Yes, Virtual Goods Are Still Goods For Trademark Purposes

• Published date: 04 August 2025
• Law Firm: Mitchell Silberberg & Knupp LLP
• Author: Bryse Thornwell

On July 23, 2025, in a significant update for the evolving intersection of intellectual property and blockchain technology, the United States Court of Appeals for the Ninth Circuit issued a unanimous opinion affirming critical trademark principles as they apply to non-fungible tokens ("NFTs") and digital assets. See Yuga Labs, Inc. v. Ripps, et al, Case No. 24-879.¹ The opinion, written by Circuit Judge Danielle J. Forrest, upheld the district court's ruling on several key issues, including (1) NFTs are "goods" for purposes of the Lanham Act; (2) trademark rights are not automatically transferred with the sale of an NFT; and (3) the First Amendment and the test set forth in Rogers v. Grimaldi does not protect an infringer when it uses an infringing mark as a source identifier in connection with the infringer's goods.

Plaintiff Yuga Labs Inc. ("Yuga") is the creator of the globally recognized NFT collection known as the Bored Ape Yacht Club ("BAYC"), which features stylized cartoon images of apes in various colors, poses, backgrounds, and outfits. Defendants Ryder Ripps and Jeremy Cahen (collectively, the "Defendants"), launched their own NFT collection under the name Ryder Ripps Bored Ape Yacht Club ("RR/BAYC"). According to the Defendants, the RR/BAYC project was created as a form of "appropriation art" aimed at "criticizing and satirizing" the BAYC collection. The Defendants specifically alleged that they were commenting on the "neo-Nazi symbolism, alt-right dog whistles, and racist imagery" found in Yuga's BAYC collection and in its broader brand.

In July 2022, Yuga filed a complaint against the Defendants asserting several violations of the Lanham Act. In response, Defendants filed an answer challenging the validity and enforceability of Yuga's trademarks in the BAYC collection (the "BAYC Marks"). They further argued that, even if the BAYC Marks were protectable, the Defendants' use of the BAYC Marks was shielded by the doctrine of nominative fair use and protected under the First Amendment. The Defendants also filed counterclaims alleging various causes of action, though only their claims for violations of the Digital Millennium Copyright Act ("DMCA") and declaratory judgment were relevant to the Ninth Circuit's analysis. The district court granted summary judgment in favor of Yuga on both the trademark infringement and cybersquatting claims, dismissed the Defendants' counterclaims, and issued a permanent injunction prohibiting Defendants from promoting or selling any products or services using the BAYC Marks.

On appeal, Defendants challenged the...