Grumpy Cat has a new reason to turn that frown upside-down. Though the cat is known for her sneer, she is (or rather, Grumpy Cat Limited and its/her owners are) sitting pretty on a recent jury award in California of over $700,000 for trademark and copyright infringement and breach of contract. (Grumpy Cat Ltd. v. Grenade Beverage LLC, Civ. No. 8:15-cv-02063 (C.D. Cal. Jan. 24, 2018) (jury verdict)).
We have written before about the growing popularity of animal influencers like Grumpy Cat. These furry friends—or foes, in the case of the frowning feline—can be highly lucrative not only for their owners, but also for companies looking to capitalize on their social media presence to gain exposure and endorsements.
So, it should come as no surprise that Grumpy Cat was approached by the defendants in this case, Nick and Paul Sandford of Grenade Beverages (later renamed Grumpy Beverages LLC), to be the (glaring) face of a new line of iced coffee drinks, called “Grumpuccinos.” The parties signed a trademark and copyright licensing agreement, but, as Grumpy Cat’s owners discovered, Grenade went outside the bounds of that agreement to market ground coffee products and apparel.
Grumpy Cat sued, quipping in its complaint that, “Defendants’ despicable misconduct here has actually given Grumpy Cat and her owners something to be grumpy about.” Grumpy Cat alleged that they were induced to license the valuable Grumpy Cat IP to the defendants, who not only went outside the bounds of the agreement to sell unauthorized Grumpy Cat merchandise, but also failed to account to them for the sale of the Grumpuccinos.
Grumpy Cat’s case was bolstered with email evidence that it had explicitly denied approval to extend the licensing agreement to additional products. The complaint pointed to evidence of social media advertising of the infringing products.
Grenade countersued, alleging that Grumpy Cat breached the agreement by failing to promote the Grumpuccinos on social media. The jury, however, was unconvinced, awarding $710,001 to Grumpy Cat and nothing to the counterclaimants.
One takeaway is that both licensors and licensees of intellectual property should take care not only when negotiating the agreement, but also after the agreement is signed, to consider exactly what uses and applications will be permissible. Failing to do so can prove to be quite costly.