COMMENTARY: MLB Properties vs. Upper Deck — Examining Upper Deck's argument

With the MLB Properties case against Upper Deck set for an April 19 court date, Beckett Media will be examining several aspects of the complicated and wide-scoped case through a series of commentary pieces. We’ll examine MLBP’s complaint, Upper Deck’s argument, try to address some key questions and more …

By CHRIS OLDS | Beckett Baseball Editor | COMMENTARY

Part 3 … Upper Deck’s argument

While Upper Deck has declined to address its forthcoming court date with MLB Properties with Beckett Media, it has argued its stance on three recently released baseball card sets that feature MLB team logos in the photographs in two ways — via a letter to distributors in January and in court filings in opposition of a temporary restraining order on the products in early February.

While we’ve examined the key question of “Why just Topps?” when it comes to licensing and examined MLB Properties’ complaint as well, we haven’t probed Upper Deck’s argument that could alter the landscape of trademark licensing in all of professional sports products, if not many other areas as well.

And it all ultimately comes down to one question: What makes a baseball card?

In its preliminary statement, Upper Deck writes: “This is not a garden variety trademark infringement dispute. This case requires a deliberate and careful assessment of the scope of MLBP’s trademark rights in a context where those rights come into direct conflict with principles of free speech and competition and the legal doctrines that aim to protect them.”

Big sell for baseball cards, ain’t it? Freedom of speech? Is there a statement made by a baseball card? Actually, there is a past case and past product that cites that. (We’ll get to it…)

Later in its 28-page court filing, Upper Deck argues that its use of unaltered  action photography is at the core of everything — in short it’s what makes a baseball card. Upper Deck argues that since the beginning of baseball cards they’ve always had an image of a player in uniform (of course, baseball card production was around before licensing was) and argues that “it is beyond dispute that the essential feature of any collectible baseball trading card is a picture that accurately depicts the player as a player … and not in his street clothes or at home with his kids.

“To effectively compete in today’s market, Upper Deck must produce baseball trading cards with high-quality action photographs of players in uniform.”

There are countless single-card examples in standard-issue sets in all sports that could run contrary to this statement and then there have been products like NFL Pro Line in the early 1990s that focused on players away from the field (but in portraits wearing official NFL gear) but we’ll let them continue …

Kobe Bryant's 1996-97 Upper Deck basketball card.

“These photographs are a critical element of Upper Deck’s product design — essential to the very purpose of the card itself. If Upper Deck’s baseball trading cards featured photographs of professional baseball players in their street clothes, they would cease to be baseball cards altogether. The use of player photographs, including the incidental depiction of their game uniforms, is therefore a functional element of baseball player trading cards. Simply put, there is no alternative way to make a marketable baseball card without depicting the players in their team uniforms.”

There hasn’t been an attempt to produce a full logo-less, uniform-free set made up of draft picks and veteran players has there? (Could there be a market?)

Pavel Bure's 1991-92 Upper Deck hockey card.

In the court declaration of Jason Masherah, Upper Deck’s Director of Sports Brands, he says no …

“In the modern market, there is no such thing as a baseball player [card] series that does not feature photos of players in their uniforms. A series consisting solely of players not in uniforms would be, at best, a sporadic novelty low-revenue item. This is about Upper Deck’s ability to continue to produce player-licensed baseball cards and to compete fairly in the market for such cards against MLBP-licensed cards. If we cannot use the uniforms, we cannot compete and most assuredly there will be only one baseball trading card company — Topps — when the dust settles.”

Furthermore, Masherah states that, despite the dwindling market for sports cards and baseball cards in general through the years,  “MLBP has engaged in a pattern of using legal actions to push non-licensees out of the baseball trading card market. I am aware of past instances where MLBP has brought legal actions similar to this one against baseball trading card companies such as Pacific and Donruss, and those companies are no longer in business.”

How important are the three baseball card products in question here? They amount to roughly $10 million in revenue and appear to be quite important to the livelihood of the company based on previous court filings.

We’ll examine more after the jump.

Upper Deck argues that MLBP’s trademark dilution claim is based on the use of action photos only and that argument could be taken to the extreme leading “to the result that MLBP’s marks already have been diluted over the decades by the countless in-game newspaper and magazine photographs  and television broadcasts that similarly depict MLBP’s marks.

“If showing an action shot from a public sporting event impairs the distinctiveness of MLBP’s trademarks, then MLBP should have banned all sports writers and reporters from its stadiums years ago. The position that MLBP adopts is patently ludicrous and its dilution claim is inapplicable where Upper Deck has made no use of the allegedly famous and distinctive marks apart from game-action photographs protected under the First Amendment.”

While newspapers and magazines pay photo services or photographers for use of photographs, trademark infringement cases are not common as there’s often times no question in most readers’ minds the origin of the publication — the particular publishing company and not an official league or team that might appear on its cover.

(Example: It’s relatively obvious to most that it’s Beckett Media for Beckett Baseball for example with an issue with a New York Yankees player on the cover — and not the Yankees or Major League Baseball. Or in the case of a standalone issue for say a Yankees World Series championship, a publisher would be careful to not use a World Series, MLB or Yankees logo that might imply an endorsement, sponsorship or the image that it is otherwise an MLB publication.)

