PEI Licensing, the company behind the clothing brand Original Penguin, has sued Pudgy Penguins, alleging that the NFT project’s apparel line infringes its penguin trademarks — and it is asking a Florida federal court to destroy the products and hand over all profits from them.
By Imani Davis | October 3, 2026
The lawsuit, filed Wednesday in a Florida federal court, accuses the non-fungible token project of trademark infringement, dilution and unfair competition over its clothing merchandise. For a brand that has pushed hard from digital collectibles into toys and retail, the case is a direct hit at its real-world business — the part that turns NFT characters into a consumer brand.
The Hook: Two Penguins, One Courtroom
At the center of the dispute is a bird. PEI Licensing owns the trademarks behind Original Penguin, a mid-century American clothing brand famous for its penguin logo. In its complaint, PEI argues that Pudgy Penguins uses a “family of penguin trademarks that are confusingly similar” to its own marks on apparel and related goods.
“This action results from Defendant’s unauthorized use and attempted registration of various PENGUIN word and design trademarks in connection with apparel and related goods and services that are confusingly similar to PEI’s federally registered and famous PENGUIN and penguin design trademarks,” the company said in its complaint.
The Core Conflict: Decades of History vs. a Crypto-Native Brand
PEI’s legal footing rests on history. The company claimed it has used the PENGUIN word mark since at least 1967 and first used a penguin design on apparel as early as 1956. In the world of trademark law, long use of a famous mark is a powerful card — it supports claims that newer, similar marks dilute the brand’s distinctiveness and confuse shoppers.
This is not the first shot either. PEI says it sent Pudgy Penguins a cease-and-desist letter in October 2023, claiming the products “infringe and dilute” its famous PENGUIN marks. That letter also demanded Pudgy Penguins abandon its pending applications with the US Patent and Trademark Office (USPTO) to register various PENGUIN marks. According to the lawsuit, those demands went unmet.
What PEI Wants From the Court
- Block the registrations — an order directing the USPTO to reject Pudgy Penguins’ trademark applications.
- Stop the sales — an injunction barring Pudgy Penguins from allegedly infringing uses of the penguin marks.
- Destroy the products — destruction of any items found likely to be confused with PEI’s trademarks.
- Hand over the profits — an award of all profits from the sales of the allegedly confusing products.
Pudgy Penguins Fights Back
Pudgy Penguins’ legal chief, Jennifer McGlone, told Cointelegraph the company “was surprised by the action, particularly as both parties had been engaged in productive discussions to resolve this matter privately.” She said the company had advanced applications with the USPTO and was “confident that PEI’s claims lack merit.”
“The trademarks in question are visually distinct and serve entirely different audiences and markets,” McGlone said. “We have the utmost confidence that we will prevail as Pudgy Penguins has already secured multiple trademark application approvals from the USPTO covering the Pudgy Penguins brand and related marks.”
The company’s X account took a lighter approach, posting a meme implying its brand bears no resemblance to Original Penguin.
Market Implications: Why a Clothing Lawsuit Matters to NFT Holders
Pudgy Penguins is one of the most aggressive NFT brands when it comes to real-world expansion — turning its chubby cartoon characters into toys and retail merchandise, and paying NFT holders a share of toy revenue along the way. That strategy only works if the brand owns its name and likeness in the physical world. A court order blocking penguin-branded apparel, or stripping profits from it, would strike directly at the business model that separates Pudgy Penguins from purely digital collections.
The case is also a broader warning for the NFT industry. Web3 projects often assume that ownership of a digital collection translates into freedom to slap its characters on t-shirts and toys. But trademark law in the physical world rewards prior use and famous marks — and a 70-year-old clothing brand will argue it was waddling first.
What This Means for You
If you hold Pudgy Penguins NFTs or the project’s related tokens, the main things to watch are procedural: whether the court grants any early injunction against merchandise sales, and how the USPTO applications fare while the case proceeds. Trademark cases often take a long time to resolve, and settlement discussions — which both sides were already having — remain possible at any point. A company losing its merchandise revenue stream would be a genuine business hit; a successful defense would clear the path for further retail expansion.
The Verdict
Two penguins are now squaring off in a Florida courtroom, and the outcome will test how far an NFT brand’s real-world ambitions can go before it collides with legacy trademarks. Pudgy Penguins says its birds are visually distinct and its registrations are advancing; PEI says seventy years of penguin history speaks for itself. For collectors, the smartest move is to follow the docket rather than the memes.
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PEI using a penguin mark since 1967 is a brutal fact for the Pudgy legal team. Hard to argue shoppers will not be confused when both sell apparel with cartoon penguins.
Thing is, penguins are generic birds. If PEI wins this, every NFT project with an animal mascot and a merch line should be sweating, not just Pudgy.
generic birds sure, but pudgy sells actual penguin hoodies next to original penguin hoodies in the same walmart aisle. that part is the problem
Original Penguin going after destruction of products AND all profits is aggressive. that merch revenue is the engine behind the whole Pudgy retail push
they have been selling penguin gear in actual big box stores though, which makes the trademark claim less crazy than it sounds on paper
asking a florida court to destroy the products feels theatrical. settle, rebrand the merch line, move on. lawsuits bleed both sides dry
Asking the court to destroy the products and hand over all profits is aggressive. Feels designed to force a settlement rather than actually go to trial in Florida.
That is the standard playbook. Ask for the maximum, settle for a licensing deal. The Pudgy retail push into Walmart makes them a target now that real revenue exists.
settle playbook is right. PEI does not want a florida jury deciding cartoon birds either, they want a royalty cut on every hoodie
Big Clothing picking a fight with a cartoon penguin. 2026 keeps delivering
a 1967 trademark versus a four year old NFT brand, and now a jury picks. expect a quiet licensing deal by spring with both sides pretending they won