Internet users are constantly creating new content. Sometimes, new content finds wide distribution on social media platforms—commonly known as “going viral”—and therefore gains commercial value for the creators. Trademark law can protect content creators’ exclusive rights to names, logos, and designs, and it allows them to license the use of the same to others. A jury in a California federal court recently found in favor of the owners of a trademark involving a cat, who has gained worldwide fame for her unique look. The trademark covers the cat’s likeness and her internet nickname, “Grumpy Cat.” The case involved a licensee who, according to the trademark owner, infringed the trademark by using the cat’s nickname and likeness in more ways than were allowed by the terms of the license. Grumpy Cat Limited v. Grenade Beverage LLC, No. 8:15-cv-02063, complaint (C.D. Cal., Dec. 11, 2015). After a five-day trial in January 2018, the jury awarded the trademark owner $710,001 in damages.
The federal Lanham Act defines a “trademark” as “any word, name, symbol, or device, or any combination thereof,” which a person is using or “has a bona fide intention to use” for business or commercial purposes. 15 U.S.C. § 1127. It prohibits the unauthorized use of a trademark in connection with the marketing, advertising, or sale of goods or services if it “is likely to cause confusion, or to cause mistake, or to deceive.” Id. at § 1114(1). It also prohibits unauthorized uses of a trademark that falsely designate the origin of goods or services, or that dilute the “distinctiveness” of a famous trademark. Id. at §§ 1125(a), (c).
License agreements allow individuals or businesses to use someone else’s trademark for commercial purposes, usually in exchange for a license fee or other compensation. Businesses may choose to do this in order to capitalize on a trademark’s popularity or goodwill. Trademark owners are responsible for monitoring not only compliance with the license agreement but also the quality of the goods and services that bear the trademark. Failing to do so is known as “naked licensing,” and it can result in the loss of trademark protection. Barcamerica Intern. v. Tyfield Importers, Inc., 289 F.3d 589, 596 (9th Cir. 2002).
The plaintiff in the Grumpy Cat case is a limited partnership created to manage the trademark for “Grumpy Cat,” a cat from Arizona who has gained substantial internet fame. She has appeared in commercials and books, and on the packaging for various products. She was even the subject of a movie in 2014. As of early May 2018, she has over 2.5 million followers on Instagram and 1.5 million followers on Twitter.
The plaintiff entered into a license agreement with the defendant in 2013 to use the cat’s likeness on a coffee beverage known as “Grumpuccino.” According to the complaint, the plaintiff learned in late 2015 that the defendant planned “to create and exploit a line of ‘Grumpy Cat’ branded roasted coffee ground products,” unrelated to Grumpuccino. Grumpy Cat, complaint at 7. The plaintiff declined to approve this use of the trademark, but the defendant proceeded to launch the new product. The lawsuit followed. A jury found that the defendants infringed the trademark and awarded damages to the plaintiff.
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More Blog Posts:
Cereal Maker Cannot Trademark the Color Yellow, According to Trademark Appeals Board, Pleasanton Business & Commercial Law Blog, September 19, 2017
Trademark Disparagement Clause Violates Free Speech Rights, According to U.S. Supreme Court, Pleasanton Business & Commercial Law Blog, July 12, 2017
Federal Circuit Rules on What Constitutes Use of a Trademark in Commerce, Pleasanton Business & Commercial Law Blog, February 15, 2017