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Upper Deck Pays Up – Ligue majeure de baseball & Upper Deck Settle Lawsuit

MLB Properties v. Upper Deck (Partie II)

Major League Baseball filed a federal complaint for trademark infringement against Upper Deck on February 1 (Partie I) seeking to stop Upper Deck from selling cards that featured Major League Baseball team logos and trademarks with MLB permission.  The case didn't last long and the parties settled yesterday.

MLB leveraged its trademark portfolio and Upper Deck's unauthorized use of its trademarks to extract a significant pay out, by our estimates, of Sur $8 million from Upper Deck - certainly a favorable settlement for MLB. 

Here is a quick summary of the nonconfidential portions of the settlement:

• Upper Deck pays MLB more than $2.4 million it owed on back debts for royalties not paid to MLB for card sales in 2009. 
• Upper Deck pays MLB "a substantial sum of monies" for the unlicensed cards it sold in 2010. 
• Upper Deck agrees not to make any new sets of cards using "MLB logos, uniforms, trade dress, or Club color combinations." 
• Upper Deck agrees it will not airbrush, alter or block MLB marks in future products.
• Upper Deck must receive approval from MLB for the use of baseball jerseys, pants, jackets, caps, helmets or catcher's equipment in future products featuring players. 

The MLB also publicly made the following statement:

"Our settlement in the case against Upper Deck is a clear and decisive victory for Major League Baseball. Upper Deck will be unable to release baseball trading cards that incorporate Major League Baseball's intellectual property in the future.  The real winners today are the millions of fans who collect baseball cards.  They will be able to clearly identify official Major League Baseball trading cards without any confusion."

Here is the Inside Trademarks™ assessment:

1. For starters, Upper Deck had to pay $2.4 million to MLB for it to even consider allowing Upper Deck to sell baseball cards based on MLB players and teams in the future.

2. We estimate that the "substantial sum of monies" that Upper Deck will pay to MLB for unlicensed card sales this year is at least $6 million.

3. Getting Upper Deck to agree to not to use Club color combinations is significant victory for MLB. This grants broad enforcement rights against those who may not even use MLB team logos or names, but do use similarly colored products or services relating to baseball.

4. The MLB has effectively prevented Upper Deck (and likely other card sellers) from selling similar cards without a MLB trademark license just because they cover up a team logo found, for example, on a baseball player's helmet on a baseball card.

5. Upper Deck likely agreed to MLB's onerous approval provision just to keep selling the three new sets of baseball cards it is offering for sale in 2010, and to preserve its future baseball card revenue beyond 2010.

6. It is not often that parties settling a lawsuit allow one party to publicly proclaim victory based on the settlement.  MLB's public statement indicates that they clearly had leverage over Upper Deck and that if the case had gone further, the court would have likely granted an injunction ordering Upper Deck to cease all sales of its infringing baseball cards.  This would have resulted in huge losses for Upper Deck, and such losses may have easily exceeded what it now ultimately has to pay MLB in this settlement.    

Leçons apprises:

1.  Selling products bearing famous trademarks without a license or permission can be expensive.

2. MLB, like other professional sports leagues, aggressively protects its trademarks and intellectual property -- they are the primary source of its licensing revenues.