[00:00:00] Speaker 01: All right, so our first, excuse me, our next case for argument is Yuga Labs versus Ryder Rips and Jeremy Cahen. [00:00:10] Speaker 01: And let's see, Mr. Tompros. [00:00:14] Speaker 03: Yes, Your Honor. [00:00:15] Speaker 03: May it please the court, Louis Tompros for the appellants. [00:00:18] Speaker 03: I'd like to reserve five minutes for a rebuttal if possible. [00:00:21] Speaker 03: This case raises several novel questions stemming from Yuga's abuse of trademark law to stifle freedom of expression. [00:00:29] Speaker 03: Nevertheless, this court can resolve this appeal without breaking significant new ground by reversing on either nominative fair use or trademark ownership [00:00:39] Speaker 03: which are the two dispositive areas which I propose to focus on primarily, though of course I'm happy to address anything else Your Honors would like. [00:00:47] Speaker 03: As to nominative fair use, the district court's decision directly contradicts this court's holdings in Carnes that fair use applies even if the alleged infringer's ultimate goal was to sell his own product, and Toyota, this court's decision that the plaintiff has the burden to prove that nominative fair use does not apply. [00:01:08] Speaker 02: Let me ask you, how does this nominative fair use defense survive post Jack Daniels? [00:01:18] Speaker 02: What's your view as to whether or not Jack Daniels applies? [00:01:21] Speaker 03: Jack Daniels is relevant to the First Amendment issue, but no court has ever held that the Jack Daniels First Amendment analysis is relevant to nominative fair use. [00:01:30] Speaker 03: And that's because what nominative fair use does is it [00:01:33] Speaker 03: it replaces the likelihood of confusion test under Sleekcraft. [00:01:38] Speaker 03: So Jack Daniels doesn't change the nominative fair use calculus one way or the other, and there are no additional hurdles needed to jump over Jack Daniels to get- Jack Daniels also was applied to the dilution claim, correct? [00:01:53] Speaker 03: Correct, Your Honor. [00:01:53] Speaker 03: That's correct. [00:01:54] Speaker 02: And this is not a dilution claim at all. [00:01:58] Speaker 02: It did kind of look to the purposes of the Lanham Act to ensure consumers can tell where goods come from with respect to dilution. [00:02:12] Speaker 02: It was concerned with respect to the ultimate question whether the use of a mark is similarly source identifying. [00:02:22] Speaker 02: Isn't that a relevant consideration here, whether or not [00:02:27] Speaker 02: that the mark is similarly source identifying. [00:02:29] Speaker 03: Well, respectfully, I think that there is nothing in Jack Daniels that changes the existing nominative fair use requirement, which is that under nominative fair use, it is true that the [00:02:43] Speaker 03: that there is a burden on the plaintiffs to prove initially that they used the mark to refer to the trademarked good. [00:02:51] Speaker 03: That is, it's only nominative fair use if it names. [00:02:54] Speaker 03: So to that extent, I think that there is some potential relationship in that sense. [00:02:59] Speaker 03: Jack Daniels didn't purport to change that at all. [00:03:01] Speaker 03: And indeed, in this case, there is no question that the appellants used the Marks B-A-Y-C Board Ape Yacht Club, the images, to refer to the Board Ape Yacht Club of Yuga. [00:03:16] Speaker 03: In fact, that was an undisputed fact at summary judgment. [00:03:20] Speaker 03: Yuga Labs proposed, and it's in the record, [00:03:22] Speaker 03: 8ER 1430 paragraph 70, Yuga proposed the undisputed fact, defendants have stated that BAYC represents the abbreviated title of Yuga's NFT collection. [00:03:34] Speaker 03: We didn't dispute that. [00:03:34] Speaker 03: There was no dispute that Mr. Rips and Mr. Cahan were using these marks to name Yuga as part of their criticism of Yuga. [00:03:43] Speaker 03: And that's why nominative fair use applies. [00:03:45] Speaker 04: Now the error that the district- The problem with that for me is, [00:03:48] Speaker 04: You're also using, your client is also using BAYC and the Board 8 Yacht Club to refer to its own product that it's selling, its own NFT. [00:03:58] Speaker 04: I mean, it's embedded right in the name of the, or the description of the NFT and also the contract name. [00:04:08] Speaker 04: So it's both, right? [00:04:10] Speaker 03: Your Honor, they are definitely using the name as part of the title of their own product, but that is allowed under nominative fair use. [00:04:21] Speaker 03: That's exactly what nominative fair use permits. [00:04:24] Speaker 03: It permits, for example, in the applied underwriters case, a company to call its program a program about applied underwriters. [00:04:32] Speaker 03: It permits, in the Toyota case, a repair shop to talk about [00:04:37] Speaker 04: the Lexus is that where they repair and it permits most tellingly in those cases the factual context demonstrated that you wouldn't have confusion about origin agreed your honor and how is that the case here when the factual content can't context is that your clients are offering on the market something that looks exactly the same [00:05:03] Speaker 04: as Yuga's product, and so you don't have a context that shows distinction. [00:05:11] Speaker 03: So I think that, respectfully, Your Honor, we disagree. [00:05:15] Speaker 03: It was certainly a disputed issue of fact as to whether there was such a distinction. [00:05:19] Speaker 03: There were. [00:05:20] Speaker 03: If you look at the actual NFT that Mr. Rips and Mr. Kane were selling, the text is different. [00:05:26] Speaker 03: It shows the creator name Ryder Rips. [00:05:28] Speaker 03: It shows a different origin, a different creation date, different metadata. [00:05:32] Speaker 03: The database entry, which is all an NFT is, right? [00:05:35] Speaker 03: It's like the certificate in the name of star analogy that we used in our brief. [00:05:39] Speaker 03: That certificate was completely different. [00:05:42] Speaker 03: It looks nothing like the Yuga NFT. [00:05:45] Speaker 04: How do you explain away the contract name? [00:05:47] Speaker 03: It is, but it was always shown along with rider rips. [00:05:55] Speaker 03: Project was referred to, it was referred to as the Rider Rips Board Apioclub, and even in the EtherScan token, it had the project name, it had the title Board Apioclub. [00:06:03] Speaker 03: Immediately under that, or in some cases above, was Rider Rips, the creator name. [00:06:08] Speaker 