022 in the Central District of California asserting claims for false designation of origin, false advertising, and trademark infringement, among other claims. The district court granted summary judgement for Yuga Labs on its trademark infringement claim, finding that RR/BAYC was likely to cause consumer confusion and rejecting Ripps’ First Amendment and fair use defenses. Ripps appealed.
Trademark infringement under the Lanham Act requires two things: ownership of a valid trademark used in connection with a good or service and a likelihood that the defendant’s use of an alleged similar mark in connection with similar goods or services will cause consumer confusion. On appeal, Ripps challenged the foundation of Yuga Labs’ trademark infringement claim, arguing that Yuga Labs had no valid or enforceable trademark because NFTs are not protectable “goods” under the Lanham Act, as NFTs are not tangible. In support of this position, Ripps relied on Dastar and SlepTone, two cases holding that intangible content embedded in a physical product – such as a video recording on a cassette or music track on a CD – is not separately protectable as a trademark. Ripps argued that like the intangible aspects identified in these prior cases, NFTs are entirely intangible and thus fall outside the statute’s reach.
The Ninth Circuit was not persuaded. Ripps’ analogy failed because in the earlier cases, the intangible content that was not subject to trademark protection was merely a component of a larger tangible product. NFTs by contrast are the product. Moreover, NFTs are not contained in, or associated with, any tangible product. Rather, they exist entirely in the digital world, are tied to specific digital files, and are actively marketed and traded as commercial goods. BAYC tokens also offered real-world benefits, functioning as membership passes. These features reinforce the idea that NFTs operate in commerce much like any other branded product and the trademarks for these products function just the same to identify the source of these goods[1].
Although the Ninth Circuit agreed that NFTs are protectable goods, it did not affirm the district court’s finding of infringement and instead remanded the question of whether the marks were confusingly similar to the lower court for trial.[2] However, the Ninth Circuit did affirm the district court’s rejection of Ripps’s First Amendment and fair use defences, concluding that Ripps used Yuga Labs’ marks as source identifiers for Ripps’ own competing NFT and that the conduct “went well beyond commentary.”
Trademark protection serves a straightforward purpose: safeguard the names, logos, and other branding elements that identify the source of a good or service. In Yuga Labs, the Ninth Circuit recognized that the elements used in the commercialization of NFTs can perform that same source identifying function, making them eligible for protection under the Lanham Act and confirming that brands should be paying attention to NFTs from both a protection and enforceability perspective.
Ultimately, the Ninth Circuit’s decision made clear that the basic rules of branding apply in the metaverse just as they do in the physical world. For companies operating in the digital asset space, this means including the names, logos, slogans or other identifiers used in connection with NFTs to the company’s broader brand protection strategy, and treating NFT branding with the same diligence applied to traditional product lines.
[1] The court’s conclusion was based in part by the U.S. Patent and Trademark Office and the Copyright Office’s 2024 joint report to Congress, which stated that trademarks serve the same source identifying function in NFT markets as in traditional markets. The USPTO itself had already anticipated this development in 2021 when it added approved descriptions for NFT related goods and services to its Identification Manual in Classes 09 and 35, notably as a result of the popularization of BAYC.
[2] The parties recently settled the matter outside of court resolving all claims and Yuga filed orders blocking Ripps and Cahen from using Yuga’s branding. See Blake Brittain, Yuga Labs Settles Lawsuit Against Artist Over Bored Ape NFTs, Reuters (Apr. 8, 2026), https://www.reuters.com/legal/litigation/yuga-labs-settles-lawsuit-against-artist-over-bored-ape-nfts-2026-04-08/.