Celebrity kitty Tardar Sauce aka “Grumpy Cat” (or, rather, the entity that owns rights to the GRUMPY CAT brand) has prevailed on its claims of breach of contract and trademark and copyright infringement against a beverage company for exceeding the scope of its license to use the brand to produce and market coffee products.

In 2013, Grumpy Cat Limited (“GCL”), the company that owns rights in the GRUMPY CAT brand, entered into a joint venture, granting Grenade Beverages LLC a license to use Grumpy Cat’s name and likeness, including the right to sell GRUMPY CAT-branded coffee products. The license required prior approval by GCL for all product and packaging before going to market. GCL gave approval for an iced coffee line called GRUMPPUCCINO, which Grenade then brought to market.

But when the cat’s away, the mice will play

Soon after bringing GRUMPPUCCINO to market, Grenade—enamored with the idea of a new line of roasted, ground-coffee products it thought was the cat’s pajamas—pounced on production and marketing of the line without first obtaining the required approval from GCL. Grumpy Cat was not amused.

Once the cat was out of the bag, GCL filed a lawsuit against Grenade in California, alleging breach of contract, copyright and trademark infringement, among other claims. After trial, the jury found Grenade had exceeded the scope of the license agreement, breaching the contract and infringing GCL’s copyrights and trademark rights. Notably, the jury awarded GCL $1.00 in damages for breach of contract, indicating the jury found GCL did not prove any actual losses from the breach. However, the jury awarded GCL damages of $710,000 on the infringement claims—a major coup for the famed feline sourpuss.

Policing intellectual property can be a real game of cat-and-mouse

Two lessons are learned from this surly experience. First, licensors should be sure their license agreements are clear. Grenade’s defense was that the parties had formed a new company together called Grumpy Beverage, LLC and that references to the the “Company” in the license agreement were references to that company. The second lesson is the importance for brand licensees to be aware of and to ensure their use of the licensed intellectual property is within the scope of the license. If not, they could be hit with a sizeable judgment, regardless of any definitive damage to the brand’s owner.

The good news for brand owners is that the case exemplifies that policing a brand, even among licensees, need not always constitute a pure expense with no upside. Additional issues remain undecided in the case, so it is yet unclear whether GCL will recover its attorney fees in the matter.