03: So it was described to be, it is used in the title for sure, but in the context, there is at minimum a disputed issue of fact as to whether the creation of that would suggest sponsorship and endorsement. [00:06:23] Speaker 03: It is also clear that nobody actually ever bought a RRBYC thinking that they were buying a Yuga NFT. [00:06:31] Speaker 03: The district court, when going through Sleekcraft's setting, said that they did not find that there was any evidence of actual confusion. [00:06:39] Speaker 02: So the addition of the name... I don't know if it said that it did find any evidence of confusion versus that there was some offered, but [00:06:46] Speaker 02: Fair enough, Your Honor. [00:06:49] Speaker 03: You're exactly right, Your Honor. [00:06:50] Speaker 03: The district court did not make a determination that there was actual confusion. [00:06:56] Speaker 03: But the error that the district court made happens before we even get into this question that Judge Forrest was asking about suggesting sponsorship or endorsement. [00:07:04] Speaker 03: The error that the district court made was by finding that nominative fair use was categorically inapplicable, and that is incorrect as a matter [00:07:12] Speaker 03: of law under this court's decision in Karens. [00:07:16] Speaker 03: Karens says that it is okay to use the name of someone else's product to market your own product if you are using it to talk about theirs. [00:07:26] Speaker 03: And that is exactly what Mr. Rips was doing. [00:07:29] Speaker 03: That's why this is just like Toyota. [00:07:31] Speaker 02: It is just like Karens, which was- And again, given that Karens is a 2002 case, [00:07:36] Speaker 02: and it predates Jack Daniels by 21 years. [00:07:42] Speaker 02: The ultimate question that we have is regarding Jack Daniels and whether or not it applies and given the analysis and the concerns of the Lanham Act and whether or not those same concerns are present here. [00:07:56] Speaker 03: I mean, I would say this about Jack Daniels in that context, Your Honor. [00:07:59] Speaker 03: This court has decided post Jack Daniels, this court very squarely decided in Punchbowl, that all of the prior First Amendment law applies other than the very limited issue in Jack Daniels as to whether the mark was being used as a mark. [00:08:15] Speaker 03: So this court, I think, has already left in place all of the rest of the doctrine, which is another reason why I understand, Your Honor, that these cases are [00:08:25] Speaker 03: not post Jack Daniels. [00:08:27] Speaker 03: But Jack Daniels was focused specifically on the First Amendment context and the Rogers test and not on nominative fair use. [00:08:36] Speaker 03: And this court in Punchbowl did say essentially everything else is left alone. [00:08:42] Speaker 02: I'm not sure they said that. [00:08:43] Speaker 02: It was a First Amendment case, correct? [00:08:45] Speaker 02: It was. [00:08:45] Speaker 02: It was your honor. [00:08:46] Speaker 02: It was a fair use case. [00:08:47] Speaker 03: It was a First Amendment case, not a Fair Use case. [00:08:49] Speaker 03: So I think the question is still open. [00:08:52] Speaker 03: Fair enough, Your Honor. [00:08:53] Speaker 03: And it may be that it is worth revisiting, in bank or otherwise, the test for nominative Fair Use in this circuit. [00:09:01] Speaker 03: But as the test currently stands, the district court unquestionably misapplied it. [00:09:06] Speaker 03: And it misapplied it by saying that it's categorically unavailable, simply because [00:09:11] Speaker 03: they were using the name of Board Ape Yacht Club to market their own goods. [00:09:15] Speaker 03: The district court. [00:09:16] Speaker 04: Looking at the elements of the Nominative Fair Use Defense under Toyota, New Kids on the Block, one of them is you use the mark only as reasonably necessary to identify the product. [00:09:30] Speaker 03: That's correct. [00:09:30] Speaker 04: And no further, basically. [00:09:32] Speaker 04: And here, where the mark is embedded in the name of your client's product, how can you meet that requirement? [00:09:39] Speaker 03: Because that is true of almost every nominative fair use case. [00:09:43] Speaker 03: It is true of Lexus. [00:09:44] Speaker 03: The name was embedded. [00:09:45] Speaker 03: The Lexus mark was embedded in the name. [00:09:47] Speaker 03: It is true of applied underwriters. [00:09:49] Speaker 03: It is true of food chain Barbie, the Mattel case, which was another case. [00:09:56] Speaker 04: I guess I'm coming back to the same question I had. [00:09:57] Speaker 04: In all those cases, you had a factual context that showed that the person who was referencing the prior, the Barbie or the Lexus or whatever, was not making Barbies and was not making Lexuses, was doing something else, was providing a service. [00:10:09] Speaker 04: was doing a totally different creative endeavor, and that is not the case here. [00:10:13] Speaker 03: Respectfully, it is the case here, Your Honor. [00:10:15] Speaker 03: At least it was a disputed question of fact as to whether that's the case here. [00:10:19] Speaker 03: Because what Mr. Ripson was doing, he is unquestionably a famous artist in the internet space, he's been profiled in this space, and he was very clear that what he was doing was laying out a criticism [00:10:31] Speaker 03: of UGA Labs and of NFTs. [00:10:33] Speaker 03: That is different than what UGA Labs was doing, which was selling NFTs, period. [00:10:38] Speaker 03: This was done as part of this broader artistic project, or at minimum, at minimum, that was a disputed question of fact that should have gone to the jury on nominative fair use. [00:10:50] Speaker 03: If I could turn briefly to the issue of ownership, that's another way to resolve this case fairly squarely. [00:10:57] Speaker 03: UGA doesn't dispute that they have no registered trademark. [00:11:00] Speaker 03: They're asserting only common law trademark rights. [00:11:04] Speaker 03: And they have no such common law trademark rights because of the statements in their own terms and conditions. [00:11:09] Speaker 03: Their terms and conditions say, [00:11:11] Speaker 03: quote, when you purchase an NFT, you own the underlying board ape, the art completely. [00:11:16] Speaker 03: They have public statements interpreting that that say things like, quote, we have no, sorry, all IP rights are granted to the member. [00:11:25] Speaker 03: We have none of those rights. [00:11:27] Speaker 03: And it was