Case Note: Grumpy Cat Limited v. Grenade Beverage LLC.
Grumpy Cat was one of the most famous animal memes ever. We never had any doubts that the cat itself or the business associated to it will have IP consequences. An important ruling was published back in 2018 – finally, we had time to review it in English language. – A guest post by Ceren Morbel.
Grumpy cat is also known as Tardar Sauce became an internet viral in 2012 after her photograph was posted to the internet. Grumpy Cat Limited is the owner of the intellectual property rights of Grumpy Cat, including copyrights and trademarks. In May 2013, Grumpy Cat Ltd. entered into a license agreement with Grenade Beverage that granted certain limited rights to use for selling, advertising, distributing “Grumpy Cat Grumppuccino” which was an iced coffee beverage. According to Grumpy Cat Ltd., there was a “mutually understood intent” in the agreement which allows to Grenade produce and distribute Grumpy Cat Grumppuccino. Additionally, pursuant to section 4(a) of the agreement all uses of the “Grumpy Cat” licensed properties required Grumpy Cat Ltd.’s prior approval. In 2015, Grenade wanted to add an illustration of Grumpy Cat onto their roasted coffee ground products and they sought approval of Grumpy Cat Ltd. for these roasted coffee ground products. But Grumpy Cat Ltd. never provided approval and stated that Grenade is not authorized to proceed with the ground coffee product. Nevertheless, Grenade offered the roasted coffee ground product and also started to sell unauthorized Grumppuccino T-shirts.
Grenade also obtained ownership of the domain name www.grumpycat.com without the authorization of Grumpy Cat Ltd. Also under the License Agreement, Grenade had to provide detailed monthly accounting statements. But they did not fulfill the requirements of the agreement.
Then Grumpy Cat Ltd. sued Grenade for various reasons: breach of contract, cybersquatting, copyright infringement, trademark infringement, and trademark dilution in the federal court in Orange County, California.
The main discussion was whether the roasted ground coffee product needs the approval of Grumpy Cat Ltd. or it could be interpreted in “Product Category” which was described in the License Agreement. The related term in the license agreement was “additional products within the Product Category that may, upon the Parties’ mutual approval, be marketed hereunder”. The court interpreted this “in” word in the License clause to mean that the granted rights were only for iced coffee beverages, and other additional products rather than iced coffee need the approval of Grumpy Cat Ltd.
The jury awarded Grumpy Cat Ltd. totaling $710.001, $230.000 for copyright infringement, $480.000 for trademark infringement and $1 for breach of contract. The jury gave the verdict without Grumpy Cat Limited proving damages for lost profits.
The case showed us how important drafting a license agreement clearly and avoiding ambiguities are for both parties. When there is a vagueness on authorization, uncertainty must be eliminated and the party should not proceed without approval.
Unfortunately, the most famous cat of the internet Grumpy Cat has died at the age of 7 this May.
Ceren Morbel is a fourth-year law student at Istanbul University in Turkey. She completes her summer internship at the University of Szeged, Faculty of Law, Institute of Comparative Law and Legal Theory, under the supervision of Associate Professor Péter Mezei.