Grand Cards: Upper Deck and Confusion

Tuesday, February 16, 2010

Upper Deck and Confusion

This is long. Read at your own risk.

News came down yesterday that the Upper Deck v. MLB Properties case has a trail date set for April 19th. As promised, I withheld extensive commentary yesterday so that I could make a more concentrated effort today. Before I get into things I want to clarify that I am not a lawyer, and any opinions of legal arguments I have may not be valid. I'll try to keep things clear, concise and easily refutable if someone with the appropriate expertise wants to examine things. Onward!

The Issue Upper Deck has put out three releases: 2009 Ultimate Collection, 2009 Signature Stars and 2010 Upper Deck all of which clearly depict players in their MLB uniforms, and in many cases showing unobstructed or partially obstructed logos of the teams. I'm not going to rehash the issue here, although you can take in my initial thoughts if you'd like.

The Claim Major League Baseball Properties--the licensing agent for MLB and it's member teams--filed suit against Upper Deck alleging that the cards infringed on MLB's Trademarks and intellectual property.
Filed in U.S. District Court in Manhattan, the suit claims Upper Deck blatantly ignored the deal MLB put in place with Topps, which states that Topps has the sole right to use team and league trademarks including logos.

The suit also claims that Upper Deck has plans to distribute more 2010 baseball cards that are similarly unauthorized.

Part of the suit states that "Upper Deck's current 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 Defense For it's part Upper Deck says that they haven't done anything illegal:
In its papers filed in objection to MLBP's temporary restraining order request, Upper Deck claims its use of MLB Properties' trademarks amounts to nominative fair use and that the use of game action photos is protected under the First Amendment.

"If showing an action shot from a public sporting event impairs the distinctiveness of MLBP's trademarks, then MLBP should have banned all sports writers and reporters from its stadiums years ago," wrote Upper Deck's attorneys with Quinn Emanuel Urquhart, Oliver and Hedges.
This defense is based on the fact that Upper Deck doesn't use any logos, team colors or names in the design of the card. That being said, they admit that the logos are present in the cards thusly:
"Upper Deck's 2010 Series make no use of MLBP trademarks other than those that happen to be visible in the high-quality, game-action photographs of the baseball players in uniform. Upper Deck has gone to great lengths to ensure that its 2010 Series products are respectful of MLBP and do not run afoul of its legitimate trademark rights. There is no alternative way to make a marketable baseball card without depicting the players in their team uniform."

This in an interesting argument, in that it implicitly suggests that NOT allowing the depiction of logos on uniforms amounts to creating a monopoly in the Baseball Cards market for the sole licensee in the industry--in this case, Topps.

More importantly, from a legal perspective, is the core of their argument. The photographs that they use are protected under fair use and are not violations of any trademark rights.

Confusion For us laymen, the term "confusion" has created a lot of, well, confusion. Take Gellman's thoughts:
Also, im not sure why is MLBP taking the argument of "No one can tell the difference between licensed and unlicensed." No one is that fucking stupid! We all know about UD's lack of a license, even people who are just casual collectors! Know why I know that? Because it says it three times every pack and box we open! Im actually pretty glad someone at MLBP thought this was a good way to go, because it leaves the door open for a nasty comeback.

Indeed, we bloggers and message board visitors and many collectors are aware that Upper Deck does not have a license. In that sense, "confusion" is a poor choice of terms. However, in the legal world everything means something different. Using my veritable legal skills (aka wikipedia) we learn that in trademark cases, the trademark holder must prove that "there is a likelihood of confusion that the products or services originated from the trademark holder." So, it's not so much that MLB chose to claim that Upper Deck's cards confuses us, the poor, stupid consumer, but rather that, to prove a trademark infringement case they must prove a likelihood of confusion. That's how you defend a trademark.

