Sandgate Coffee and Delights was forced to rename their scones when Bettys said they owned the trademark.
A spokesperson for Bettys said: "While the name Fat Rascal has some references in old literature, the idea of a plump fruity scone, topped with natural cherry eyes and split almond mouth was created by Bettys over 30 years ago. It’s since become one of our best-selling specialities.
"We're a family business and it's important that we protect the name of our specialities for the future and on behalf of all those who love Bettys. It’s what any business has to do."
The cafe's owner Helen Matos agreed to the request and changed the branding to Whitby Fatties, but maintained that Fat Rascals belong to Whitby.
She said: ""We were absolutely flabbergasted that they would target our tiny little cafe, which they clearly see as some kind of threat.
"And for them to trademark the Fat Rascal name is preposterous. They have been made since the 1800s and the first one on record was made over a peat fire on the edge of Whitby in 1855.
"So if anyone has a right to sell them surely it's a cafe in the town where they were invented?"