Grumpy Cat is Smiling – IP Lessons for Small Businesses

Grumpy Cat, whose real name is “Tardar Sauce,” won a verdict for $710,001 this week.

It all began with this opening line of the complaint, a legal document filed to initiate a lawsuit, filed in the United States District Court for the Central District of California: “Ironically, while the world-famous feline Grumpy Cat and her valuable brand are most often invoked in a tongue-and-cheek fashion, Defendants’ despicable misconduct here has actually given Grumpy Cat and her owners something to be grumpy about.”

This case was not as publicized as the memes for which Grumpy Cat / Tardar Sauce is famous, but it provides many good lessons for small business in trademark and copyright law.  There was a lot emotion evident in the filings, and each side had a number of complaints, but I’ll try to summarize it in a nutshell.

Grumpy Cat’s owners have legal trademark and copyright protection for Grumpy Cat’s image.  Grumpy cat licensed its  image for Grenade Beverage to use in promoting a new product called GRUMPPUCCINO™.  Grumpy Cat claimed the use went beyond what was agreed upon and sues.  Grenade Beverages lobbed a round back, claiming bad faith (among other claims) by Grumpy Cat.  Grenade sought millions in damages.

Grenade Beverage is owned by a father and son team.  Their Counterclaim contains the following paragraph that clearly displays the raw emotions:

“13. The animal known as “Tardar Sauce” is a feline that achieved popularity as an Internet meme. The animal was born with a deformity that causes her to have a perpetually grumpy expression – hence the moniker – together with disproportionately short front legs that in turn cause an unsteady gait and the often awkward positions seen in the Internet memes. The owners of the feline have a limited amount of time to exploit the animal because, on information and belief, the deformity is likely to result in a shortened lifespan. As a result, the owners used the cat to generate revenue by making guest appearances on shows and licensing the use of images of the cat for various merchandising products.”

The lessons I read are as follows:

  1. Don’t overplay your hand with toxic and unnecessary sarcasm.  Making light of a cat’s shortened life-span probably is not good form in a legal pleading.  We at Lincoln Law PLLC are not uptight in our everyday practice, but pleadings and in-court appearances require the utmost professionalism.
  2. Make sure your contracts are crystal clear and always have an attorney review them.  This is a service we offer and will even review single contracts without requiring long-term engagements or retainers.
  3. What is a copyright vs. a trademark?
    1. A copyright is generally going to protect artistic works (art, words, music).  Trademarks will identify a brand.
    2. GRUMPPUCHINO has the potential to be a trademark – this was a main issue in the case.  It is just a word so there is no copyright at issue.
    3. The artwork can be copyrighted but can also receive trademark protection if it designates a brand.
    4. Below I use examples from the case to illustrate the difference.
The original Grumpy Cat Meme. This is protected under Copyright Law. You can’t reproduce it without permission or exception (i.e. Fair Use). You also can’t alter it to “get around” the copyright, except in some limited circumstances.
In this excerpt of the pleading you see the “image mark” (a form of trademark) developed by Grumpy Cat. It represents the Grumpy Cat brand.
This shows the evolution of copyrighted artwork and development of a trademark. The first and last are also trademarks. All are copyrighted, but from what I can tell since the middle one was never used to represent the brand it is not a trademark.
The image at issue. Do the Grenade owners have the right to use this image?

 

To sum up the allegations –

Grumpy Cat allegations against Grenade Beverage:

1. COPYRIGHT INFRINGEMENT
2. TRADEMARK INFRINGEMENT
3. TRADEMARK INFRINGEMENT – FALSE DESIGNATION OF
ORIGIN
4. TRADEMARK DILUTION
5. CYBERSQUATTING
6. BREACH OF CONTRACT

Grenade Beverage allegations against Grumpy Cat:

  1. Declaratory Judgment Of Trademark Ownership (the name “GRUMPPUCCINO”)
  2. Declaratory Judgment Of Copyright Ownership (the artwork shown in the image above)
  3. Declaratory Judgment Of Domain Name Ownership
  4. Declaratory Judgment Of Trademark Non-Infringement
  5. Declaratory Judgment Of Copyright Non-Infringement
  6. Reverse Domain Name Hijacking
  7. Intentional Misrepresentation
  8. Negligent Misrepresentation
  9. Breach Of Fiduciary Duty
  10. Breach Of Contract
  11. Breach Of The Covenant Of Good Faith And Fair Dealing
  12. Intentional Interference With Contractual Relations
  13. Intentional Interference With Prospective Economic Advantage

The cybersquatting claims are interesting and not as well known as other subsets of intellectual property law.  Cybersquatting can give rise to a civil cause of action (i.e. it is not illegal in that one could go to jail, but could result in money damages or an injunction).  The Anticybersquatting Consumer Protection Act (ACPA), 15 U.S.C. § 1125(d) is the law and it requires that one register a domain name that is strikingly similar to a mark/trademark and intend in bad faith to profit off the other entity’s trademark.  This law is controversial and what is being done in good/bad faith is not always easy to prove.   Reverse Domain Name Hijacking is a defensive-turned-offensive claim made by the alleged squatter.  The idea is that they are legitimately using the domain and the other party is bullying them into giving up their domain.  This is beyond the scope of this article, but something to keep in mind.

One final comment is on fair use (17 U.S.C. §107).  If you are wondering how I am adding copyrighted material into this article, look no further.  In its simpliest form, fair use allows for criticism, comment, news reporting, teaching , scholarship, or research.  Here I am commenting upon the copyright.  Parodies are a quintessential example, although not without contest at time.

As you can see, there is a lot more to intellectual property law than patenting your product or registering a trademark.  These are complicated waters for a small business to navigate, but Lincoln Law PLLC has the experience to help your company without breaking the bank.

 

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