Social Media and Copyright Infringement Case Law: Grumpy Cat Ltd. v. Grenade Beverage, LLC. Case No. SA CV 15-2063-DOC.

Grumpy Cat Ltd. Complaint

Plaintiff Grumpy Cat Ltd. filed a complaint against Grenade Beverage LLC for copyright infringement, trademark infringement, false designation of origin, trademark dilution, cybersquatting, breach of contract, and accounting.  This case comes from the Central District of California.

Facts

Grumpy Cat (aka Tardar Sauce) swept the meme community in 2012 as the face of sourpusses everywhere. The cat's popularity allowed his owner, Tabatha Bundesen, to quit her job and form Grumpy Cat Limited to monetize the cat's image. The company sells pillows, mugs, pens, bags, and books “written” by the cat. Tarder Sauce has appeared on “Today,” “Good Morning America,” and “American Idol.”

She has been in a commercial for Honey Nut Cheerios and is the official “spokescat” for Nestle's Friskies cat food. She is the star of a Lifetime Television Christmas movie, and has three books on the New York Times bestsellers list. Plaintiff owns several copyrights revolving around the Grumpy Cat persona.

Defendant Grenade was owned and operated by Defendants Nick and Paul Sandford. Defendant sold and manufactured beverages. On or around May 31, 2013, Plaintiff entered into a license agreement which granted Grenade limited rights to use Grumpy Cat's copyrighted and trademarked image in connection with advertisement, distribution, offering for sale, and sale of “a line of Grumpy Cat-branded coffee products.”

In exchange, Defendant agreed to pay Plaintiff royalties from Grenade's sale and exploitation of the Plaintiff's intellectual property. Plaintiff understood the intent of the license to be to create a line of “Grumpy Cat” branded iced-coffee beverages called “Grumpy Cat Grumppuccino.” Any additional product offerings should have been negotiated separately.

Allegations

Plaintiff alleged that upon receiving limited rights to the “Grumpy Cat” brand, Defendants “repeatedly abuse[d] and infringe[d] those rights by creating and exploiting unauthorized ‘Grumpy Cat' branded products and further failing to account to Plaintiff for the sale of the only product that was actually authorized to be sold by Defendants.”

One of the alleged abuses involved the Defendant's effort to create a “Grumpy Cat” branded roasted coffee. While Defendant notified Plaintiff of its intent to create such a line, they did not obtain approval or negotiate terms before moving forward. In fact, Plaintiff repeatedly informed Defendant that they would not approve such a line. Defendant ignored the Plaintiff's will. The “Grumpy Cat” branded coffee was widely distributed and promoted. Defendant also created an unauthorized website promoting the ground coffee that it refused to relinquish.

Plaintiff's listed additional complaints, including:

(1) Defendant's failure to provide the Plaintiff with detailed monthly accountings,

(2) failing to make royalty payments,

(3) exceeding the limited scope of the “Grumppuccino” license,

(4) failing to form a California limited liability company pursuant to the license agreement,

and

(5) failing to negotiate in good faith.

Countersuit

Grenade counterclaimed, alleging that it was the proper owner of the GRUMPPUCCINO™ trademark and requesting that the Trademark Trial and Appeal Board dismiss the Opposition Proceeding. Grenade also contested the ownership of the copyrights at issue and the domain names. Grenade contested the trademark infringement claims by alleging that there was no likelihood of confusion between Grumpy Cat's trademarks and the trademarks Grenade employed to promote products.

All in all, defendant sought to dispute each claim, but was unable to dispute any successfully.

NOTE:  I saw there was a trademark opposition proceeding pending.  Not sure how that turned out.  But the mark appears to be LIVE and valid.

Jury Verdict

The jury found in favor of Plaintiff Grumpy Cat Limited on its causes of action for breach of contract, copyright infringement against Paul Sanford and Grumpy Beverage, LLC, trademark infringement against Paul Sandford and Grumpy Beverage, LLC, breach of covenant of good faith and fair dealing, breach of fiduciary duty, negligent misrepresentation, and intentional misrepresentation. Grumpy Cat Limited was awarded $700,001 in damages.

This blog was written by Ms. Claudia Lin, U.S.C. law student

Major Takeaways – how to monetize your pet!!!

1. You can monetize your cute pets (dogs, cats, roosters, cows, parrots, bird, anything)
2. If your dog or cat (or other animal) has a unique name, get it trademarked
3. Copyright protects pictures of your pet
4. Setup a merchandising and licensing website featuring your pet
5. Enter into specific and well negotiated licensing agreements (we can help)
6. Enforce your IP rights by going after unauthorized uses

Contact a Pet Infringement Copyright Lawyer

We can help you protect your pet with copyright and trademark protection.  We can then help enforce your rights in copyright infringement and trademark arbitration, mediation, and litigation.  Call us at (877) 276-5084.