Grumpy Cat: the feline who grew a business empire with IP rights

By Anca Draganescu-Pinawin, IP Counsel, Novagraaf, Switzerland

There once was a cat with such a look of disgruntlement on her face that one day in September six years ago, her owner’s brother felt compelled to take a picture and post it on reddit for all to see. She looked so grumpy!

The cat very quickly became an Internet sensation. As P.G. Wodehouse would have put it, anyone could see that, if not actually disgruntled, she looked far from being gruntled. Many people made memes from the picture: they took it, added a funny caption, and posted it on the Internet for others to have a laugh and share before watching other cat videos, flicking through pictures of kittens, or otherwise carrying on with their lives. 

And so was born the most famous cat in the world: Grumpy Cat.

Now the grumpy cat’s owner, a waitress toiling away in a restaurant, and her business partner brother, could spot a good business opportunity, no matter how sour its expression, when it stared them in the face.

So they started a company called Grumpy Cat Limited and to protect the “Grumpy Cat” intellectual property (IP), hired IP counsel to file the appropriate copyright and trademark applications. They began selling all sorts of everyday objects bearing the image of the grumpy cat: pens, mugs, calendars, even the New York Times-bestselling Grumpy Guide to Life.

Grumpy Cat had her own YouTube channel, website and Instagram and Facebook accounts, and even featured in her own TV commercial for Honey Nut Cheerios®, and a McDonald’s commercial ! The cat became famous; her owner, rich, although no one could exactly pinpoint the size of her fortune (but many tried). Was it USD 1 million or 100 million? No one could say. Still, the cat’s grumpy expression persisted. 

But if simply putting the picture of a cat on everyday objects and selling them could make so much money, one thing was clear: that picture and trademarks had to be protected. With so much at stake, not just anybody should be able to use the grumpy cat’s image and marks: they would first have to ask for the owner’s permission. The cat owner’s company would establish how and where the picture and the marks could be used, and if those rules were broken, the user would end up in a lot of trouble.

You see, the cat owner had to make sure she was protecting her money-making cat with a veritable fortress of IP rights: copyright, trademarks and licensing agreements. While all these rights allowed licensees to enjoy and benefit from the Grumpy Cat business, they made quite certain that nobody could not ride on the cat’s coat tails and make it their own business without first seeking permission from the cat owner. To do otherwise might well cause them to be dragged like a mouse into court to explain their actions in front of the plaintiff (the cat owner), the judge and maybe even a jury. And if the jury came to the conclusion that the user had indeed tried to profit from the picture without first obtaining the required paw of approval, they might have to pay lots and lots of money to the grumpy cat.

This is in fact what befell the folks at Grenade Beverage LLC, which had made a contract with Grumpy Cat Limited to sell Grumpy Cat Grumppuccino iced coffees. A few years into their contract, the licensees decided to prowl beyond the terms of their licensing deal and started selling Grumpy Cat Roasted Coffee. Grumpy Cat Limited learned that the terms of the agreement had been breached, and took Grenade Beverage LLC to court for copyright infringement, trademark infringement, breach of contract and even cybersquatting! The jury found Grenade liable, and ordered Grenade Beverage LLC to pay Grumpy Cat Limited more than USD 700,000 in damages. That is around 175,000 Grumpy Cat Grumppuccinos!

While Grumpy Cat remained distinctly unamused, her owner was delighted that she had so thoroughly protected the IP rights associated with the image and her business, and rightfully so. These rights had allowed her to establish her business and the cat’s place in the market (how many other felines can claim to be an Internet sensation or the head of a business empire?). They also meant that the company was able to protect its brand and take legal action against any and all who might dare to ride on the grumpy cat’s fame.

The moral of the story? Any business that believes it has an idea worth bringing to market should protect the relevant IP rights as if it were already generating revenue. It doesn’t matter if the idea is as simple as putting a cat picture on a mug or a t-shirt and selling it. You never know if, or when, or how spectacularly your business will take off. Besides, if you’re confident enough in the value of your idea to put time and energy and capital into pitching it to investors and others, you should also think about what could happen to your business if the IP rights at its heart go unprotected.

Think about it: if your IP goes unprotected you could be left out in the proverbial rain while others are busy making money from your idea. And then you would really have a reason to be grumpy.