Michael Jordan License Teaches Lesson

McManis Faulkner

McManis Faulkner

In his heyday, everything Michael Jordan touched turned to gold. Today, even a faint image of him in the background will cause an asset’s value to skyrocket, at least according to Upper Deck in a trademark case filed in the Southern District of California against archrival sports card manufacturer Panini America.

Decades ago, while cognizant of that value, Upper Deck, a worldwide sports and entertainment company specializing in the production of collectible sports cards, entered into an exclusive license with Jordan to use his image, name, likeness, and other rights in connection with basketball cards and other memorabilia. For years, other sports cards manufacturers have respected those rights, leaving Upper Deck as the only player in town in terms of creating new Jordan cards.

Panini America, however, recently put forth a series of “retro series” cards, which included prominent players from Jordan’s teams, including Scottie Pippen and Dennis Rodman. Certain versions of these cards featured small images of Jordan in, for example, the bottom right of the 2017-18 Pippen card. According to Upper Deck, the inclusion of these images of Pippen and Rodman’s teammate was an intentional scheme to attract Jordan collectors to Panini’s products, in violation of the rights conferred through Upper Deck’s license. In order to stop what Upper Deck viewed to be a blatant usurpation of its exclusive rights, the card manufacturer sued its competitor in federal court last Summer asserting claims for trademark infringement, trademark dilution, unfair competition, and infringement of publicity rights, among other claims.

While the increased value of so-called “error cards” may be familiar to those involved with the hobby, the value of cards based on background images may be less familiar to collectors. Suffice it to say, however, that many deep in the hobby are aware of the phenomenon. A 2007 Derek Jeter Topps card that featured Mickey Mantle in the Yankee dugout and President George W. Bush in the stands was a hot acquisition when it hit the market that substantially outpaced cards of comparable stars from the set in terms of sales prices. Collectors have also chased a 1971 Chris Short card, which featured Pete Rose in the background, and a 1960 Topps World Series card, which featured Maury Wills, even though he was not under contract with the card manufacturer.

Aimed at preventing Panini from circumventing the Jordan license to capture this same type of value, Upper Deck’s lawsuit endeavored to stop what it believed to be illicit use of Jordan’s image on its competitor’s cards. While the complaint largely survived the initial attacks on the pleadings, two weeks ago, the court downsized Upper Deck’s complaint in granting in part Panini’s motion for judgment on the pleadings. In that motion, Panini averred that Upper Deck lacked standing to bring its claims since it was Jordan, not Upper Deck, who owned the marks, images, and other intellectual property at issue. Analyzing the underlying license under the “incorporation by reference” doctrine, the court agreed with Panini, at least in part.

In disposing of Upper Deck’s trademark-based claims, the court observed that, while the license at issue conferred exclusive rights to use Jordan’s marks in certain products, it was neither a complete assignment of Jordan’s trademark rights, nor an exclusive license to use such rights in all products. Important to this conclusion was the court’s observation that the licensor—here, Jordan—retained various rights in his marks. In light of these conclusions, the court dismissed both Upper Deck’s trademark infringement and trademark dilution causes of action.

Despite the foregoing, the court nevertheless allowed Upper Deck’s common law commercial misappropriation and right of publicity claims to survive. Though the decision’s specific references to the language in the license were redacted, the court indicated that a license and/or an assignment of specific rights were sufficient for conferring standing on a third party to bring such state law claims. More specifically, the court concluded that, unlike for trademark claims, an exclusive license was not necessary for standing. Accordingly, Upper Deck’s state law claims survived.

The Upper Deck lawsuit serves as an important, though ostensibly obvious, reminder to drafters to be precise in exactly what type of license is being granted, lest a licensee end up in similar situations. And while it may ultimately be a case study for the Streisand Effect (in driving up the value of the cards by trying to shut them down), the case also appears poised to create new standards for collectibles and memorabilia developed in the future.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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