But wait, there's more. The rich history of trademark infringement law has set forth a test comprised of eight elements that are used to measure a "likelihood of confusion" and that it isn't necessarily measured by actual customer confusion. The eight elements used to prove a "likelihood of confusion" are:

1. Strength of the mark
2. Proximity of the goods
3. Similarity of the marks
4. Evidence of actual confusion
5. Marketing channels used
6. Type of goods and the degree of care likely to be exercised by the purchaser
7. Defendant's intent in selecting the mark
8. Likelihood of expansion of the product lines

Let's take a jump over to some actual law-talkin' guys to flesh these out.

Strength of the Mark Basically, we're talking about how distinctive the trademarked logos are--in MLB's case, the logos of there teams are very strong. For example the "Detroit Tigers" and the Old English D logos are much stronger than if this were the 1880's and the Tigers had generic striped caps and used the name "Detroit Baseball Club." All of MLB's logos have this strength.

Proximity of the Goods Basically, are the licensed and unlicensed goods similar? Are they sold through similar channels? Are they marketed similarly? etc. This is a big ol' yes. UD's cards are sold side by side with licensed cards in Big Box Stores, Hobby Shops, online retailers and secondary markets like eBay, Beckett Marketplace, Sportlots etc.

Similarity of the Marks The marks are exactly similar (they are depicted in photographs)--unlike counterfeited goods that may be very similar but not exactly the same, but may still give a confusing impression.

According to the legal blog I've linked, these first three factors are the most important in determining the validity of a case. It's the next factors that constitute the "grey area" of which all cases are made.

Evidence of Actual Confusion This is the big one and I'm pretty sure that this is what UD's entire defense is dependent upon. This is the reason that Upper Deck has done this:
Upper Deck also submitted copies of stories and blog posts from collectors stating they "clearly show that card collectors understand that Upper Deck's 2010 series are not licensed or approved by MLBP."
I'm of the opinion that just because bloggers and message board frequenters are aware the UD doesn't have a license does not mean that there isn't evidence of actual confusion. I think those people just happen to be the sophisticated buyers in the industry (see Degree of Care, below). When I think Evidence of Actual confusion I see this:

Cards from the releases in question sold on eBay and other secondary markets as "Detroit Tigers" cards, e.g.

Cards from the releases in question listed on Beckett checklists etc. as "Detroit Tigers", e.g.

Cards sold by major online retailers that proclaim "With Team Logos on Every Card!"

Cards where the main content (front picture) is what is solely depicted in 99% of card reviews, blog posts, message board posts, eBay listings and appears exactly the same as a licensed card in every way.

Other than the fact that I know that Upper Deck doesn't have a license, can my former knowledge really be indicative of the market as a whole? If I saw these cards for sale in person or online, would I be "confused"? In other words, would I think that this was a "Detroit Tigers" (e.g.) card? I think so.

Marketing channels used The Law Blog I'm looking at doesn't mention this, but FWIW, UD's cards are marketed in the exact same way as licensed cards.

Degree of Care aka, customer sophistication. Another big one. Here it is assumed that sophisticated buyers are less likely to be confused by trademark issues. Similarly, buyers of more expensive goods are assumed to be less confused by trademark issues. What's tough is determining whether the buyers of these products are "sophisticated" or not. Obviously, bloggers are. I don't mean that to be cute, but because we are people who write about cards with frequency--we obviously know what's going on, just as reporters know what's going on on their beat. Similarly, people who are deeply involved in message boards are sophisticated in the same sense that somebody who reads the NY Times or Wall St. Journal every day is sophisticated in the goings on of the world. Distributors and case breakers are also sophisticated buyers in that they are making large dollar value purchases.

That being said, I'm not sure that you can claim that buyers of cards are "sophisticated buyers." First--per Topps' and MLB's stated mission when creating the exclusive license--the entire point of issuing one license was to decrease confusion in the market, and especially to make it easier for kids to collect cards. I can't imagine that kids should be considered sophisticated buyers in this sense. Second, a substantial amount of sales are done on a card-by-card basis on the secondary market. That is, in essence, the primary sales channel these days. There are many people who don't read many blogs or don't sit on the message boards but still buy cards for their collections online. These are not "sophisticated buyers" in the same sense.

