Grumpy Cat, Ltd. vs. Grenade Beverage
For a curmudgeonly feline, Grumpy Cat is thriving financially. His most recent monetary success is a $710,000 award from a jury in U.S. District Court. The case was a copyright and trademark licensing dispute pitting the Plaintiff, Grumpy Cat Limited, against the Defendant, Grenade Beverage (and its owners).
Grumpy Cat is a well-known feline whose brand has been worth millions of dollars in sales of products relating to the cat. Much of this financial success has been achieved through licensing the Grumpy Cat brand. Grumpy Cat lends its name in return for a share of the profits in products bearing his name or likeness. Grenade Beverage is a business that sought to profit using the Grumpy Cat brand and entered into a licensing agreement with Grumpy Cat, Ltd.
Intellectual Property Licensing Dispute
Many copyright and trademark disputes arise when an individual or company takes a name, image, or other intellectual property that belongs to another and exploits it for gain or profit. This case is different because Grumpy Cat and Grenade entered into a licensing agreement that allowed the Defendants to create and distribute a line of iced-coffee beverages called “Grumpy Cat Grumppuccino.” The jury award stemmed almost entirely from the trademark and copyright infringement charges. However, the core issue was whether Grenade surpassed the scope of the licensing agreement, leading to infringement.
The agreement between the parties provided that the Grumpy Cat brand was licensed to Grenade for the sole purpose of producing and distributing the Grumppuccino iced-coffee line of beverages. The agreement also stated that any products outside of Grumppuccino would require an additional agreement between the parties.
Grenade Beverage Exceeds Scope of the License
Grenade proceeded to begin to create a line of roast ground coffee products using the Grumpy Cat moniker. Grenade’s action led to two-plus years of litigation ending with the $710,000 jury award. Presumably disadvantageous to Grenade was the fact that they already had a similar dispute with E & J Gallo Winery. Grumpy Cat’s complaint alleged that E & J Gallo obtained both judgment and a permanent injunction against Grenade.
The Grumpy Cat lawsuit was not spectacularly groundbreaking, outside of the public amusement at a “millionaire” cat winning a significant award. On its face the lawsuit seemed unnecessary. The Defendant had already lost a similar lawsuit. Grenade likely could have avoided this suit had they abided the Plaintiff’s repeated warnings not to exceed the licensing agreement.
Lessons in Crafting IP Licensing Agreements
The lawsuit does highlight important points about creating an intellectual property licensing contract. It also underlines the importance of researching potential partners who seek to license the product. In reaching its verdict, the jury decided that Grenade had exceeded the scope of the Grumppuccino agreement and thus had infringed Grumpy Cat’s copyrights and trademarks.
Without a specific written contract detailing the exact scope of the licensing agreement, a jury may have decided differently. When an attorney crafts such an agreement, precision and scope are of the utmost importance. A line of iced-coffee and a line of ground coffee are close in scope. They are almost certainly within the same class of products. A successful attorney will articulate within a written document the exact product that the client’s brand is being licensed for. A contract’s intent should be obvious to the reader and leave nothing to the imagination.
A lesson can also be learned through Grenade’s prior lawsuit with E & J Gallo Winery. Research and investigation of licensing partners is a worthwhile task to avoid partnering with litigious parties. Grumpy Cat, Ltd. stated that Grenade held itself out to be a “law-abiding” company, but it is unclear what research was done beforehand to confirm this. Grumpy Cat only learned of Grenade’s earlier litigation after its own litigation began with Grenade. Thorough research of Grenade’s business practices, including prior litigation, could have influenced Grumpy Cat to avoid the licensing agreement entirely.
Identifying and conveying the specific product a partner is using a license for and knowing the background of that partner can save a business, individual, or in this instance, a cat, a significant amount of money.