The litigation between Upper Deck and Panini America will continue to advance through the courts, as a motion to dismiss by Panini was rejected by a federal judge.
The lawsuit, The Upper Deck Company v. Panini America, Inc., was originally filed Jan. 29 in U.S. District Court, Southern District of California. Upper Deck was suing Panini over images of Michael Jordan that appear in the background of three cards released by the Dallas-based company. Panini countered with a motion for dismissal in late May, alleging that Upper Deck’s claims were baseless and that the California-based card and memorabilia company resorted to “vague allegations and third-party Internet posts” in filing their complaint.
Upper Deck’s complaint alleged that Jordan was not the main focus of two Panini cards featuring Scottie Pippen and Dennis Rodman but said its exclusive contract with MJ was violated by the background images of the Hall of Famer. Upper Deck argued that because it had exclusive rights to produce and market Jordan’s image on a trading card, even an incidental appearance on a rival’s card violated its exclusivity deal.
Panini countered by arguing that “notably absent” from Upper Deck’s objection was “the alleged license agreement” on which the claims were based. “Because Upper Deck has failed to state plausible claims for relief, its complaint must be dismissed,” Panini wrote in its motion to dismiss.
In the latest round of legal wrangling, the judge accepted as true “all facts alleged in the complaint” by Upper Deck but notes that Panini “does not address the Downing factors.” Instead, it argues the merits of “whether there is a likelihood” of consumer confusion and asked the court to resolve that issue.
Downing refers to the 2001 case, Downing v. Abercrombie & Fitch. In that case, the plaintiffs, well-known surfers, sued the clothing manufacturer when their faces and names were placed on the company’s T-shirts. A circuit court panel determined that the defendant’s publication of a photograph of the plaintiff was actionable. The court later ruled that claims for the use and likeness are not subject to copyright law.
In Upper Deck v. Panini, the court ruled that Upper Deck’s false endorsement claim — whether it is ultimately valid or not — has alleged sufficient facts to survive a motion for dismissal.
Upper Deck’s claim could be difficult to prove if the case eventually goes to a full trial, but for now, the court ruled that the case can proceed.
Upper Deck could probably derail Panini’s claim by producing the exclusivity license it alleges to have, but at this stage of the case, it chose not to do so.
For Panini, a silver lining can be found in that the court tossed out Upper Deck’s claim of intentional interference with a contract dismissed. The court ruled that Upper Deck did not properly allege any actual disruption to its deal with Jordan, any economic harm, or any independent wrongful act by Panini.
To recap, the Pippen cards were part of Panini’s 2017-2018 Donruss Basketball set and Donruss’ 2017-2018 Optic NBA Retro series. Pippen is shown in both series driving to the basket. According to Upper Deck, Panini intentionally cropped the image from the first set to remove any images of Jordan. In the higher-end Optic set, the same image was used — but this time, Jordan can be seen in the bottom right corner of the card.
Panini argued that Jordan was not “readily identifiable” on the Pippen card and asserted that Jordan’s jersey number was not visible in the photograph. Panini added that Upper Deck conceded the image of Jordan was “no bigger than Pippen’s shoe.”
A shadowy image of Jordan can also be seen on the right side of a 2018-2019 Panini Contenders card featuring Rodman.
In its complaint, Upper Deck alleged Panini did not crop the photo to exclude Jordan because it wanted to increase the card’s value. The background, Upper Deck alleged, “caught more consumer interest and excitement” than Rodman because the card “prominently and intentionally featured Jordan.”
Panini responded that it “requires an implausible flight of fancy” to suggest Jordan endorsed Rodman’s and Pippen’s cards “based merely on his passing appearance.”
Upper Deck, in its January filing, alleged two violations under the Lanham Act, trademark infringement, intentional interference with a prospective economic relationship, intentional interference with a contractual relationship, commercial misappropriation, right of publicity, and unfair competition.
The Lanham Act, passed by Congress on July 5, 1946, is a federal law that governs trademarks, service marks and unfair competition. It went into effect on July 5, 1947.
The January lawsuit alleged that Panini, which has had a license to produce and market NBA cards since 2009, “hatched a scheme” to trade on Michael Jordan’s image “without paying a dime of those rights.”
For now, the case moves forward. It could become messy and expensive, and it would not be a surprise if a settlement were reached before the case was heard. But that remains to be seen.