If you have been on social media or anywhere on the internet in the past couple years, you might remember the internet sensation Grumpy Cat who has been raking in some serious cash for her owners and she recently reminded us the value in statutory damages for trademark and copyright infringement cases.
Grumpy Cat’s owners have created an entire company around her particularly grumpy face. She has her face on all sorts of household goods, and consumers love her.
In May of 2013, Grumpy Cat entered into a license agreement with a Los Angeles based company called Grenade Beverage, LLC (“Grenade”). Under the agreement, Grenade was allowed to use the cat’s name and image to sell the “Grumppuccino”. Two years later, Grenade decided to also sell Grumpy Cat Ground Coffee. The problem came because they didn’t ask permission and the cat did not approve.
Unfortunately for Grenade, they had already began to advertise and sell their new Grumpy Cat Ground Coffee. They heavily marketed the product all over social media outlets, such as Facebook, Instagram, and Twitter, and through their website, drinkgrumpycat.com.
As you might guess, even grumpier cat filed a lawsuit against Grenade for Copyright Infringement, Trademark Infringement, Trademark Dilution, Cybersquatting, Breach of Contract, and Accounting. The lawsuit basically said that Grenade had exceeded the scope of the license agreement by attempting to sell the new Grumpy Cat Ground Coffee. In the complaint, she alleges that Grenade also breached the agreement by failing to provide them with accounting statements, pay royalties for Grumppuccino sales, and they even claim that Grenade form a separate California limited liability company to sell Grumppuccino shirts.
The jury decided that Grenade breached the licensing agreement, but because Grumpy Cat could not show any lost profits, the jury only awarded them $1. However, the jury also made a very powerful statement by awarding statutory damages, which do not require proof of lost profits. The jury awarded Grumpy Cat $230,000 in statutory damages for Grenade’s willful copyright infringement and $480,000 in statutory damages for Grenade’s willful trademark infringement.
Grenade went through the trouble of setting up a website, creating and marketing a new product – all of which caused Grenade to breach its licensing agreementt. However, Grenade dropped the ball and then failed to consider the hefty statutory damages it may face, not for breaching the licensing agreement, but for infringing on Grumpy Cat’s trademark and copyright rights in the first place! Oops.