"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 apparel 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. Its apparel has featured penguin imagery since 1956, and in 1967, the “Penguin” word trademark was officially registered. The brand has established a certain level of recognition in the global fashion market over the years.

Image 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 such confusion 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 its NFT collectible series 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 points 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.

Image source: PEI Licensing | PEI Licensing states that Pudgy Penguins’ use of penguin imagery, 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 they stop using potentially confusing penguin trademarks on apparel and related products.

However, the company notes that after receiving the notice, Pudgy Penguins continued to sell related products and also applied for multiple trademarks with the United States Patent and Trademark Office (USPTO), including “Pengu Nation” and slogans like “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 these applications cover product categories nearly identical to those long used by Original Penguin for apparel and accessories, suggesting potential direct competition.

In legal filings, PEI accuses Pudgy Penguins of “deliberately exploiting existing brand reputation and goodwill,” and considers their ongoing use of related marks to be intentional misconduct.

Pudgy Penguins Denies Allegations, Cites Different Market Positioning Pudgy Penguins expressed surprise at the lawsuit. Legal director Jennifer McGlone stated that the company had been negotiating privately with the plaintiff, hoping to resolve the dispute through dialogue, and was shocked by the sudden filing of the lawsuit.

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

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

Currently, PEI Licensing is seeking a court order for Pudgy Penguins to cease using the disputed trademarks, revoke its trademark applications, and recover all profits from related sales. Additionally, the plaintiff requests the court to order the destruction of 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.