In any market there are buyers who are both sophisticated and not-sophisticated, and while we bloggers and people who spend a great deal of time on message boards know the ins and outs of the industry, I'm not sure that you can claim that the average baseball card buying person will be able to tell the difference between a licensed and unlicensed card--especially if they only see a scan of the front of the card--which is how the majority of cards are sold online.

Intent of the defendant Wait, "Because go fuck yourselves MLB and Topps", isn't a valid reason? UD is screwed on this measure, although they claim that it is because it is impossible to create a marketable baseball cards without including team logos.

Likelihood of expansion of product lines All indications are that UD will continue to produce unlicensed cards with logos.

Ok, I know this is getting long, but there is one more thing to discuss. UD Claims that they have a right to use the photographs under fair use. I'll let you use your own exceptional legal skills again to parse that, but as I was looking for things I stumbled across an interesting article about the use of trademarks in artistic representations. The most relevant part:
If we transfer this legalese into an art world example of the painting of the street scene, one would argue that there is no other way to create a realistic painting without using trademarks; second, that the marks are being used accurately and solely to convey information regarding the brand of the product; and third, the artist’s use of the trademarks could not be construed to indicate sponsorship or endorsement by the trademark owner.
This is, in essence, the claim that Upper Deck is making. Except instead of saying that there is no way to depict these baseball players without using trademarks they allege that there is "no alternative way to create a marketable baseball card" without using logos. I'm not sure if that will pass legal muster, as it is not the most noble of intensions. It's like saying, "there is no way for me to make marketable sports memorabilia without using the logos of the team." That's true. But you don't have the rights to the logos, so deal with it. What's more, companies like Razor and Donruss/Panini were able to make marketable cards without licneses, as was Topps (1970s Football), and a number of companies in the 1990s. Sure, they weren't as successful as licensed products, but they sold.

However this proceeds, photographs are not, in and of themselves, fair use of a logo. In fact, artistic works are not necessarily protected by fair use--meaning that baseball cards certainly wouldn't be protected just because they are photographs. What's more, the Upper Deck falls on the wrong side of fair use on a few factors. The Purpose is commerical, the Amount is central or significant to the whole and the market effect is such that it hurts the market for, or can substitute for the licensed work.

UD's claim photographs represent fair use because if they didn't reporters and photographers would have been banned from stadiums long ago doesn't hold much water. Newspapers and factual reporting and depiction of events are A-OK because they are considered to benefit the public.

The Conclusion When it comes down to it, I still think that Upper Deck is in trouble, with the "Likelihood of Confusion" being the lynchpin of the whole case. I also think that it's important to remember this: Even the sophisticated collectors who know that UD doesn't have a license from MLB may not know what that means. The fact is, MLB Properties licenses use of team logos instead of each team doing it individually. The reality is nobody cares whether cards are licensed by MLB as long as they show team logos. The packaging could say that a million times, but as soon as I see an Old English D on a card, that is a Detroit Tigers card, whether MLB has approved it or not. My sense is that once it is clear that a card depicts a player on the Detroit Tigers, and that the only way we are able to distinguish that it is a Detroit Tigers card is through the presence of a logo in the photograph, then I think confusion has occurred. If these ARE NOT Detroit Tigers cards because they are not licensed to be Detroit Tigers cards, then why do I think they are Detroit Tigers cards? Because they have logos.

So, instead of going through all the legal tests above, I'll do something far simpler. Two cards. What team is depicted on Card #1? How About Card #2? How do you Know?

Card #1

Card #2

I argue that Card #1, of a relatively obscure player essentially known only to Tigers fans, is known to all as being a Detroit Tiger by virtue of the fact that logos are on the card. Card #2, of a well-known former Tiger, is known to most/all as being a Tigers card by virtue of the secondary knowledge that Curtis Granderson played for the Tigers. To me, the non-lawyer baseball card collector that alone is enough to prove confusion. Upper Deck is telling me that these are not Detroit Tigers cards. On #2, they're right--especially if Wilkin Ramirez were shown in Card #2, few people would instantly recognize that as being a Tigers card. But Card #1 is instantly recognizable as being of a Detroit Tiger and that, to me, is confusing.