undisputed that those statements were made. [00:11:29] Speaker 03: It was undisputed that that is how the, that the statement, the contract had been [00:11:33] Speaker 03: interpreted in public statements beforehand. [00:11:36] Speaker 03: And that was, in fact, Hugo's point of differentiation, that they were giving these broad worldwide commercial unlimited licenses to allow entities to, quote, produce and sell merchandise. [00:11:48] Speaker 03: That is an abandonment, effectively, of trademark rights. [00:11:53] Speaker 02: But don't they reserve certain rights? [00:11:55] Speaker 02: Because, for example, on the secondary market, if these products were resold, then they were entitled to a royalty, correct? [00:12:02] Speaker 03: They were not, and they did not obtain any royalty when the products were resold. [00:12:05] Speaker 03: It is possible to structure an NFT that way. [00:12:08] Speaker 03: That is not the way that Yugo structured their NFT. [00:12:10] Speaker 03: It is possible to do that, and some entities have. [00:12:13] Speaker 03: This license was not one that did that. [00:12:14] Speaker 03: They claimed no such rights. [00:12:17] Speaker 02: And that is- So the only profit that they made was on the front end? [00:12:21] Speaker 02: Correct. [00:12:22] Speaker 02: And not on the secondary market? [00:12:23] Speaker 02: That's exactly correct, Your Honor. [00:12:25] Speaker 02: Now, they could have. [00:12:29] Speaker 02: Did RR Basie end up having, maintaining some secondary rights? [00:12:33] Speaker 03: No. [00:12:34] Speaker 03: No profits back to the original contract creator on the secondary, as a result of the secondary market sales. [00:12:41] Speaker 03: So you can set up an NFT that way. [00:12:44] Speaker 03: these NFTs were not set up that way. [00:12:47] Speaker 03: And so what Yuga did was gave this away, and we gave away all of the trademark rights. [00:12:54] Speaker 03: And where entities then use the trademark rights, that is an abandonment of trademark rights that precludes your common law trademark from continuing to function. [00:13:04] Speaker 03: Might have been different if they'd had a registration. [00:13:06] Speaker 03: They did not have any such registration. [00:13:08] Speaker 03: And there were dozens and dozens of products, including [00:13:12] Speaker 03: other NFT collections to your honor's point about these being somewhat more similar than say a service right there were other NFT collections also using board ape yacht club that you did not dispute were sold in many instances did not dispute were licensed they're all in the record 2 er 331 323 333 to 412 dozens and dozens of these other products using the mark [00:13:38] Speaker 03: That is absolutely an abandonment of trademark rights and a failure to police. [00:13:44] Speaker 03: And given that naked license, they can no longer enforce their common law rights. [00:13:49] Speaker 04: So I guess on that question, you split out the NFT from the underlying art. [00:13:54] Speaker 04: So isn't your argument more about an abandonment of the underlying art, not so much abandonment of the NFT? [00:14:01] Speaker 03: No, Your Honor, because the contract itself, the UGO's terms and conditions, made clear that it is a purchase of the NFT. [00:14:09] Speaker 03: So the NFT itself is what is purchased. [00:14:12] Speaker 03: So all of the rights to the NFT, as well as the rights to the underlying art, go to these purchasers. [00:14:18] Speaker 03: And respectfully, as we pointed out in our briefs, the underlying art does include [00:14:23] Speaker 03: the trademarks right it includes for example the ape skull logo in in the underlying art so if an entity has the right to use that unfettered that is exactly the kind of license here at minimum again there was a disputed issue of fact on this that is certainly sufficient to allow the finder of fact to determine whether or not there is whether or not there is an issue and then the last thing i would say because let me ask you with respect to abandonment [00:14:48] Speaker 02: Given that Yuga would have actively promoted the brand, hosted these large-scale events, offline social communities, celebrity endorsers, [00:15:03] Speaker 02: Wouldn't that be evidence of the continuation and maintaining of these marks? [00:15:09] Speaker 03: I think it may be evidence of the continuation of their marketing activity. [00:15:14] Speaker 03: Marketing of what? [00:15:16] Speaker 03: Of Yuga Labs as a company and of this sort of club. [00:15:19] Speaker 03: But that is different than a continuation of the use of the mark so that it continues to function as a trademark to provide the source identifying role that a trademark is supposed to provide. [00:15:30] Speaker 03: That is what they did not do. [00:15:31] Speaker 03: And I would point out again that even if this court were to find, and I don't want to spend too much time on this. [00:15:38] Speaker 03: I know I'm in my rebuttal. [00:15:39] Speaker 03: Even if this court were to find that these issues were disputed issues of fact. [00:15:46] Speaker 03: So even if it is close, at minimum, this should not have been dealt with on summary judgment. [00:15:50] Speaker 03: And it should not have been allowed to then go toward a jury trial and then have the jury trial removed by this abandonment of legal remedies. [00:15:58] Speaker 03: at the last minute, as this Court has said in the Sonner case, that is an inappropriate way to use equitable remedies in place of legal. [00:16:07] Speaker 03: And that has been essentially the story of this case. [00:16:10] Speaker 03: I will reserve the rest of my time for rebuttal if I may. [00:16:12] Speaker 04: I have one other question. [00:16:14] Speaker 04: Of course. [00:16:14] Speaker 04: Perhaps our presiding judge will be a little bit more lenient with time. [00:16:20] Speaker 04: On the copyright counterclaims that your client has brought, what is your best evidence to show that [00:16:28] Speaker 04: The providers that took down content were relying on statements that were made in the notices that you challenged that relate to copyright as opposed to trademark. [00:16:37] Speaker 03: I think the best evidence is as to the Foundation website copyright takedown, which appears at 3ER 628 to 629. [00:16:48] Speaker 03: There's no dispute that was taken down following that notice. [00:16:51] Speaker 03: And the Foundation takedown, the subject line is, quote, UGA Labs, Inc., notice under DMCA, Foundation app. [00:17:01] Speaker 03: The first