In late January 2018, a court in Santa Ana, California awarded Grumpy Cat Limited $710,001 in damages over a breach of a licensing agreement entered into in 2013 which included granting limited rights to use Grumpy Cat’s trade marks and image for advertising, distribution and sale of a line of iced-coffee products the “Grumpy Cat Grumppuccino”.
Ohio entity Grumpy Cat Limited, run by Tabatha Bundesen, is the lawful and exclusive owner of the copyright and trade marks in the Grumpy Cat brand, depicting a scowling cat made famous online.
Ever since her first appearance in 2012, Tardar Sauce (Grumpy Cat’s real name), has brought Tabatha positive publicity and significant returns on investments through the sale of merchandise like shirts, mugs and phone cases, alongside numerous appearances on TV shows, front-page magazines like Wall Street Journal and the sale of 3 “co-authored” books, which were listed on the New York Times best-sellers list. This brought the brand significant consumer recognition and monetary value.
The licensing agreement under dispute was struck between Grumpy Cat and Grenade Beverage LLC on 31 May 2013, under which Grumpy Cat agreed to grant Grenade Beverage limited rights to use Grumpy Cat’s trade marks and image for the “Grumpy Cat Grumppuccino”.
Grumpy Cat alleged that Grenade Beverage repeatedly abused and infringed the rights granted, by creating and exploiting Grumpy Cat branded products and also by failing to account for the sale proceeds from the Grumppuccino drinks.
Grenade Beverage was also previously sued for trade mark infringement by E&J Gallo Winery for unauthorised use and exploitation of E&J Gallo winery’s intellectual property. This assisted Grumpy Cat’s claim for copyright and trade mark infringement, as it lawfully impugned the defendant’s characters and demonstrated a behavioural pattern in the defendant’s past dealings.
Grenade Beverage, agreed under the licence, to pay Grumpy Cat royalties from the sale and exploitation of Grumpy Cat’s name and image for its Grumppuccino drinks and also present a monetary advance against those royalties. Any additional products were subject to further negotiations and approvals from Grumpy Cat.
The breach of contract occurred once Grenade Beverage intended to create and exploit a line of ‘Grumpy Cat’ branded roasted coffee ground products. It sought approval from Grumpy Cat, pursuant to the agreement, but the company never granted it.
Despite the lack of approval, Grenade Beverage posted this product on Facebook, Instagram and Twitter, while also starting to sell Grumpy Cat branded T-Shirts, which was a clear violation of the initial licensing agreement.
Grenade Beverage also created and owned the domain for www.grumpycat.com, which was obtained in order to further Grenade’s use and exploitation of Grumpy Cat’s copyright and trade mark. In addition to this, Grenade never accounted for any sale of the Grumppuccino product initially agreed upon.
Grenade Beverage counterclaimed, alleging first that Grumpy Cat received upfront royalties and secondly, having receiving those royalties, Grumpy Cat “failed to participate and to involve itself in the operation of the business or to offer any meaningful support whatsoever.”
Grenad Beverage’s lawyer also claimed Grumpy Cat’s product manager misrepresented the fact that the cat would “co-star” in movies with comedians Will Ferrell and Jack Black, which could have potentially reached a greater audience.
Grenade Beverage also claimed that, despite the joint venture agreed upon by the parties, Grumpy Cat did not promote the iced coffee enough on social media, adding that it also failed to promote the product on a Fox News show, by the fact that Grumpy Cat representatives failed to say “Watch out Starbucks. The cat’s coming for it” as they initially agreed to do.
The jury favoured Grumpy Cat, awarding it $710,000 for copyright and trade mark infringement and $1 in damages for breach of contract.