The sports card industry is marking the 30th anniversary of something that collectors, manufacturers and their employees, and most dealers in the industry do not know about. The ‘something’ is a lawsuit that paved the way for an entire segment of the industry. It wasn’t just a David vs. Goliath scenario. It was more like David vs. a team of Goliaths.
The David in this case was Dad’s Kid, a small company in Newport Beach, California that developed a product called Tri-Cards.
Tri-Cards were a unique product where the company would take three of the same baseball cards and laser cut the images of two of the cards onto the first card to give them a 3-D look and effect. They were then repackaged with one player per package. The packs were more like boxes, and they had a window so that the consumer could see which card he was buying.
I was the editor of Canadian Sportscard Collector at the time the product was released in 1992. One came across my desk one day with a press release. They popped up at the National that year, as well as the Fall Expo in Toronto.
The cards used were base cards of stars from 1990, 1991 and 1992 baseball sets. Fleer, Leaf, Score and Upper Deck cards were all used. I was never sure why Topps cards were not used. Maybe they were not able to secure enough cards in bulk, and maybe the quality of the photography and production of the other sets were more suited to their product than what Topps had in its sets at the time.
The cards are serial-numbered out of 50,000, which in 1992 was considered somewhat limited. Tri-Cards would have had to secure 150,000 of each of the cards they made to hit that number. While print runs for those sets were large at the peak of the junk wax era, it is doubtful that a case cracker, or even a team of case crackers, could come up with the volume of cards needed. My guess is that they produced as needed to fill orders, and then stopped when the lawsuits began flying.
The cards may have been done very well from a production and laser cutting standpoint, but the legal mess that followed this set around was a sloppy mess.
Tri-Cards was introduced to the world at the February 1992 New York Toy Fair. The product was designed to be a retail and toy product more than a hobby product. The company told us at the time that they had $20 million worth of orders to various chains and distributors. In addition to Toys R Us, toy giants F.A.O. Schwartz and Spencer Gifts were among the big accounts they secured. The cards even found their way onto QVC. Dad’s Kid CEO and president Christopher Kamar informed us that the company had 160 employees. To put that into perspective, that’ s about triple of what Pacific had at the company’s peak.
Soon after Tri-Cards appeared on the market, the Major League Baseball Players Association sued Dad’s Kid. Upper Deck, Fleer and Score followed with simultaneous lawsuits over the usage of their cards. The lawsuits claimed that Dad’s Kid had violated trademark, copyright and player publicity rights. Dad’s Kid launched a countersuit against the MLBPA and the companies for a collective $995 million.
The lawsuits against Dad’s Kid were filed on July 10, 1992, just before the National.
“The suits against Dad’s Kid had done their initial damage, with some distributors returning merchandise and other simply declining to place new orders,” Kumar said in a press release in 1993. “Dad’s Kid was reluctantly forced to lay off 90 per cent of its workforce and focus most of its resources on the litigation. We have been continuing the legal battles with our one, in-house attorney against seven law firms and six in-house counsels.”
Important Lawsuit
While 30 years later, it may seem like a legal squabble over a cheesy product that was not going to have any future value, it became one of the most important lawsuits in hobby history. The outcome would determine the future of repackaging trading cards.
In 1993, Dad’s Kid submitted a formal request for a Federal Trade Commission (FTC) review and investigation into the regulatory issues surrounding the alleged restraint of trade imposed on Dad’s Kid by the MLBPA and the companies.
“The MLB and trading card manufacturers have deliberately abused and acted in defiance of anti-trust laws by attempting to use copyright, trademark and other common and statutory laws to secure another end in violation of the Sherman act,” Kamar said at the time. “The future of the entire trading card repackaging industry is at stake here – not just our own situation.”
The argument stems from the fact that royalty payments are already made to the leagues and players associations when the cards are originally sold into the market. Dad’s Kid purchased the cards they used on the secondary market. Royalties had already been paid on those cards, but using player images and league logos on their packaging was a different issue. Dad’s Kid got around the restrictions with a window on their boxes, showing the actual product inside. While packs of trading cards are a blind buy, meaning collectors do not know what cards they will get, Tri-Cards packaging showed the consumer exactly what and who they were getting.
“We feel that fair profits and proper royalties were already paid to the card manufacturers when we bought the card son the retail market,” Kamar said.
In their FTC request, Dad’s Kid brought up three main points.
- Fixed prices of licenses were economically prohibitive.
- Trading card companies refuse to deal with smaller companies which, in turn, prevents new competition from entering or remaining in the market.
- Trading card manufacturers and the MLBPA have engaged in a concerted manner to control the baseball card aftermarket, including repackaging and resale of legitimately licensed baseball cards.
Before Dad’s Kid began producing its Tri-Cards product, the company applied for licenses from the MLB and MLBPA to produce their own cards.
“Without hesitation or reservation, all attempts made by the company were quickly denied by the MLB and MLBPA, forcing Dad’s Kid to buy cards from other licensed card manufacturers at retail rates which include compensation to the sports figures,” said Kamar. Those card companies have engaged in a continuing boycott of Dad’s Kids and still refuse to sell their cards directly to the company.”
Dad’s Kid VP Legal Affairs Christine Koral Roberts said that MLBPA and manufacturers were in violation of the Sherman Act, which was introduced in 1890. The FTC defines the act as a “comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade.”
Kamar believed until the end that the baseball card manufacturers, more than the MLBPA and MLB, were responsible for putting an end to Tri-Cards. By the time Dad’s Kid filed their counter suit, hobby and retail distributors were returning caseloads of product and reluctant to order more. Many were afraid of facing repercussions from the card manufacturers if they continued to sell Tri-Cards. Kamar said he believed the MLB and MLBPA license refusals and the cease and desist letters were done solely because of the demands placed upon them by the card manufacturers. He also alleged that economic leverage was used in an anti-competitive manner by the card companies to influence one or both of the MLB and MLBPA.
Although the manufacturers and the MLB and MLBPA lost their suit against Dad’s Kid, the damage had been done. Tri-Cards was gone and is now just another of the many niche products that appeared in the craziest decade the hobby has ever seen. Today, you can find a few on eBay but they’re not especially common.
The press release that I received called Tri-Cards the next dimension in sports card collecting. It turned out to be the next dimension in sports card litigation.
And even though Dad’s Kid came and went like a blip on the 1990s sports card timeline, they paved the way for the massive sub-industry of sports card repackaging that exists today.
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