sentence of the email is, we are contacting you as the DMCA agent. [00:17:07] Speaker 03: So when you refer to DMCA in the subject line, refer to it in the first line, and then mention copyright also again, saying that they represent the copyright. [00:17:14] Speaker 04: The district court noted that there's things in the record to indicate that what was really being said in those notices was an assertion of trademark rights, and that even the response that providers were giving back seemed to understand that. [00:17:27] Speaker 03: So I think at minimum that's a disputed issue of fact. [00:17:30] Speaker 03: I don't dispute that there are references also to trademark there, but the DMCA is supposed to be this extremely fast mechanism to allow copyright and copyright only violations to be remedied, not trademark, right? [00:17:42] Speaker 03: And so what they did was they got the attention of these entities by filing a DMCA notice, but in fact had no DMCA rights. [00:17:49] Speaker 03: That is exactly what 512F is supposed to prevent. [00:17:51] Speaker 04: Well that may be, but if the service providers didn't materially rely, [00:17:55] Speaker 04: on what was, you know, any assertion of copyright rates in these notices, then it doesn't really matter. [00:18:01] Speaker 03: Well, that's a disputed question of fact, as to whether they materially relied or not. [00:18:05] Speaker 03: And so that's, again, an error there. [00:18:08] Speaker 03: The district court didn't rule on that basis, but the district court said these are not DMCA notices, so 512-F is not triggered. [00:18:15] Speaker 03: That was the error, because at minimum it was disputed as to whether they were 512-F, and we would say it was also disputed as to whether [00:18:22] Speaker 03: The reliance was there warranting the sanction of 512F. [00:18:27] Speaker 01: So I want to ask you about something entirely different. [00:18:30] Speaker 01: You have focused on nominative fair use and really haven't touched at all on the sleet craft factors. [00:18:37] Speaker 01: So it seems that the market issue, the Board 8 Yacht Club, is a very strong mark. [00:18:42] Speaker 01: It's fanciful. [00:18:43] Speaker 01: It's not descriptive. [00:18:44] Speaker 01: And then you have argued that relying on the enterprise media case that if by attaching RR and a forward slash to a very strong mark that means that there's [00:19:01] Speaker 01: not a likelihood of confusion or they're dissimilar on that basis. [00:19:05] Speaker 01: But it seems to me that something very important about that case is that the enterprise mark was quite weak. [00:19:10] Speaker 01: It was descriptive. [00:19:12] Speaker 01: And here the mark is quite strong, and enterprise states that if the mark is strong, [00:19:18] Speaker 01: then the similarity is stronger and the likelihood of confusion. [00:19:23] Speaker 01: So if we thought, okay, you added a couple letters and a slash, that means they're not similar, couldn't you do that to any mark? [00:19:30] Speaker 01: I mean, any strong mark could then just become dissimilar because you add a couple letters and a slash? [00:19:36] Speaker 03: A few responses, Your Honor. [00:19:37] Speaker 03: It is definitely a fact-dependent issue. [00:19:40] Speaker 03: and depends on a broader set of totality of circumstances as to whether a modification is or is not sufficient. [00:19:45] Speaker 03: And we agree, it depends in part on the strength and distinctiveness of the mark. [00:19:49] Speaker 03: We don't dispute that at all. [00:19:51] Speaker 03: I would say this, however, number one, it's incredibly unusual to resolve sleek craft at summary judgment because of the fact-intensive nature [00:19:59] Speaker 03: of these things. [00:20:01] Speaker 03: This is one of the only cases in which a plaintiff has ever been granted summary judgment on Sleekcraft ever, as far as we know. [00:20:09] Speaker 03: But I would say, the second thing I would say about specifically adding the RR, I think if you look into that entrepreneur or media case, it is true that the fact that entrepreneur was [00:20:20] Speaker 03: I don't think, if you look at the actual analysis of the addition of the letters, that the weakness materially affected the importance of the addition of the letters. [00:20:34] Speaker 03: What they discuss in that case is [00:20:36] Speaker 03: Something like the D.C. [00:20:38] Speaker 03: in Washington, D.C. [00:20:39] Speaker 03: distinguishing it from the state. [00:20:41] Speaker 03: And that and that is true. [00:20:42] Speaker 03: And it's especially true in the Internet context. [00:20:45] Speaker 03: That is, if you have a Web site that says Toyota dot com, that is very different than Toyota stinks dot com. [00:20:53] Speaker 03: And nobody would be confused. [00:20:54] Speaker 01: Not with what if it were something like our forward slash Nike. [00:21:00] Speaker 03: You know, Your Honor, I think that may very well be sufficient, again, depending on the facts, if, as we have here, you have someone who is a prominent critic of the brand, who's known very publicly for having made public statements in this space, who's an artist in this space, if Mr. Rips, now Mr. Rips has, in fact, done a work for Nike, so I don't think he would do this, but if he were to establish a reputation as a prominent critic, then it may very well be that just adding RR to Nike [00:21:27] Speaker 03: is sufficient. [00:21:27] Speaker 03: The issue is it's a fact-dependent question, and an entrepreneur makes it very clear. [00:21:32] Speaker 01: So are you suggesting that a district court could never grant summary judgment on this? [00:21:39] Speaker 03: Of course not. [00:21:39] Speaker 01: I mean, there's undisputed facts, and they make a determination as a matter of law. [00:21:43] Speaker 03: I agree if the facts are indeed undisputed and the determination is a matter of law, of course the district court could make a determination of summary judgment. [00:21:51] Speaker 03: The issue is it's rare and it should not have occurred here because the facts really have to be genuinely undisputed. [00:21:59] Speaker 03: And here where we have a circumstance where we have a critic trying to exercise rights to critique [00:22:05] Speaker 03: I think that's what he perceived as the impropriety of Yuga's business model and the hateful imagery in their product. [00:22:12] Speaker 03: And when we're in that circumstance, it really should be exceptionally rare to determine this on summary judgment because the criticism