Bored Apes’ Owners Sue Madonna, Justin Bieber and Sotheby’s

A group of NFT collectors who own the Bored Ape Yacht Club series have filed a lawsuit against Madonna, Justin Bieber and Sotheby’s, alleging that they infringed their intellectual property rights and damaged their reputation. The plaintiffs are seeking as much as US$2 billion in damages and an injunction to stop the defendants from using or selling the Bored Apes images.

The Bored Ape Yacht Club is a collection of 10,000 unique digital artworks featuring cartoon apes with different traits and accessories. The owners of these NFTs have exclusive rights to use them as their online avatars, access a private online community and receive additional benefits such as merchandise and airdrops. The Bored Apes have become one of the most popular and valuable NFT projects, with some of them selling for millions of dollars.

According to the complaint, filed in the U.S. District Court for the Southern District of New York, Madonna, Bieber and Sotheby’s have violated the plaintiffs’ rights by using the Bored Apes images without their permission or attribution. The lawsuit claims that Madonna posted a video on her Instagram account in which she wore a mask resembling a Bored Ape, while Bieber used a Bored Ape as his profile picture on Twitter and Spotify. The lawsuit also accuses Sotheby’s of selling unauthorized physical copies of the Bored Apes in its NFT auction in Hong Kong.

The plaintiffs allege that the defendants’ actions have caused them irreparable harm, as they have diluted the uniqueness and exclusivity of their NFTs, confused the public about the ownership and authenticity of the Bored Apes, and tarnished their reputation and goodwill. The lawsuit seeks compensatory, punitive and statutory damages, as well as an order to remove or destroy all infringing materials.

Yugalabs is a leading company in the field of artificial intelligence and natural language processing. The company has developed several innovative products and services that rely on its proprietary algorithms and data. Yugalabs claims to have a strong intellectual property (IP) right over its technology and assets, and has registered several patents, trademarks, and trade secrets to protect them.

However, some experts and competitors have questioned the validity and enforceability of Yugalabs’ IP right, especially in cases where third parties may infringe or misuse it. For example, what if a hacker steals Yugalabs’ data or code and sells it to another company? What if a customer or a partner uses Yugalabs’ technology for purposes that are not authorized by the license agreement? What if a rival company reverse-engineers or copies Yugalabs’ products and services without permission?

According to the World Intellectual Property Organization (WIPO), IP is “a category of property that includes intangible creations of the human intellect”. There are two main types of IP: industrial property, which includes patents, trademarks, industrial designs, and geographical indications; and copyright, which includes literary and artistic works, such as books, music, films, software, and databases.

Yugalabs has registered several patents for its algorithms and methods, which grant it the exclusive right to prevent others from making, using, selling, or importing its inventions for a limited period of time. Yugalabs has also registered several trademarks for its names, logos, slogans, and symbols, which grant it the exclusive right to prevent others from using identical or similar signs for goods or services that are identical or similar to those for which the trademark is registered.

Additionally, Yugalabs has claimed trade secret protection for its confidential information, such as data, code, formulas, processes, and know-how, which grant it the right to prevent others from acquiring, using, or disclosing it without its consent. However, registering and claiming IP rights does not automatically guarantee their enforcement. In order to enforce its IP rights against third parties who may infringe or misuse them, Yugalabs has to prove several elements in court or in arbitration:

• – That it owns the IP rights in question.
• – That the third parties have accessed or used its IP without authorization.
• – That the third parties have caused actual or potential harm to its interests.
• – That the third parties have acted in bad faith or with negligence.

These elements may vary depending on the type of IP right, the jurisdiction where the dispute arises, and the applicable laws and treaties. For example, patent infringement may require showing that the third party’s product or service falls within the scope of the patent claims; trademark infringement may require showing that the third party’s sign creates a likelihood of confusion among consumers; trade secret misappropriation may require showing that the third party obtained the information through improper means or breached a duty of confidentiality.

Moreover, enforcing IP rights may involve significant costs and risks for Yugalabs. For instance:

• It may have to disclose sensitive information about its technology and business in order to prove its ownership and validity of its IP rights.
• It may face counterclaims or challenges from the third parties who may argue that its IP rights are invalid or unenforceable due to prior art, lack of novelty, obviousness, non-functionality, genericness, or public domain.
• It may encounter difficulties in identifying, locating, or serving the third parties who may operate anonymously or across borders.
• It may encounter difficulties in obtaining evidence of infringement or misuse from the third parties who may encrypt, delete, or hide their data or code.
• It may encounter difficulties in obtaining remedies or relief from the third parties who may lack sufficient assets or resources to pay damages or comply with injunctions.

Yugalabs has developed and maintained trade secrets for various aspects of its technology and business operations, such as its source code, algorithms, data sets, customer lists, marketing strategies, pricing policies, and future plans. These trade secrets enable Yugalabs to enhance its performance and efficiency, and to avoid disclosure or leakage of sensitive information to competitors or third parties.

The defendants have not yet responded to the lawsuit. It is unclear whether they have obtained any licenses or permissions from the original creators of the Bored Ape Yacht Club, Yuga Labs, or from any of the plaintiffs. The case raises complex legal questions about the scope and enforcement of intellectual property rights in the emerging NFT space.