Don't Mess with Grumpy Cat.
On Monday, January 22, a California federal court awarded Grumpy Cat Limited ("Grumpy Cat") $710,000 in damages for numerous claims against Grenade Beverage LLC ("Grenade Beverage"), a California-based beverage company. The original complaint, filed by Grumpy Cat on December 11, 2015, accused Grenade Beverage for (1) copyright infringement, (2) trademark infringement and false designation of origin, (3) trademark dilution, (4) cybersquatting, and (5) breach of contract—among others. You can check out the entire complaint here. Keep reading this article for a summary of the case and some important lessons we can all learn from Grumpy Cat.
Here's What Happened.
Around mid-2013, Grumpy Cat—an Ohio limited liability company—entered into a licensing agreement with Grenade Beverage, allowing Grenade Beverage to sell a coffee beverage called "Grumpy Cat Grumppuccino." More specifically, Grumpy Cat Limited enabled Grenade Beverage to use its federal and common law trademark GRUMPY CAT, as well as a copyrighted image of Grumpy Cat shown below, in connection with "Grumpy Cat" branded coffee products. In the contract, Grumpy Cat Limited expressly stated that all such beverages were subject to Grumpy Cat's approval. And, of course, the contract required Grenade Beverage to pay Grumpy Cat royalties for the sale and exploitation of the approved Grumpy Cat beverages.
In its complaint, Grumpy Cat claimed that the mutual intent of the parties was to enable Grenade Beverages to produce and distribute a line of "Grumpy Cat" branded ice-coffee beverages called "Grumpy Cat Grumppuccino" only. Then, in late 2015, Grenade Beverage sought Grumpy Cat's approval to produce and distribute a line of roasted coffee ground products, pursuant to the license agreement. However, Grumpy Cat frowned at this idea and made it clear to Grenade Beverage through a series of emails in November 2015 that it did not approve the coffee ground products. The following are excerpts from those emails:
October 21, 2015: "Approval is still required. Hold off until you hear back from us."
November 2, 2015: "Per our conversation of today, our client does not approve this. Do not proceed."
November 24, 2015: "You are not authorized to proceed with the ground coffee product, and your posting of these products for sale will constitute a clear breach of the subject licensing agreement . . . . Do NOT proceed with the posting of the ground coffee products.
Despite Grumpy Cat's clear protest, Grenade Beverage nevertheless proceeded to sell the unauthorized roasted coffee ground product, branded as "Grumpy Cat Roasted Coffee." The branding included unauthorized uses of Grumpy Cat's trademark and copyright. To make matters worse, Grenade Beverage was also selling infringing "Grumppuccino" t-shirts and registered the domain name, www.grumpycat.com, all without Grumpy Cat's authorization and in breach of the licensing agreement between the parties. The following images of the offending coffee products are taken from the Instagram account @drinkgrumpycat.
Lessons From Grumpy Cat.
Although Grenade Beverage denied Grumpy Cat's allegations, the jury returned a verdict in favor of Grumpy Cat on January 22, 2018 for copyright infringement, trademark infringement, and breach of contract. Here are some steps you can take to ensure that your important business interests are protected just like Grumpy Cat's:
Protect your brand by applying for federal trademark protection;
Protect your creative works by applying for federal copyright protection;
Protect your inventions by applying for patent protection;
Execute well-written and comprehensive licensing agreements (and other contracts);
Keep a good written record of all negotiations with the other parties; and
Consult an experienced intellectual property attorney to advise you of your rights against infringers.
Res Nova Law is an intellectual property and business law firm based in beautiful Portland, Oregon, serving innovative companies and entrepreneurs across the Pacific Northwest. We're your go-to lawyers for startups and well-established businesses of all sizes and in every stage of business growth. Our legal services include business formation, contract drafting, intellectual property advising and litigation, business advising and litigation, and more. We also offer outside counsel plans for businesses with ongoing legal needs.
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