Furthermore as a provision of their credentialing for events,  said publications cannot sell prints of photographs shot by staff members, because those photos would compete with most pro sports leagues’ licensed photograph manufacturers. (They can, however, help sell copies of magazines and newspapers that they appear in.)

Upper Deck notes that it has “endeavored to make baseball trading cards that utilize the various rights granted to it by the Players Association without running afoul of the legitimate trademark rights of MLBP” and noted that its “limited and incidental use of the MLBP’s marks in its 2010 Series lies in sharp contrast to how the company leveraged the MLBP Marks when it was a licensee.” In its filing, Upper Deck cites six ways it was different in 2009 than it is in 2010:

1. All product packaging prominently featured the “Authentic MLB Merchandise Hologram

2. All products, packaging and marketing featured the MLB Legal line and logo

3. All products bore Member Club trademarks on the face or back of the cards as part of the card design

4. Many products prominently featured MLBP and Member Club trademarks in promotions and advertising

5. Many products incorporated the team colors of the Member Club into the card designs, and

6. Some products made mention of MLBP-trademarked events such as the All-Star Game and/or the World Series.

Upper Deck says its newest products use no trademarks other than those that appear in photographs and “on occasion in a purely editorial written copy describing the action depicted in the featured photograph.” The company also notes that it believes it has “taken every reasonable step to avoid confusion as to the source or sponsorship” of its cards with it not using logos, team names and team color combinations on its cards as well as its disclaimers that appear on all cards.

The company states that it is acting in good faith after it was refused a license by MLB Properties after it had already paid for a license from the MLBPA.

In its TRO filing, the company stated that MLBP has not shown it will suffer irreparable harm, said it has collected statements that show card collectors obviously understand that MLB Properties has not approved Upper Deck’s products, that MLBP presupposes that consumers will assume that sponsorship and presupposes that Upper Deck “does not have the right to use photos of players in uniform on its cards under either the nominative fair use and/or functionality doctrines.”

We’ll touch upon nominative fair use a bit later. First, more from Upper Deck’s argument includes that MLBP can’t prove that consumers will mistakenly buy Upper Deck cards under the impression that they are licensed by MLBP nor can it prove that its use of action photographs causes that confusion. It adds that “one likely source of confusion as to sponsorship or authorization could arise from the fact that many consumers do not understand the difference between the Players Association and MLBP.”

Upper Deck argues that “it simply cannot avoid showing some portions of MLBP’s marks and logos — which are affixed to practically every joint and surface of the players’ uniforms — if it uses game-action photos of the players on its cards” and that the functionality doctrine is in play in this case. That doctrine says “a product feature is functional and cannot serve as a trademark if it is essential to control a useful product line” — a requirement that “protects competition even at the cost of potential consumer confusion.”

Upper Deck claims that nominative fair use — which means a trademark can be used if it is necessary to refer to a party’s product or service in order to identify the product or service — applies in this case “to accurately describe the players as they would appear on the field.” Upper Deck claims that there is “virtually no way around depicting these marks, at least in part, because they are so prevalent on the uniforms.”

In his court-filed declaration, Upper Deck’s Senior Corporate Counsel Michael Bernstein wrote that, while financial terms in the 2006 licensing renewals with MLBP were negotiable, the terms of the agreement were not. That included the provision that a licensee can “never make fair use of the marks at issue, even after the termination of the license.” The intellectual property provisions were “presented by MLBP on a take-it-or-leave-it basis.”

Now that it does not have a license, it disagrees with the legality of the contracts. Upper Deck says MLBP’s position “flies in the face of case law — including Supreme Court precedent — that has repeatedly found such contractual provisions in trademark licenses to be unenforceable as against public policy.”

Upper Deck argues that as “one of only two remaining producers of trading cards featuring professional baseball players any restriction on Upper Deck on its non-trademark uses will result in a severe restriction in competition for baseball cards, injuring the public interest” and that, while Upper Deck recognizes MLBP’s right to opt for an exclusive licensee, it contends that there is “extraordinarily strong public interest for there to be viable competition in the marketplace for baseball trading cards” and that any further limitations on its products based on that previous licensing agreement’s provision would “instantly eliminate Topps’ primary competitor in the marketplace.”

(Of course, if Upper Deck vanished tomorrow, collectors would still find current products from TRISTAR and Panini America on the market, so Upper Deck places a definite qualifier above on what constitutes a producer of pro baseball player cards — it must have been previous full MLBP licensee? Or are such sets not viable competition in the marketplace? Or are they not even baseball cards?)

In short, Upper Deck argues that the previous contract’s provision allowing for a limitation on even permissable uses of uniforms and logos would deprive consumers of “competing information and [deprive] Upper Deck of its First Amendment rights.”

Ah, yes — the First Amendment and baseball cards. Upper Deck’s filing cites that “numerous courts have held that both current and historical information concerning the game of baseball, including the information conveyed on a baseball card, is speech protected under the First Amendment.” A 1996 case — Cardtoons vs. MLBPA affirms that one — that baseball cards are “an important means of expression that deserve First Amendment protection.”

Something in this collector’s mind says that Cardtoons are a little different kind of example, but we’ll let the courts handle all of it in April.

We’ll have more on this case here later this week and then in upcoming issues of Beckett Sports Card Monthly and Beckett Baseball.

Chris Olds is the editor of Beckett Baseball and Beckett Graded Card Investor. Have a comment, question or idea? Send an e-mail to him at colds@beckett.com.