and the parody and the rest of it plays so much into exactly the questions that Sleekcraft looks at. [00:22:25] Speaker 03: So I don't think it is impossible. [00:22:28] Speaker 03: I think it's rare and it's rare for a reason. [00:22:30] Speaker 03: And the errors the district court made here [00:22:35] Speaker 03: the typical buyer and on the misapplication of that entrepreneur case that Your Honor described, that is an indication of why this is not the kind of rare case that should grant summary judgment for a plaintiff in a trademark infringement case. [00:22:50] Speaker 01: We've taken you over time. [00:22:53] Speaker 01: I'll give you three minutes for rebuttal. [00:22:54] Speaker 01: Thank you, Your Honor. [00:22:59] Speaker 01: Mr. Gregorian. [00:23:01] Speaker 00: Good morning your honors may it please the court Todd Gregorian of Fenwick and West for plaintiff Yuga labs I'll take the subjects in the order that mr. Topros presented them and then circle back to Sleepcraft and anything else the panel would like to hear from unless the panel has a different agenda so I think the reason why the court [00:23:23] Speaker 00: saw this as the unusual case in which you can straightforwardly grant summary judgment, is that the core conduct that was challenged was akin to counterfeiting. [00:23:33] Speaker 00: it was creating identical products, marking them with identical, not modified marks, and then putting those out to market, sometimes under identical advertising of our marks, other times slight modifications, but ultimately in a market where these products trade and re-trade with no association [00:23:57] Speaker 00: to Mr. Ripps other than scrutinizing the smart contract. [00:24:04] Speaker 00: So when you come to the fair use analysis, this is a question of whether there is fair use for a counterfeit product. [00:24:16] Speaker 00: If someone makes a copy of a Nike shoe and slaps a swoosh and the Nike brand on it and sells it in Foot Locker and allows it to be sold on eBay, can you come back to the court and say, [00:24:31] Speaker 00: Well, no, my intention in doing that, irrespective of what the reasonable consumer sees when they see it in the marketplace, was to make some sort of sly comment about Nike and their labor practices. [00:24:44] Speaker 00: And those people who knew me and saw my website [00:24:47] Speaker 00: elsewhere on the internet and these dozen or so hearsay emails that I received that should acknowledge that they've seen my website and understand that meaning, does that somehow convert? [00:25:00] Speaker 00: Is that a record on which there is now a triable issue about whether a reasonable consumer walking into Footlocker sees a counterfeit Nike shoe designated Nike [00:25:12] Speaker 00: and associates it with an artistic project rather than just a sale of a product in the market as one usually expects. [00:25:20] Speaker 04: It seems like you're arguing the likelihood of confusion analysis more than the fair use analysis and on that point here because the what you're buying is an NFT and not the art your analogy falls apart a bit because the NFT is something different than the art [00:25:39] Speaker 00: So I would contest the premise, Your Honor. [00:25:44] Speaker 00: And there is where the record is undisputed that the product that Yuga Labs sells is an NFT with an associated image that conveys rights in that copy of the image, as well as a copyright license to use [00:26:00] Speaker 04: the ape that is depicted as well as other benefits all of that without an nft being involved and because there is an nft involved the analysis necessarily is more complicated it seems to me [00:26:18] Speaker 00: So I think, well, I won't say, I won't opine on whether it's more complicated, but what the analysis is in the fair use realm is did they use the mark to refer to the product that was sold? [00:26:36] Speaker 02: Going back to my threshold question with respect to Jack Daniels, does Jack Daniels affect the analysis at this point? [00:26:42] Speaker 00: Absolutely, Your Honor. [00:26:44] Speaker 00: Why? [00:26:44] Speaker 00: Because Jack Daniels is a First Amendment case, and nominative fair use is a doctrine that's born out of the First Amendment. [00:26:51] Speaker 00: And Jack Daniels said there is no special protection under the First Amendment when you're using a mark as a trademark to designate the source of the good. [00:27:00] Speaker 00: Now, I think that principle is already baked in [00:27:04] Speaker 00: to the Nominative Fair Use Doctrine. [00:27:06] Speaker 00: So I don't think this panel has to reach beyond anything that Toyota says, right? [00:27:11] Speaker 00: So what is the standard that they had to meet? [00:27:14] Speaker 00: Well, the defendant seeking to assert that doctrine needs to show that it used the mark to refer to the trademarked good. [00:27:23] Speaker 00: Namely, they need to show that their use of the mark referred to UGA Labs' NFTs, not their NFTs. [00:27:31] Speaker 00: And while Mr. Topros said that was our burden, [00:27:33] Speaker 00: That's an incorrect statement. [00:27:35] Speaker 00: Toyota maintains that threshold burden on the defendant seeking to assert nominal fair use. [00:27:42] Speaker 00: And that's where things fall down, because yes, there is a technological back end to NFTs, but the question here is what did consumers on the undisputed record see? [00:27:54] Speaker 00: And the evidence was that Mr. Rips, [00:28:01] Speaker 00: used our marks in the smart contract that had the effect of emblazoning the Nike shoe with Nike, marking the fake Rolex watch with Rolex, because it causes those NFTs, when they appear for sale in the secondary markets, and when authentication websites and bots that [00:28:21] Speaker 00: announced to the public what transactions have occurred, it causes all of those things just to read the metadata as Board Ape Yacht Club and BAYC. [00:28:31] Speaker 00: And so to return to my Nike analogy, the situation is actually worse than if you had fake Nikes sold as Board Ape Yacht Club in Footlocker on the shelf next to real Nikes. [00:28:43] Speaker 00: If you had the town crier in front of the store, [00:28:46] Speaker 00: And when a sale of the fake Nike is made, he says, everyone, I would like to announce to you that Nike Air Jordans just sold for $5 at Foot Locker. [00:28:56] Speaker 00: And someone else next to him, an accountant says, I can verify, I can verify that an authentic Nike just sold at Foot Locker for $5. [00:29:08] Speaker 00: And so the idea