Internet’s Grumpy Cat Awarded $710,001 in Licensing Spat

Grumpy Cat via Instagram

SANTA ANA, Calif. (CN) – While coffee often makes people less grumpy, that wasn’t the case in a contract dispute between a beverage company and the owners of feline internet sensation Grumpy Cat, who prevailed late Monday and were awarded $710,001 in damages.

The 8-member jury heard of the rocky relationship between the creators of an iced coffee brand, who hoped the likeness of Grumpy Cat would allow them to rival Starbucks for retail space, and Grumpy Cat’s owners during the week-long trial.

Nick and Paul Sandford, son and father, approached Grumpy Cat Limited to market a line of beverages with the scowling cat’s face on the packaging. Grumpy Cat Limited, the cat’s owner, agreed to license for a line of iced coffee, the “Grumpy Cat Grumppuccino.”

“Nick Sandford knows social media well,” said Brian Kinder of the Kinder Law Group, the Sandfords’ attorney, during closing arguments Monday. “He thought he could take this trend of a photograph of a cat and turn it into a brand.”

Kinder held up a bottle of “Grumpy Cat Grumppuccino” in court for the jury to see.

But the Sandfords say they entered into a partnership agreement with Grumpy Cat Limited when they formed a Texas limited liability company and paid $150,000 in upfront royalties in 2013.

“Paul Sandford named the entity as Grumpy Beverage, because they wanted to include multiple beverages,” said Kinder.

Grumpy Cat Limited sued Grenade Beverage for breach of contract when the beverage company began to market a brand of coffee grounds with the cat’s likeness without permission. Grenade Beverage countersued as Grumpy Beverage sought $12 million in damages based on potential lost revenue.

Grumpy Beverage owned 90 percent of the company in its agreement with Grumpy Cat Limited. But after Grumpy Cat Limited received upfront royalties the “company failed to participate failed to involve itself in the operation of the business or to offer any meaningful support whatsoever,” according to the Sandfords’ countersuit.

But David Jonelis, attorney for Grumpy Cat Limited, told jurors the Sandfords were denied permission to produce a brand of Grumpy Cat ground coffee.

There was also the matter of a Grumpy Cat movie supposedly in the works while the Sandfords and Grumpy Cat Limited were in talks. The Sandfords claimed Grumpy Cat Limited’s product manager misrepresented the movie would star comedians Will Ferrell and Jack Black in order to hook them into the Grumpy Cat deal.

Jonelis said the movie was attached to a producer who was involved in another movie with the two comedians. He read a text message Nick Sanford sent to a relative linking to an article that did not say the comedians would be in the movie.

“He lied,” Jonelis said of Nick Sandford. “He cannot claim to be ignorant of the truth.”

Jonelis asked jurors if Jack Black and Will Ferrell were so vital, why were they not mentioned in a marketing plan prepared by Paul Sandford?

“They never relied on this information until after the fact,” he said of the Sandfords.

During the trial the jury was shown a number of social media posts, including one that Kinder said torpedoed the launch of “Grumpy Cat Grumppuccino.”

Bryan Bundensen, brother of Grumpy Cat’s owner Tabatha Bundensen, had posted an image of the iced coffee before it was ready to go to market. Kinder said this deflated any chance of a true product launch because people went online but discovered the product wasn’t available.

But Jonelis said the social media post generated hype and was even referenced by the Sandfords in marketing material.

Besides not doing enough on social media to promote the iced coffee – only 17 posts – the Sandfords’ attorney noted an appearance on a Fox News show to promote the product was a “disaster” because Grumpy Cat’s people did not refer to the talking points they’d been given.

Grumpy Cat’s iced coffee would be bottled and sold in retail spaces and her familiar face would rival Starbucks and its familiar mermaid logo, Kinder said, had Grumpy Cat’s people not gone off script during their appearance on “Fox and Friends” and downplayed their role in the iced coffee business.

They were supposed to say “Watch out Starbucks. The cat’s coming for it.” That’s when the Sandfords knew they were not partners with Grumpy Cat Limited, Kinder said.

But Jonelis said his clients were assured that the Sandfords would be able to handle the marketing and production of the iced coffee, and he noted the Sandfords didn’t appear on the “Fox and Friends” segment at all.

“They were the beverage people. My client was just the cat people,” said Jonelis of the Sandfords.

In the end, the jury sided with Grumpy Cat and awarded her owners $710,000 for copyright and trademark infringement and $1 in nominal damages on the breach of contract claim. Jonelis called the verdict “a complete victory,” adding: “Grumpy Cat feels vindicated and feels the jury reached a just verdict.”

Grumpy Cat, real name Tardar Sauce, wears a permanent scowl and was not present during closing arguments on Monday, but did make a brief appearance earlier in the trial.

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