Although the market for NFTs has cooled off from its heyday several years ago, digital goods are still a hot commodity. This summer, the Ninth Circuit recognized that such goods are more than mere ephemera: they are "goods" under the Lanham Act to which trademark law applies.
The case, Yuga Labs v. Ripps, involved a dispute over the Bored Ape Yacht Club (BAYC) NFT collection. Yuga Labs sued artist Ryder Ripps and his collaborator for creating a nearly identical NFT collection using the same images and branding. The defendants argued that the trademark infringement claims failed because an NFT is not a "good" under the Lanham Act. While the court ultimately reversed summary judgment on trademark infringement due to unresolved questions about consumer confusion, it made a clear and consequential finding: NFTs are trademarkable goods.
The court's reasoning wasn't limited to NFTs as a niche art form. It emphasized that the Lanham Act protects marks used with "any goods or services," referencing reports from the USPTO on the subject. The court reasoned that although NFTs are intangible, they are bought and sold in curated online marketplaces, functioning as commercial goods. The decision indicates that trademark protection extends to a wide range of digital assets, including virtual fashion and wearables, in-game items and avatars, tokenized memberships and experiences, and digitally branded merchandise.
The court distinguished NFTs from earlier cases involving intangible content embedded in physical goods (like video cassettes or karaoke tracks). The intangible elements of goods like video cassettes represented ideas or creative works that were not protectable by trademark law. Unlike those goods, NFTs are not tied to tangible media: they exist and are traded entirely in digital environments. Thus, the intangible elements of NFTs are not merely expressive, but include the package in which the content is distributed. That difference was key to the court's conclusion.
In short, if consumers perceive a digital asset as a product in commerce, it may qualify for trademark protection.
This decision is a reminder that courts are willing to adapt traditional IP frameworks to emerging technologies. Tellingly, the court quoted a recent Supreme Court case, stating that "we are mindful that when we apply 'established legal rules to the 'totally new problems'' of emerging technologies, our task is "not to 'embarrass the future.'"
For companies operating in the digital space, it's also a reminder to:
- Audit your digital offerings for trademarkable elements, such as logos, names, symbols.
- Review your trademark portfolio to determine whether your digital offerings are adequately protected; and
- Monitor marketplaces for unauthorized use of your marks in digital assets.
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