that this is [00:29:15] Speaker 00: Well, to conclude on fair use, there is just no question of fact that those core uses were uses of R Mark as a source to designate his product. [00:29:28] Speaker 00: And that's how consumers saw them. [00:29:30] Speaker 00: And that's why I don't think we need to get into. [00:29:32] Speaker 00: The court doesn't need to go beyond that, really. [00:29:37] Speaker 02: On Sleekcraft, it doesn't seem like the district court [00:29:43] Speaker 02: did much analysis of the record, particularly as to the positions of the defense. [00:29:53] Speaker 02: And in so doing, and given how fact-intensive this area of law is, how can we affirm what the district court did as to its Sleekcraft analysis? [00:30:04] Speaker 00: Absolutely, Your Honor. [00:30:07] Speaker 00: So I think there's a really clear path here. [00:30:10] Speaker 00: And it is, what did the district court consider at summary judgment? [00:30:15] Speaker 00: And that is, whether the defendants were liable of some form of trademark infringement. [00:30:21] Speaker 00: And it answered that question yes, and it answered that question based on the sale of counterfeit NFTs. [00:30:28] Speaker 00: It said the conduct that is challenged in this case is the sale of products that are made to look like legitimate board apes and then marked with the Board Ape Yacht Club mark and sold. [00:30:41] Speaker 00: And the district court has already been affirmed in that regard by a different panel of this court on the state law claims. [00:30:50] Speaker 00: Different legal context and anti-SLAP, but nonetheless, that panel said, what this lawsuit challenges is the sale of copied cat, board ape, yacht, club, NFTs. [00:31:05] Speaker 00: And so if you look at the District Court's Sleekcraft analysis, it is tailored to that conduct. [00:31:14] Speaker 00: So it talks about Mr. Rips's design of an identical product, including copying over our APE IDs, so that his would appear with the same numbering. [00:31:26] Speaker 00: his marking them with our unmodified marks at and in that when he talks about use of the mark right the district judge says explicitly the use of the mark in the NFT right so it is he is referring to that use of the mark in the smart contract to designate the product [00:31:46] Speaker 00: And then he talks about marketing channels. [00:31:48] Speaker 00: And what marketing channels does he rely on? [00:31:50] Speaker 00: He relies principally on the secondary marketplaces, OpenSea and XTY2, where these things go out and appear on, you know, [00:32:01] Speaker 00: essentially unaffiliated with Mr. Ripps, but for some very close analysis. [00:32:08] Speaker 00: And so on the- I'm sorry. [00:32:12] Speaker 04: One lingering question that I have based on the briefing and the argument that you're making now is your argument makes perfect sense if we're talking about a typical consumer market. [00:32:25] Speaker 04: I don't think the NFT market is your typical consumer market. [00:32:29] Speaker 04: And so I guess I come back to, isn't this more complicated than you're making it? [00:32:34] Speaker 04: Because we're not just talking about Nike shoes sitting at Footlocker. [00:32:37] Speaker 04: We're talking about something that is, I mean, at least in my experience, trying to get up to speed in this case. [00:32:44] Speaker 04: Like, what are we even talking about? [00:32:46] Speaker 04: What is an NFT, right? [00:32:47] Speaker 04: So the people in this market have a different understanding and are coming at this from a different place. [00:32:53] Speaker 04: Isn't that fair? [00:32:54] Speaker 00: So it is fair to say that the body of reasonable consumers is different from the body of reasonable consumers. [00:33:01] Speaker 04: And would you agree that the Sleep Crafts test is all about trying to figure out the consumer in our relevant market, not a generic consumer that buys anything out in the world, but a consumer out there that buys this, an NFT? [00:33:14] Speaker 00: Yes, Your Honor, and so let me address how that was handled on this record, which was everyone had their opportunity at summary judgment to prove up the reasonable consumer and there was no dispute of fact. [00:33:30] Speaker 00: The products appear identically on an online marketplace. [00:33:34] Speaker 00: It was undisputed that where consumers go to verify the authenticity of those products, the EtherScan website copied our exact marks. [00:33:44] Speaker 00: And so someone looking at EtherScan would, someone who was sophisticated enough to look at EtherScan to verify the provenance of their NFTs would see EtherScan representing these to be legitimate board API club as opposed to a counterfeit. [00:34:04] Speaker 00: But as to the reasonable consumer, the district court made two rulings, right? [00:34:12] Speaker 00: One is just that some sophistication is required in this market to verify provenance. [00:34:19] Speaker 00: And he did that based on the express admissions of defendants. [00:34:23] Speaker 00: And the second ruling he made is that defendants knew some consumers in this market were likely to be deceived. [00:34:31] Speaker 00: And there is ample undisputed evidence in the record for that ruling because it is shot through defendants' communications about their project. [00:34:43] Speaker 00: The people in this market who have been drawn into it by the Tonight Show, Rolling Stone, all the publicity that NFTs were receiving at the time, those are sheeple. [00:34:55] Speaker 00: Those are sheeple who will not read the smart contract. [00:34:58] Speaker 00: Oh, they are likely to be confused by our use of the mark on this ape market website that we're designing. [00:35:05] Speaker 00: These are all internal communications that offenders made among themselves while they were not subject to the scrutiny of the court. [00:35:15] Speaker 00: And so how does that apply in the larger sleep crack analysis? [00:35:21] Speaker 00: Well, this court has said the reasonable consumer is not one person. [00:35:25] Speaker 00: The reasonable consumer is a range of folks. [00:35:27] Speaker 00: And the reasonable consumer standard is concerned with the least reasonable of those folks. [00:35:35] Speaker 00: The least sophisticated person who we would also deem a reasonable consumer should not be deceived. [00:35:43] Speaker 00: it was clear that such a person would be deceived. [00:35:47] Speaker 00: And that is because, as this Court has held, when someone marks an identical product with an identical