Before the NBA season resumed down in Florida, basketball fans received a big dose of nostalgia with the 10 part airing of the documentary miniseries "The Last Dance" which chronicled the 1997-1998 season of the legendary Chicago Bulls, the last season the star-laden team was together before getting disbanded. It also capped the Bulls' sixth NBA Championship led by none other than Michael Jordan. While watching the 10 hour miniseries, we saw how Jordan's brand and image expanded from the hungry and tenacious student-athlete at UNC to a global icon who has become bigger than basketball. Jordan created the blueprint for how athletes can leverage their platform to build empires spanning athletic apparel and shoes, film and television, team ownership, real estate and restaurants, and sports memorabilia and trading cards. This has translated to a net worth of approximately $2.1 billion for Jordan, with less than $100 million of that coming from his player salary. It is no wonder that Jordan is the wealthiest former professional athlete in the world.
Jordan's brand is so big that for decades he has granted The Upper Deck Company ("Upper Deck") -- which produces sports memorabilia and trading card products among other sports and entertainment products -- an exclusive license to "use his image, name, likeness, marks, and other rights on and in connection with, among other products, trading cards" (the "License"). In fact, Upper Deck has been the only trading card manufacturer to have such a license agreement with Jordan. In light of this, it is worth noting that (1) Jordan's name and jersey number 23 are federally registered as trademarks with the USPTO (collectively, the "Trademarks"), and (2) as part of the License, Jordan assigned Upper Deck the right to begin an action relating to a third party’s infringing use of Jordan’s rights.
Let's run through some math here (don't worry, no calculations required). We have Jordan, one of the most recognizable athletes and brands in the world + Upper Deck, which has been granted an exclusive license from Jordan to manufacture trading cards using his name, image, likeness, and those federally registered Trademarks + that a new trading card featuring Jordan in his number 23 Bulls jersey has not been released for at least 10 years = $$$. According to Upper Deck, a single rare trading card featuring Jordan sold on eBay for a whopping $350,100!
On The Card? Off To Court!
Against this backdrop, let us proceed. We previously mentioned that back on January 29, 2020, Upper Deck filed a complaint against one of its direct competitors, Panini America, Inc. ("Panini"), for producing retro trading cards which feature Jordan in the background (the "Complaint"). Umm wait, the background? Yes, according to Upper Deck, the "background imagery of a trading card can have substantial bearing on the value of the card. Use of cameos featuring ancillary figures in the background of trading cards increases the value of those cards, and individuals in the background of an image on a trading card can dramatically increase the value of both the trading card and the trading card release."
The Complaint alleged eight claims under the Lanham Act and related state law causes of action, including (1) false endorsement and false advertising under the Lanham Act (15 U.S.C. § 1125(a)); (2) trademark dilution under the Lanham Act (15 U.S.C. § 1125(c)); (3) trademark infringement under the Lanham Act (15 U.S.C. § 1114); (4) intentional interference with prospective economic relationship; (5) intentional interference with contractual relationship; (6) commercial misappropriation; (7) right of publicity under California Civil Code section 3344 et seq.; and (8) unfair competition pursuant to California Business & Professions Codes Code sections 17200 et seq. As part of the Complaint, Upper Deck alleged that Panini "deliberately altered and manipulated Jordan’s image into the background of [the] two trading card releases to market and increase the sale of its products and brand equity, to use Jordan for commercial gain, to confuse the market, and to harm Upper Deck including Upper Deck’s brands, goodwill, and exclusive contract." In response, Panini filed a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Upper Deck filed an opposition and Panini replied. In the opinion entered on June 29, 2020, the United States District Court of the Southern District of California (the "Court") granted in part and denied in part Panini’s motion to dismiss with leave to amend allowing the false endorsement and false advertising, trademark dilution, trademark infringement, right of publicity and commercial misappropriation claims to proceed.
According to the Complaint, in November 2017, Panini printed the 2017-2018 Donruss Basketball Retro Series card featuring Scottie Pippen, Jordan's right hand man on the Chicago Bulls. (On that note, is anyone still upset by how underpaid Pippen was?! That's a story for another day I suppose.) This card did not include any image of Jordan. However four months later, Panini released its 2017-2018 Donruss Optic Retro trading card set, its more expensive and higher end version of the Donruss Basketball Retro Series. Within the set, Panini included the same exact image featuring Scottie Pippen (“Pippen Card”) included in the 2017-2018 Donruss Basketball Retro Series, but this card also had a small image of Jordan in the bottom right corner of the card. Panini later released its 2018-2019 Panini Contenders Basketball trading card set, which included a card of Dennis Rodman, also known as "the worm" for his defensive prowess in addition to being known for his bad boy persona, the background of which prominently featured Jordan ("Rodman Card" and collectively with the "Pippen Card," the "Cards").
The Ninth Circuit uses an eight-factor test modeled after the Sleekcraft factors to determine whether there has been a likelihood of consumer confusion in celebrity cases. These factors are as follows: "(1) the level of recognition that the plaintiff has among the segment of the society for whom the defendant’s product is intended; (2) the relatedness of the fame or success of the plaintiff to the defendant’s product; (3) the similarity of the likeness used by the defendant to the actual plaintiff; (4) evidence of actual confusion; (5) marketing channels used; (6) likely degree of purchaser care; (7) defendant’s intent on selecting the plaintiff; and (8) likelihood of expansion of the product lines." Downing v. Abercrombie & Fitch, 265 F.3d 994, 1007-08 (9th Cir. 2001). Instead of addressing the Downing factors, Panini presented several merit-based arguments as to why the false endorsement claim should be dismissed such as that because the Cards do not have Jordan's name and a tiny figure of a Bulls player in the background of the Pippen Card is unidentifiable, there is no likelihood of confusion as to whether Jordan endorses its cards. In addition, Panini argued that because Panini trading cards are sold in packs, consumers do not know what individual cards are in the packs until after their purchase.
