I'm assuming this is a fleet race, not a match race, but match racing call G2 might be useful. I'll leave it to the actual rules experts here to weigh in on whether G2 is applicable in a fleet race.

https://www.racingrulesofsailing.org/cases/835

Question 1
Blue is sailing to leeward of Yellow. Both boats have spinnakers set. Blue luffs Yellow. What are the obligations on Blue and Yellow?
Answer 1
Yellow is required to keep clear and Blue is required to give Yellow room to respond to her luff. While Yellow is able to keep the majority of her spinnaker filled and drawing she is not entitled to additional room to drop her spinnaker.
If Blue continues her luff so that Yellow, in order to keep clear, has to luff beyond the point where she can keep her spinnaker filled and drawing, then Blue must give Yellow room to drop her spinnaker.
Whether or not Yellow drops her spinnaker at that time, she is still required to keep clear. If she does not drop her spinnaker at that time, then Blue is not required to give her additional room to drop the spinnaker later in that luff.

Question 2
If Yellow does not drop her spinnaker and passes head to wind to keep clear, is Blue giving Yellow room to keep clear in a seamanlike way?
Answer 2
Yes. Blue may continue to luff as long as she has previously given Yellow room to drop her spinnaker.

Question 3
Does either answer change if Blue does not have a spinnaker set, or if Blue has a different type of spinnaker set?
Answer 3
No.

The following four Cases and Appeals define what is not appropriate.
 
WS Case 72 – Discussion of the word ‘flag’. (rule 60.2(a)(1))

RYA Case 2001/13 – A glove cannot be a protest flag. When the display of a protest flag is required but not complied with, a protestee’s objection at the start of a hearing to the validity of the protest is to be upheld even if the protestee must have been well aware of the intention to protest. (rule 60.2(a)(1))

US Appeal 66 – A 2-inch by 8-inch protest flag on a 40-foot boat is not of sufficient size or of suitable proportions to be “conspicuously displayed.” (rule 60.2(a)(1))

Sail Canada Appeal 63 – For boats greater in length than 6 metres, a protest flag must be perceived to be a flag. The flag must be displayed at the first reasonable opportunity. For a fully-crewed boat, compelling evidence would be required to justify display within minutes, rather than seconds of an incident. Failure to meet these requirements will render a protest invalid. (rule 60.2(a)(1))

 Time to re-read RRS 11 and the definition of keep clear, plus RRS 14.

Go for it.

KC(a) - not met.
+
KC(b) - met/not determined?
=Did not keep clear.
R14 - insufficient distance was the cause.

Notes:
1. Some people wrongly believe that if KC(b) is met it's enough to say W kept clear. However KC(a) must also be met. The two are connected with 'and'.  KC(a) always applies, overlapped or not.  KC(b) only applies when overlapped.  My issue is not with KC(b). It's immaterial if KC(a) is not met.

I'm saying that KC(a) was not met.

2. Dropping the sheet is never a problem if the distance is sufficient between the boats. Insufficient distance caused 'dropping the sheet' to be problematic. Insufficient distance caused the contact. Not dropping the sheet.

3. KC(a) - Think of 'need to take avoiding action' as the trigger here. (See above.)

(W failed to keep clear of L, as L was able to sail her course but had need to take avoiding action while doing so. 

In fact, to resolve that need to take avoiding action, L would have had to bear away to increse the distance between the boats.  So effectively, she could not 'sail her course without a continuous need to take avoiding action'.)

Thanks so much, Mark. It's good to have these when racing outside the US, in order to have more credibility. 

Thank you Paul for the change. And thank you all for the helpful suggestions.