mark, confusion follows this course, of course. [00:35:58] Speaker 00: It is also true because the evidence of such likelihood of confusion in the record was undisputed. [00:36:04] Speaker 00: There were two surveys. [00:36:06] Speaker 00: one of how the marks appeared on OpenSea that included the modified mark RRBYC, and there was a likelihood of confusion there. [00:36:16] Speaker 00: And so the idea that we can argue now, Your Honor, that based on conjecture that RR might be a differentiator, the record is set. [00:36:26] Speaker 00: The record was that was confusing. [00:36:28] Speaker 00: When those two marks were together on OpenSea, it confused people. [00:36:31] Speaker 00: The other survey was about the foundation website and the whole process, the buying process of the NFT. [00:36:40] Speaker 00: The survey used the foundation website of the defendants after he had begun modifying logos and changing them to make sarcastic comments and points of distinction. [00:36:53] Speaker 00: And that found a 40% likelihood of confusion. [00:36:59] Speaker 02: Let me ask you, given that on a motion for summary judgment, the reviewing court is required to consider the evidence in the light most favorable to the nonmoving party, and so then here that would be Ripa Ryder, and you have evidence in the record regarding how [00:37:21] Speaker 02: on the issue of intent, there were disclaimers, there were these artist statements, there were these links to critical pieces, and those aren't even referenced at all. [00:37:34] Speaker 02: To the extent that they're not referenced at all, how can one [00:37:37] Speaker 02: reliably conclude that the court considered all of the evidence and considered it in the light most favorable to the non-moving party. [00:37:45] Speaker 00: Right. [00:37:45] Speaker 00: So the issue with that is that there is no connection, no necessary connection between the separate website he set up with a disclaimer and reasonable consumers seeing these... But shouldn't the district court have said that then? [00:38:03] Speaker 02: It's as if the evidence didn't exist. [00:38:08] Speaker 00: Perhaps, Your Honor, but I guess the question for this court is, viewing the evidence in the light most favorable to the defendants, is there liability for trademark infringement? [00:38:25] Speaker 00: And the district court's ruling that by marking the same product with the same mark, [00:38:32] Speaker 00: and allowing it out into the marketplace in the wild where it would not be associated with this disclaimer, he was committing infringement. [00:38:40] Speaker 00: And so the question of the disclaimer becomes an issue for the remedies trial, which we had. [00:38:45] Speaker 02: For the remedies trial or for the trier of fact in trying to sort all of this out, even as far as the marketing channels, [00:38:52] Speaker 02: There was no reference by the district court as to this RRBC.com being utilized to sell these NFTs as if, again, it doesn't exist. [00:39:04] Speaker 02: And so if you're considering marketing channels to fairly evaluate the record, [00:39:09] Speaker 02: then that has to be something that's at least noted, if not distinguished or weighed or considered. [00:39:16] Speaker 00: I don't think you mash all the marketing channels together and just say, is it the same or different? [00:39:25] Speaker 00: Those give rise to separate types of claims. [00:39:28] Speaker 00: And most clearly, that is evident in this court's decision in Lindy Bend, which said, [00:39:36] Speaker 00: Look, these things, when they're sold in the store, the branding is completely different. [00:39:41] Speaker 00: But when they're sold in the telephone market, which is a market where they overlap, they just show up at the office bearing the Mark Auditor, a variation of the Mark Auditor. [00:39:52] Speaker 00: And so the court spliced those two things and affirmed non-infringement on the former and remanded on the latter and there were follow-on decisions ultimately determination of liability. [00:40:09] Speaker 00: So the question is, [00:40:14] Speaker 00: What relevance does the separate disclaimer website have in this record for the facts on which the court found liability? [00:40:25] Speaker 00: And the answer is there is none. [00:40:26] Speaker 00: There is no connection. [00:40:28] Speaker 00: There's no evidence about how reasonable consumers. [00:40:31] Speaker 02: But do you agree that these are relevant considerations under Sleekcraft? [00:40:37] Speaker 02: these pieces of evidence I'm referring to, these disclaimers, these artist statements, these sales over rrbasie.com. [00:40:44] Speaker 00: Are they relevant? [00:40:47] Speaker 00: I agree that they, if this were solely a case about sales about [00:40:55] Speaker 00: Sure, I can concede that. [00:40:58] Speaker 00: Of course they're relevant. [00:40:59] Speaker 02: Given how incredibly fact-intensive the Sleekcraft test is, ultimately that's why this court, the Ninth Circuit, has instructed district courts to be wary, just not to grant summary judgment willy-nilly without taking into account the complexities and all the various pieces of evidence. [00:41:22] Speaker 00: I'm happy to concede that, Your Honor, but this Court also has the rulings in Lindy Pen and Stone Creek when there was an actual trial and the Court directs entry of judgment of infringement, finding that [00:41:38] Speaker 00: Even though many of the fact-intensive factors favored the defense, the fact that the defendant marked the same product with the same mark and allowed it out in the same marketing channels just gives rise to confusion as a matter of course. [00:41:52] Speaker 00: This is the simple case. [00:41:53] Speaker 00: Matter of law? [00:41:55] Speaker 02: Did the court basically uphold the lower court's or the jury's determination versus finding that as a matter of law? [00:42:05] Speaker 00: So in Lindy Penn and Stone Creek, [00:42:08] Speaker 00: The circuit reversed the district court's determination of no infringement because the likelihood of confusion from those three core factors was so strong so as to override all countervailing factors. [00:42:23] Speaker 00: The reason why this case is the rare case, and your honors do not see many of these, is because counterfeiters usually fold when they are sued or the case is resolved in its early stages. [00:42:37] Speaker 00: This is the rare case where [00:42:39] Speaker 00: the defendants hid behind a claim to be performing art that was contrary to the record and that was