US court raises a smile for Grumpy Cat’s owners

A coffee company that was ordered to pay the owners of celebrity feline Grumpy Cat $710,000 for IP infringement has failed to escape liability after a court denied its request for declaratory relief.

District Judge David Carter delivered the ruling at the US District Court for the Central District of California, Southern Division yesterday, May 31.

The owners of internet sensation Grumpy Cat, also operating under the business name Grumpy Cat, were awarded$710,000 in damages in January after a jury found that coffee company Grenade Beverage infringed Grumpy Cat’s copyright and trademarks.

Grumpy Cat, based in the US, is a celebrity feline who first gained attention in 2012 because of her unique Grouchy expression.

In 2015, the owners of the celebrity feline filed a lawsuit which accused the coffee business of “blatantly infringing” the company Grumpy Cat’s IP. The complaint also alleged breach of contract.

At the centre of the dispute were copyright illustrations and photographs of Grumpy Cat, as well as word and figurative trademarks of the same. According to the owners, Grenade violated the terms of a licensing agreement that the parties made in 2013.

The owners had originally granted Grenade limited rights to the brand for an iced-coffee called ‘Grumppuccino’. However, the coffee company then allegedly used pictures of the cat to sell other items, including roasted coffee and clothing, without authorisation.

Following the jury award in January, the parties agreed that the court should decide on the company Grumpy Cat’s remaining cybersquatting claims and Grenade’s counterclaims seeking declaratory relief for non-infringement.

Grenade owns the domain, which was registered by a third party before Grumpy Cat’s internet fame.

However, Carter said there was no evidence of bad faith on Grenade’s part. The domain was used as a business negotiation tactic with Grumpy Cat in a proposal to modify and expand the licence agreement, rather than being used to make profit.

Grenade argued that it should be granted relief for non-infringement of Grumpy Cat’s copyright and trademarks because the coffee company was an exclusive licensee so it could not be sued for infringement as it owned the IP via the licensing agreement.

In response, the company Grumpy Cat argued that the coffee business had used the IP on products which fell outside the scope of the licensing agreement and therefore Grenade had committed infringement.

The court confirmed that when a party breaches a contractual term limiting the scope of a licence, that party can be liable for infringement. Grenade “exceeded the scope of the exclusive licence” so it can be liable for copyright and trademark infringement, Carter said.

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