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'Grumpy Cat' owners sue for violation of coffee licensing deal

News and Notes Focused on the 3 Public Faces of IP Law

  • Brand Image Protection - Trademark Law
  • Visual Image Protection - Copyright Law
  • Personal Image Protection - Right of Publicity Law

The Image Protection Law blog has been created in order to share stories and information on the legal aspects of: 1) the marketplace reputation of a company or product captured in its trademark, 2) published or publicly-displayed artwork, photography, and any created visual design, and 3) use of a person's photograph or likeness for product promotion or other commercial purposes.

The "IP3" share at least one thing in common: Image is everything. In these posts let's look at what that means in the realm of intellectual property in the news, but let's also be prepared to explore if there's something more beyond "everything." Don't forget, the intellectual in "intellectual property" doesn't mean smart or brainy, although by nature true creators often are. The word is used to refer to any creation, i.e., a "product of the mind." While this blog will be regularly updated, you are encouraged to share your thoughts on these posts.

"She's not going to be passed around," said the federal judge before "Grumpy Cat" was brought into the California courtroom. She sat in a cat carrier as she awaited her owner's testimony in a licensing violation case. She is not expected to testify.

Grumpy Cat (real name Tardar Sauce), a calico with an underbite and a permanently aggrieved expression, is an internet sensation. So much so that her owner entered into a licensing agreement in 2013 with a beverage company called Grenade. They planned to market an iced coffee beverage called the "Grumpy Cat Grumppuccino." It was set up as a joint venture with Grenade owning 90 percent of the company and Grumpy Cat Limited owning the other 10.

The launch of Grumppuccino failed, but Grenade moved on to develop Grumpy Cat roasted coffee, which was not included in the licensing agreement. Grumpy Cat Limited sued Grenade, arguing that the license was clearly for a "single line" of products.

Moreover, Grumpy Cat Limited claims that Grenade never provided standard monthly accountings of the joint venture's success. It sued for a 2015 accounting, along with copyright and trademark infringement, trademark dilution, breach of contract and cybersquatting.

Grenade (which has reorganized as Grumpy Beverage) sees the situation in a completely different way and has filed a countersuit against Grumpy Cat Limited. It believed it was getting more than a mere licensing agreement when it entered into the joint venture in 2013.

Additionally, Grenade accuses Grumpy Cat Limited of tanking the Grumppuccino launch by refusing to post images of the Grumppuccino on Grumpy Cat properties and failing to provide meaningful support to the launch. It says that Grumpy Cat Limited claimed to have a large social media following that would buy Grumpy Cat products, but those buyers never materialized due to the company's failure to promote Grumppuccino.

In its countersuit, Grenade seeks $1 million in damages for breach of contract, breach of fiduciary duty, intentional misrepresentation, negligent misrepresentation and reverse name hijacking.

The cases will be decided by a jury. During jury selection, the judge asked potential jurors whether they followed Grumpy Cat on social media. Some were familiar with the offended-looking feline, but few followed her numerous social media accounts.

Among the issues the jury will have to decide are:

  • Whether the 2013 licensing agreement was limited to the Grumppuccino product
  • Whether Grenade exceeded the agreement by developing Grumpy Cat roasted coffee
  • Whether Grenade has since infringed upon Grumpy Cat Limited's copyrights and trademarks
  • Whether Grenade provided appropriate accountings for the joint venture
  • Whether Grumpy Cat Limited made any statements promising a specific amount in sales from Grumpy Cat fans
  • Whether Grumpy Cat Limited had a fiduciary responsibility toward its joint venture partner
  • Whether Grumpy Cat Limited failed to provide reasonable support for the Grumppuccino launch, including advertising on Grumpy Cat social media accounts
  • Whether Grenade has greater rights than those granted by a licensing agreement

As of this writing, the cases were still being presented, and the jury had not yet had its opportunity to deliberate.

It may be that the 2013 agreement poses so many issues because the parties never reached a true meeting of the minds. When the parties do not share a single vision of the purpose and obligations of a contract, that contract could be found unenforceable. This is more likely to be the case when one or both parties lacked legal counsel. In any case, these two parties seem to have very different views of what they had negotiated.

Meanwhile, Tardar Sauce was forced to remain in her carrier and continue to wait for her owner to testify. She seemed affronted.

UPDATE: The jury awarded $710,000 to Tardar Sauce's owners, Grumpy Cat Limited. 

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