Grumpy Cat, the permanently disgruntled-looking feline that gained Internet fame three years ago, is sharpening its claws in court. On December 11th, Grumpy Cat Limited, the company that owns the intellectual property rights to the cat’s likeness and name, filed a lawsuit in U.S. District Court for the Central District of California against Grenade Beverage for copyright and trademark infringement, cybersquatting, and breach of contract.
Unlike a lot of the complaints we see, these two companies are not strangers to each other. In fact, they actually had an agreement that granted Grenade Beverage a license for some uses of Grumpy Cat’s name and image. Even though Grump Cat Limited grants many licenses, the company is incredibly purrtective protective of its image. The agreement between the two parties allowed Grenade Beverage to use both Grumpy Cat’s name and likeness on “Grumpy Cat Grumppuccino” iced coffee, and Grumpy Cat Limited would get an advance and royalties from sales. Grenade Beverage developed three flavors of the Grumppuccino, and based on the reaction of people on its social media websites, there was a lot of excitement.
According to the suit, the agreement was quite clear that Grenade Beverage would need prior approval before using Grumpy Cat’s intellectual property on any additional products. Grenade Beverage sought permission a few months ago when it wanted to move forward with roasted coffee grounds, but Grumpy Cat Limited said no repeatedly. It’s unclear why authorization was not granted. Grenade Beverage created four flavors, anyway, which it debuted on its social media pages in late November. The roasted coffee grounds were even advertised in association with the approved iced coffee beverages. Grenade Beverage made the coffee beans available for sale at grumpycat.com, where it was selling unauthorized t-shirts, too. Grumpy Cats Limited owns grumpycats.com.
The copyright and trademark infringement claims are pretty straightforward and we’ve talk about those a lot, but haven’t really discussed cybersquatting and how it fits into intellectual property. In the mid-to-late 90s, companies didn’t know much about the Internet or realize its importance to their businesses; many of them didn’t register their trademarks as domain names right away. Other unaffiliated people did, however, and would register these trademarked names as domains, and use them to bash the company or pretend they were associated with it, and then eventually attempt to sell the domain to the company for a lot of money. The similarities to trademark dilution should be apparent. By using a domain name of a trademarked company the cybersquatter is weakening the distinctiveness of the trademark. Consumers will assume association between the two (dilution by blurring) or the company and brand will be seen in a bad light (dilution by tarnishment). In 1999, Congress passed the Anti-cybersquatting Consumer Protection Act (ACPA). Under the ACPA, a trademark owner can pursue a cause of action if the domain registrant:
- Has a bad faith intent to profit from that mark, including a personal name which is protected as a mark under this section; and
- Registers, traffics in, or uses a domain name that:
- in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark;
- in the case of a famous mark that is famous at the time of registration of the domain name, is identical or confusingly similar to or dilutive of that mark; or
- is a trademark, word, or name protected by reason of section 706 of title 18 or section 220506 of title 36.
If Grenade Beverage was aware that it didn’t have approval to sell the coffee beans and the t-shirts, and that it would profit from the public assuming an association, Grumpy Cat Limited probably has a strong case for cybersquatting. The domain names are confusingly similar. Grenade Beverage is still promoting both the Grumpy Cat iced coffee and the coffee beans on its social media pages but has ceased all sales for now. Eater reports that Paul Sandford, a partner in Grenade Beverage, has denied any wrongdoing.
To find out more about cybersquatting or if you believe someone is cybersquatting on your trademark, contact us.