On the other hand, Upper Deck's Complaint did address the Downing factors by referencing several points such as (1) that the actual image of Jordan and his jersey number 23 is used; (2) highlighting an example of confusion when a prominent sports memorabilia publisher published an article commenting on Jordan’s appearance on Panini’s new product line and reported “on the rarity of Jordan’s appearance in an NBA trading card release given his exclusive license with Upper Deck, and the enormous consumer appetite for all things Jordan in a Bulls uniform, especially a trading card;” (3) confusion on the secondary reseller market, such as eBay, where sellers market Panini’s cards as “Jordan cards”; (4) the marketing channels for both parties’ trading cards overlap on both the primary and secondary markets; and (5) Panini’s use of Jordan in the background is intentionally designed to capture Jordan’s value. As a result of Upper Deck's allegations addressing the Downing factors and Panini's lack thereof to do the same, the Court found that the Complaint sufficiently alleged the likelihood of consumer confusion as to whether Jordan endorses the Pippen and Rodman card. Therefore, the Court denied Defendant’s motion to dismiss the claim of false endorsement for failing to allege likelihood of consumer confusion.
For the false advertising claim brought under the Lanham Act, Panini challenged three of the five factors: (1) Panini made a false statement either about Upper Deck's or its own product; (2) the statement actually deceived or had the tendency to deceive a substantial segment of its audience; and (3) the deception is material. Newcal Indus., Inc. v. Ikon Office Sol., 513 F.3d 1038, 1052 (9th Cir. 2008) (quoting Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829 (9th Cir. 2002)). The Court found that Upper Deck's allegations stated an actionable false statement, there is a presumption of actual deception by Panini because the Complaint alleged Panini intentionally set out to deceive, and Upper Deck sufficiently provided facts to support that Panini's use of Jordan in its trading cards will likely influence consumers' purchasing decisions. Therefore, the Court denied Panini's motion to dismiss the false advertising claim based on the three challenged factors.
Panini argued that Upper Deck lacked standing to pursue the trademark infringement claim because it is not the "registrant" of the trademarks. In addition, Panini argued that Upper Deck did had failed to allege "whether it has an exclusive license and property interest in the name Michael Jordan and the “23” marks for all goods and services." The Court noted that the "determination of whether a licensee has standing to sue under § 1114 largely depends on the rights granted to the licensee in the licensing agreement.” Ultrapure Sys., Inc. v. Ham-Let Grp., 921 F. Supp. 659, 665 (N.D. Cal. 1996). As a result, the complaint must allege that a licensing agreement gave the licensee the exclusive use of the trademark and a property interest in the trademark or rights that are akin to those of an assignee. See id.; Nat’l Licensing Ass’n, LLC v. Inland Joseph Fruit Co., 361 F. Supp. 2d 1244, 1254 (E.D. Wash. 2004). Taking the allegations in the Complaint as true, the Court denied Panini’s motion to dismiss the trademark infringement claim for lack of standing.
Since Upper Deck did not address Panini's argument that Upper Deck's counterfeiting allegation failed because Upper Deck did not allege that any registered mark owned by Jordan covers trading cards, the Court granted the counterfeiting allegation as unopposed.
Finally, referencing its prior argument on the likelihood of consumer confusion, Panini asserted that the trademark infringement claim should be dismissed because Jordan’s de minimus appearance in the background is not likely to cause consumers to believe that Panini’s cards originally came from or were endorsed by Jordan or Upper Deck. As previously discussed, the Court concluded that Upper Deck adequately alleged likelihood of consumer confusion, and applying the same analysis here, Panini's argument failed yet again.
Under the Lanham Act, standing is limited to the "owner" of the mark. The Court noted that although there is limited caselaw in the Ninth Circuit on whether an exclusive licensee may have standing under § 1125(c)(1) for trademark dilution, the analysis is similar to that of standing under § 1114 for trademark infringement. As such, district courts have looked to the provisions of the licensing agreement to determine the rights granted to the licensee. Accordingly, the Court found that Upper Deck sufficiently alleged it has exclusive rights to the Trademarks via the License; therefore, the Court denied Panini’s motion to dismiss the trademark dilution cause of action for lack of standing.
Right of Publicity
The Court denied Panini's motion to dismiss the right of publicity claim for several reasons including that, (1) similar to the analysis for trademark infringement and trademark dilution under the Lanham Act, Upper Deck had sufficiently alleged standing for the right or publicity claim based on the nature of the License; (2) although the name and number on the jersey of the figure of a teammate in a shadowy background of the Pippen Card no larger than Pippen’s sneakers are not identifiable, "a basketball fan, through context, may immediately identify Jordan, by his build, skin color, or by being a fellow teammate of Pippen, as the player in the background. Moreover [Panini] is aware the image is of Jordan, a highly recognized basketball player;" and (3) Jordan was featured in the cards as an individual as opposed to the cards featuring a definable group (i.e., members of an NBA basketball team).
In Upper Deck's first amended complaint, it alleges all of the prior claims brought forth under the initial Complaint sans the claims for (1) intentional interference with prospective economic relations under California law and (2) intentional interference with contractual relations under California law. Upper Deck is still seeking both monetary and injunctive relief as a result of the allegations presented to the court.
Emboldened by their win, Upper Deck continues to press on. As this lawsuit unfolds, we will continue to keep you posted.