MLB Files Trademark Infringement Lawsuit Against Upper Deck

Upper Deck is definitely not in mint condition.

The Carlsbad, Calif.-based collectibles company, which last week agreed to pay millions to Konami, the Japanese video game publisher, to settle a dispute over counterfeit "Yu-Gi-Oh" cards, is now being sued by its first -- and most visible -- client: Major League Baseball.

Monday, Major League Baseball Properties, the league's licensing division, filed a federal lawsuit in New York against Upper Deck, accusing the company of trademark infringement and illegally selling cards that feature official team logos and uniforms. The complaint also notes that Upper Deck owes MLB $2.4 million.

In August, MLB granted Topps Co. an exclusive, long-term license to produce its trading cards, beginning on Jan. 1 of this year. The pact gave Topps, which is now co-owned by former Disney CEO Michael Eisner, a monopoly on the sport and ended Upper Deck's 22-year relationship with Major League Baseball. In a defiant twist, Upper Deck responded by re-signing its licensing agreement with the MLB Players Association, a deal that provides rights to sell cards with players' images and likenesses.

Upper Deck recently unveiled two new sets of cards -- its "Signature Stars" and "Ultimate Collection" lines for the 2009 season -- that do not have team names or logos printed on the borders of the cards, but do include pictures of players in MLB uniforms. The card of Boston Red Sox first baseman Kevin Youkilis, for example, shows him wearing the club's jersey and signature "B" batting helmet, but the card's border identifies his team only as "Boston."

Those new card lines are at the center of MLB's complaint, in which it alleges that Upper Deck's conduct is "reflective of a pattern of utter disrespect for the contractual and intellectual property rights of those from whom it licenses valuable trademarks." The suit was filed after MLB earlier sent a letter to card distributors asking them not to sell Upper Deck's 2010 baseball sets.

Upper Deck spokesman Terry Melia told FanHouse the company has no comment at this time. Tim Slavin, an attorney for the Players Association, said the union has no official position on the dispute but is closely monitoring the case. "Upper Deck used whatever measures it deemed appropriate so that [the cards were] within what it thought was legally required," said Slavin. "We certainly support [Upper Deck] as a licensee of the union, but we're not a party to the suit."

For Upper Deck, which catapulted to prominence during the sports-card industry boom of the early '90s, the suit is the latest in a string of legal and management setbacks. In the Konami case, one Upper Deck executive testified that she witnessed CEO Richard McWilliams shred counterfeit cards in his office. That settlement came on the heels of a separate dispute with Topps, which last year sued Upper Deck for stealing its card designs. Topps claimed that designs for some of Upper Deck's 2009 cards were virtually identical to cards Topps produced in the '70s. (The matter was settled by a mediator in November.)

Upper Deck's image has also been tarnished by its association with Tiger Woods -- the company has not severed its ties with the golfer -- and it has let go of dozens of employees in recent months, including a layoff of more than 30 staffers in January.

Rob Veres, the owner of Burbank Sports Cards, one of the industry's largest retailers, said he believes Upper Deck's inclusion of MLB logos on its most recent cards was intentional. "The cards they released looked like any other cards, they didn't airbrush anything out," Veres said. Now that Topps has the exclusive with MLB, he adds, dealers are worried about Upper Deck's ability to survive. "They lost their basketball license, and I'm sure they're not thrilled about Tiger," he said. "It's tough to be them right now."

It's not the first time MLB has sued a card company for improperly using official logos. In the past decade, the league filed claims against Donruss and Pacific, both of which once had licensing deals with MLB, for putting official MLB marks on cards after their agreements had expired. Ironically, Topps has been in Upper Deck's current position in the past: During the '70s, Topps had a licensing deal with the pro football players' union to make cards, but did not have an agreement with the NFL. As a result, its cards for several years featured obscured logos on uniforms and helmets, and no NFL marks.