$710,000 Jury Award Gives Grumpy Cat a Reason to Smile

In Grumpy Cat Limited v. Grenade Beverage, LLC, et al., a California jury verdict gave Grumpy Cat Limited (“Grumpy Cat”) $710,000 in damages earlier this week.  The jury awarded $480,000 for Grumpy Cat’s trademark infringement claim, $230,000 for its copyright infringement claim, and $1 for its breach of contract claim.

Along with several copyrights in photographs and images of the crotchety feline, Grumpy Cat owns common law and trademark rights to the GRUMPY CAT word mark (Reg. No. 4,527, 097) and the design mark (Reg. No. 4,820,434) for a variety of goods and services, such as coffee and tea, mugs, clothing, and website services.  Grumpy Cat sued Grenade Beverage, LLC, and its co-founders for its unauthorized use of Grumpy Cat on products other than iced coffee beverages.  In 2013, the parties entered into a license agreement that granted limited rights to use Grumpy Cat’s image and name in connection with the advertisement, distribution, and sale of “a line of Grumpy Cat-branded coffee products.”  Grumpy Cat asserted that the intent of the license agreement was to permit Grenade Beverage to produce and distribute a line of “Grumpy Cat” branded iced-coffee beverages called “Grumpy Cat Grumppuccino.”  Grumpy Cat also argued that any additional product offerings required further negotiations and approval by Grumpy Cat under the terms of the license agreement.

At the end of 2015, Grenade Beverage sought permission to produce and distribute a “Grumpy Cat Roasted Coffee” product:

Grumpy Cat did not approve this proposed use but defendants proceeded anyway, selling the roasted coffee products and t-shirts without Grumpy Cat’s permission.

The jury agreed with Grumpy Cat.  The court instructed the jury that it could award damages of up to $2 million for trademark infringement and $600,000 for copyright infringement (a total exposure of $2,600,000), and the jury ultimately awarded Grumpy Cat a “modest” $710,000.  Meowch!

The jury also disregarded Grenade Beverage’s counterclaims that Grumpy Cat made false representations about the famous feline’s future publicity plans and the company’s efforts to promote the coffee brand.  It found in favor of Grumpy Cat and against Grenade Beverage’s counterclaims for breach of covenant of good faith and fair dealing, breach of fiduciary duty, intentional misrepresentation, and negligent misrepresentation.

This case provides a furry reminder of the importance to adhering to the terms of a license agreement, especially one that requires further negotiations and authorized consent for future use of the intellectual property assets.  Where there is lack of clarity on whether permission was granted, or the scope of permitted use, ask for clarity.  And when permission is not given, don’t proceed.  The alternative may be too costly.

Interested in learning how to effectively negotiate your license agreements regarding your valuable intellectual property assets or the use of such assets?  Please contact Danielle DeFilippis at dmdefilippis@norris-law.com or Jeanne Hamburg at jhamburg@norris-law.com.