ultimately found to be false. [00:42:52] Speaker 00: With that, we'd ask the court to affirm any further questions. [00:42:55] Speaker 04: I have a question about the cyber-spotting claim. [00:42:58] Speaker 04: My understanding from the record is that your client has abandoned the ape mark, is that correct? [00:43:02] Speaker 00: That's correct. [00:43:03] Speaker 00: The cyber squatting determination is based on the board. [00:43:05] Speaker 00: Okay. [00:43:05] Speaker 04: So then the eight market.com domain, how does that, how does the claim related to that survive? [00:43:11] Speaker 00: Uh, it, it, it incorporates prominently a portion of a famous. [00:43:15] Speaker 04: And what is that? [00:43:17] Speaker 00: Boarding. [00:43:20] Speaker 04: So the word ape in ape market is the connection to board ape. [00:43:25] Speaker 00: Your honor, that is the source of confusion at the first step and of course at the second there. [00:43:32] Speaker 04: What's your best authority to say that that's close enough? [00:43:37] Speaker 00: So the My Coke and drink Pepsi cases, there are [00:43:45] Speaker 00: There are there are slew cases where minor modifications to the mark and the domain name are sufficient And and the reason that is okay for cyber squatting where it might not be okay Under the higher likelihood of confusion standard is because the preemption concern is addressed at the back end of the analysis Someone someone who I guess it's falling apart for me a little bit because what if somebody out there said I'm gonna register a domain for ape rescue and [00:44:12] Speaker 00: Right. [00:44:14] Speaker 00: And that's exactly where I'm going. [00:44:17] Speaker 00: Someone who registers that domain and uses it for such does not have bad faith intent to profit from the use of our mark. [00:44:27] Speaker 00: And so it's that second part of the analysis that shores up the lower likelihood of confusion standard to ensure that preemption doesn't happen and that people are free to use parts of marks in legitimate ways. [00:44:40] Speaker 00: Thank you. [00:44:40] Speaker 00: Thank you, Your Honors. [00:44:41] Speaker 01: All right, thank you. [00:44:44] Speaker 01: Thank you, Your Honors. [00:44:47] Speaker 03: We heard counterfeit many, many times. [00:44:49] Speaker 03: That was a disputed question of fact. [00:44:51] Speaker 03: Whether this was criticism or counterfeit was a key disputed question of fact. [00:44:56] Speaker 03: The facts have to be interpreted in the light most favorable to the nonmoving party, and they were not counterfeits. [00:45:03] Speaker 03: It certainly would interpret it that way. [00:45:05] Speaker 03: On the sleek craft question, I heard counsel say that we should apply the least reasonable consumer test. [00:45:12] Speaker 03: That's not the test. [00:45:13] Speaker 03: That is sort of where Brookfield was going, but network automation made very clear that where there's expertise in the field, you have to apply the expertise that's in the field. [00:45:22] Speaker 03: These are NFT purchasers, and there was sufficient evidence in the record [00:45:26] Speaker 03: That NF to quote typical NFT purchasers are familiar with blockchain technology and the tools needed to determine provenance. [00:45:32] Speaker 03: That's ADR 1523 separate testimony saying the same thing at three ER five 97 and 98. [00:45:39] Speaker 03: The typical consumer, people just don't go out and buy NFTs. [00:45:42] Speaker 03: Typical consumer knows how to figure out and look at the actual creator to figure out what they're buying. [00:45:49] Speaker 03: On the remaining issue on the sleet craft factors, I heard counsel say there was no need to consider the rrbayc.com website and the disclaimer [00:46:06] Speaker 03: And the artist statement there because it was a separate disclaimer website, just not true. [00:46:11] Speaker 03: The factual record makes clear that is where the sales happened. [00:46:14] Speaker 03: We're through the rrbayc.com website. [00:46:17] Speaker 03: The district court did not address that. [00:46:19] Speaker 03: It did not address it at all. [00:46:21] Speaker 03: And then I think there is, as Judge Forrest was getting at, a distinction here between NFTs and other types of goods. [00:46:27] Speaker 03: One of the two key points that Mr. Ripps was trying to make with his art, as he said at rrbayc.com, was, quote, clearly defining what we are buying when we purchase an NFT is one of the primary goals of this work. [00:46:42] Speaker 03: And it is confusing to people what they are to the general public, not to purchasers, but to the general public what they're buying when they buy an NFT. [00:46:50] Speaker 03: You can buy an NFT to the Mona Lisa. [00:46:52] Speaker 03: You can buy an NFT to Mahler's First Symphony. [00:46:55] Speaker 03: Because you can buy those things, you do not have the rights to the underlying work here. [00:47:00] Speaker 03: That is why this is different. [00:47:01] Speaker 03: And what Mr. Rips was doing was pointing out that having an NFT [00:47:04] Speaker 03: that links to a monkey picture does not give you rights to the monkey picture. [00:47:09] Speaker 03: That was a key piece of what he was doing and why it is very different from these kinds of counterfeiting type cases that the council has identified. [00:47:19] Speaker 03: And then one final thing on the issue of nominative fair use and the relationship to Jack Daniels, even if Jack Daniels is affected in some way, it does affect that analysis in some way, it only matters if there's source identification here [00:47:33] Speaker 03: And in the source identification cases like Jack Daniels, like the Punchbowl case, you have indications that the entity that was doing this was trying to sell this as the source. [00:47:44] Speaker 03: So in Punchbowl, there was a registration of the trademark and the same thing essentially in Jack Daniels with the mark on the back. [00:47:50] Speaker 03: Mr. Rips never tried to register any trademarks. [00:47:52] Speaker 03: This was criticism, not competition, not counterfeiting. [00:47:56] Speaker 03: It was criticism and an artistic project to attack the Boyd Apiat Club, not the opposite. [00:48:01] Speaker 01: Thank you. [00:48:02] Speaker 01: Thank you. [00:48:03] Speaker 01: Council, thank you for your arguments. [00:48:04] Speaker 01: They were very helpful and this case is submitted and we are adjourned for the day. [00:48:11] Speaker 04: All rise. [00:48:28] Speaker 01: This court for this session stands adjourned.