Lately there has been a lot of discussion in the NFT space about the legal suit Yuga Labs has brought against Ryder Ripps for the sale of his RR/BAYC collection, his use of the BAYC logos and marks, and the myriad other claims leveled against him.
However, there is one area that hasn’t received much attention, and it’s the disclaimer that Ryder Ripps’ collection had on his website prior to the purchase of a RR/BAYC.
To understand whether his disclaimer would be enforceable or not, we need to first examine what a disclaimer actually is before we dive into the disclaimer on the RR/BAYC site.
What’s a Disclaimer?
You may not have an exact definition of what a disclaimer is, but you see them all around you. They are present when you’re trying to get an Uber and you receive a notice saying you need to accept surge pricing to continue, they are on people’s Twitter bios when they say the views expressed therein are their own, they play at the beginning of every episode of South Park…
In practice, a disclaimer is a statement of non-responsibility that specifies or limits the scope of rights and obligations that can be enforced by parties in a legally recognized relationship. Basically, it’s something you would see a business or individual use in order to shield themselves from a legal claim.
It’s important to note that the presence of a disclaimer isn’t a magic shield that protects a party from any and all claims. There are instances when disclaimers are unenforceable, such as when there is evidence of gross negligence.
The Ryder Ripps Disclaimer - Valid or Monkey Business?
Let’s start by taking a look at the disclaimer in question:
The disclaimer above was presented to every purchaser of a RR/BAYC NFT on their website. Each person had to affirmatively click that they understand this prior to placing a hold on the NFT and purchasing it.
Is this enough? Are there benefits to having the disclaimer appear at all? Where are the weaknesses?
Instead of sitting in an echo chamber, I brought in a friend to consider these points with me.
Opening Up the Conversation
Jessica Neer McDonald Esq. is a Florida-based attorney focusing on brand protection, creative content and related advertising and privacy compliance. She has a wealth of intellectual property knowledge and, most recently, has been using that knowledge to fill the gaps in the web3 space.
The following is taken directly from the questions I sent to Jessica:
Ray: What are the benefits of Ryder Ripps adding that disclaimer to the RR/BAYC site?
Jessica: The Yuga Labs’ complaint mainly alleges trademark infringement and related claims like false designation of origin, cybersquatting, etc. We have not seen the defendants’ defenses yet, but we have a good idea that the defendants will at least claim that their actions were expressive and protected under the First Amendment. The court will evaluate if and how to balance the consumer and commercial protection under trademark law with First Amendment protection of expressive works. If it is found that the defendant’s actions involve an expressive work, it is likely the court will apply a test known as the Rogers test where the use of the trademark is only infringing if it has (1) no artistic relevance to the underlying work or (2) explicitly misleads as to the source of the work.
The disclaimer you shared attempts to explain the artistic relevance and could play a role in arguing the trademark use does not explicitly mislead as to the source of work. Based on the image, it looks like the new mint required an affirmative action of checking a box that states the dissociation and purpose of the project as a re-contextualization of “for educational purposes, as protest and satirical commentary.” Moreover, it references Defendant Ryder as the gatekeeper of whether the purchase will be fulfilled “([d]epending on the vibe of [the purchaser’s] wallet and the mood of Ryder at the time).”
Ray: Are there problems with the disclaimer that you potentially see being brought up?
Jessica: It is unlikely all consumers coming in contact with the allegedly infringing marks actually interact with this disclaimer. For example, a consumer could purchase an NFT from the RR/BAYC collection directly from those that minted (made the initial purchase), or a platform that does not have that disclaimer or need to check that same box. Moreover, there is research on disclaimers that questions its effectiveness in preventing confusion.
In the end, a court can find the use of the trademarks are likely to cause confusion regardless of the disclaimer. In it’s complaint, Yuga Labs illustrates this point with a tweet by “Ryder Ripps Bored Ape Yacht Club” (@RR_BAYC) that “RR/BAYC” does not sufficiently distinguish itself:
Ray: The disclaimer of course is only a small part of the story, what are some things in the case that you are looking forward to analyzing?
Jessica: I am looking forward to discussion generally around NFT creation as a form of expression and the balance of First Amendment rights with protecting consumers.
I would also like to see how provenance plays a role in avoiding the likelihood of consumer confusion. Trademark infringement essentially occurs if the defendant creates a likelihood of confusion. Utilizing NFTs as a vehicle for transferring art on a public blockchain creates a digital, immutable trail that can aid in discerning between different NFT collections. Regardless of whether consumers actually review the smart contracts prior to purchasing an NFT or not, this case is before a court that recognizes “initial interest confusion” as sufficient for finding infringement. In other words, even if confusion is dispelled before an actual sale occurs, there can still be initial interest confusion that exploits the goodwill associated with the trademark impermissibly.
Enough Monkeying Around
No matter what side of the debate you’re on, it’s clear that the case between Yuga Labs and Ryder Ripps will have repercussions that will be felt by the entire industry. More importantly, it will set precedent in a field with very light insight derived from U.S. case law.
We hope the case comes to a speedy and just resolution because well…we have bigger fish to fry!