"Chubby Penguin" enters physical retail, sparking a lawsuit! The 70-year-old clothing brand files a furious "trademark infringement" lawsuit

Author: Fenrir, Crypto City

The trademark licensing company PEI Licensing, which owns the rights for American clothing brand Original Penguin, recently filed a lawsuit in the Southern District of Florida federal court, accusing the well-known NFT project Pudgy Penguins of trademark infringement. The company claims that Pudgy Penguins used multiple “Penguin” related words and images without authorization, allegedly violating fair competition and trademark protection laws.

According to court documents, the Original Penguin brand operated by PEI Licensing dates back to 1955. The brand has used a penguin logo on its apparel since 1956 and officially registered the “Penguin” word trademark in 1967. Over the years, the brand has established a certain reputation in the global fashion market.

Source: PEI Licensing | PEI Licensing believes Pudgy Penguins’ use of the brand name and penguin imagery may mislead consumers

The lawsuit states that Pudgy Penguins’ use of the brand name and penguin imagery could cause consumers to mistakenly believe there is a partnership or affiliation between the two. PEI Licensing argues that this could damage the reputation and commercial credibility of Original Penguin and potentially have long-term impacts on its existing trademarks.

NFT Brand Expands into Physical Goods, Triggering Trademark Disputes Pudgy Penguins initially launched an NFT collection on the Ethereum blockchain in 2021, quickly becoming one of the most recognizable native IPs in the crypto industry. As the NFT market cooled, the brand shifted focus toward physical products and licensing, aiming to expand new revenue streams.

Starting in 2023, Pudgy Penguins released plush toys and apparel, successfully entering major retail channels like Walmart and Target. According to company data, its physical toys sold over 1 million units in less than a year, generating more than $10 million in revenue.

However, PEI Licensing pointed out that the penguin images, slogans, and brand names used on Pudgy Penguins’ apparel and accessories are highly similar to those of Original Penguin. The lawsuit includes comparison images of products such as hats, hoodies, and other clothing items, claiming that the brand identifiers are likely to cause market confusion.

Source: PEI Licensing | PEI Licensing states that Pudgy Penguins’ use of penguin images, slogans, and brand names on apparel and accessories closely resembles Original Penguin’s existing trademarks

Trademark Applications and Warning Letters Spark Two-Year Dispute PEI Licensing states that it sent a cease and desist letter to Pudgy Penguins as early as October 20, 2023, demanding that the project stop using potentially confusing penguin trademarks on apparel and related products.

Despite this, the company notes that Pudgy Penguins continued to sell related products after receiving the notice and also applied for multiple trademarks with the United States Patent and Trademark Office (USPTO), including “Pengu Nation” and the slogan “I am my penguin and my penguin is me.”

In 2024, PEI also formally opposed at least two of these trademark applications with the USPTO. The lawsuit states that the goods covered by these applications are almost identical to those traditionally used by Original Penguin, suggesting a direct competitive relationship.

In legal filings, PEI accuses Pudgy Penguins of “deliberately exploiting existing brand reputation and goodwill,” and considers its ongoing use of related marks to be a calculated act.

Pudgy Penguins Denies Allegations, Claims Different Market Positioning Pudgy Penguins responded to the lawsuit by expressing surprise. Legal Director Jennifer McGlone said that the two sides had been negotiating privately and hoped to resolve the dispute through dialogue, so they were shocked by the sudden lawsuit.

The project argues that its brand design and trademarks differ visually from those of Original Penguin, and that their target audiences and market positioning are also different. The company states that the USPTO has approved multiple trademark applications related to Pudgy Penguins, indicating regulatory recognition that there is no clear confusion. Pudgy Penguins also posted a meme on X mocking the situation.

Source: X/@pudgypenguins | Pudgy Penguins posted a meme on X mocking the incident

Currently, PEI Licensing is requesting the court to order Pudgy Penguins to cease using the disputed trademarks, revoke its trademark applications, and recover all profits from related product sales. Additionally, the plaintiff seeks an order to destroy all products that could cause trademark confusion.

This case highlights the challenges traditional brands and intellectual property rights face as NFT projects expand into the physical retail market. As blockchain-native IPs enter broader consumer markets, trademark and copyright issues are likely to become key legal topics in the industry’s next phase of development.