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UPPER DECK AUTHENTICATED, LTD. v. CPG DIRECT

January 8, 1997

UPPER DECK AUTHENTICATED, LTD., Plaintiff,
v.
CPG DIRECT, et. al., Defendants. AND RELATED CLAIMS



The opinion of the court was delivered by: MOSKOWITZ

 INTRODUCTION

 Before the Court are several motions for partial summary judgment. In one motion (the "exclusivity motion"), Defendant/Counterclaimant/Third-Party Plaintiff The Score Board, Inc. ("Score Board") *fn1" moves for summary judgment on those causes of action in the First Amended Complaint ("FAC") grounded in claimed rights of exclusivity allegedly granted to Plaintiffs Upper Deck Authenticated, Ltd. ("UDA") and The Upper Deck Company ("UDC") (collectively, "Upper Deck"). Although Upper Deck's allegations relate to the "indicia" of six different athletes, Score Board has brought the present exclusivity motion only with respect to the indicia of Mickey Mantle and Joe Montana.

 Score Board's other motion (the "authenticity motion") concerns alleged violations of Cal. Civil. Code § 1739.7, which governs certificates of authenticity for autographed sports memorabilia. Defendants Shop at Home, Inc. ("Shop at Home"), CPG Direct ("CPG"), and B & J Collectibles ("B & J") have joined in Score Board's authenticity motion.

 Based on the briefs, oral argument held on December 16, 1996, and for the reasons stated below, the exclusivity motion is GRANTED and the authenticity motions are DENIED.

 BACKGROUND

 This action arises out of disputes between various companies involved in the sports memorabilia business. The two primary parties in this case, Upper Deck and Score Board, sell items bearing the names, likenesses, images and signatures (the "indicia") of numerous famous professional athletes. Most of the remaining Defendants -- including Shop at Home, CPG, and B & J -- are engaged in similar activities. These companies have athletes autograph baseballs, footballs, hockey sticks, jerseys, and other sports-related items, which are marketed to collectors through various channels of distribution.

 Upper Deck's FAC asserts eight separate causes of action against the various Defendants, for: (I) violations of the Lanham Act; (II) misappropriation of the right of publicity; (III) interference with contract; (IV) dilution; (V) unjust enrichment, constructive trust, and accounting; (VI) declaratory relief; (VII) unfair competition; and (VIII) libel and slander. Upper Deck's claims fall into three basic categories. First, Counts I-VII are based on allegations that the Defendants violated Upper Deck's claimed rights of exclusivity by selling sports memorabilia autographed by athletes *fn2" with whom Upper Deck has or had exclusive contracts. Second, in Count VII (and also as part of the declaratory relief claim in Count VI) Upper Deck alleges that the Defendants compete unfairly by selling items in violation of California Civil Code § 1739.7, which governs certificates of authenticity for autographed sports memorabilia. Finally, Upper Deck has included in its FAC a libel and slander claim (Count VIII).

 Score Board now moves for summary judgment on (1) the portions of Counts I-VII based on alleged violations of Upper Deck's claimed exclusivity rights in the indicia of Mickey Mantle and Joe Montana, and (2) the unfair competition (Count VII) and declaratory relief (Count VI) claims as they relate to authenticity requirements under state law. Shop at Home, CPG, and B & J have joined in Score Board's authenticity motion.

 I. Summary judgment standard

 Summary judgment under Fed R. Civ. P. 56(c) is appropriate if the record, read in the light most favorable to the non-moving party, demonstrates no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996). Material facts are those necessary to the proof or defense of a claim, and are determined by reference to the substantive law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). The court must not weigh the evidence or determine the truth of the matter but only determine whether there is a genuine issue for trial. See Abdul-Jabbar v. General Motors Corp., 85 F.3d 407, 410 (9th Cir. 1996).

 A district court may continue or deny a motion for summary judgment under Fed R. Civ. P 56(f) where the party opposing summary judgment demonstrates the possibility that further discovery will raise triable issues of fact.See Fed. R. Civ. P. 56(f); Conkle v. Jeong, 73 F.3d 909, 914 (9th Cir. 1995); Visa Int'l Serv. v. Bankcard Holders, 784 F.2d 1472, 1475 (9th Cir. 1986).

 II. The exclusivity motion

 As noted above, Score Board's exclusivity motion focuses on one of the two central themes permeating Upper Deck's complaint. In essence, Upper Deck's first through seventh causes of action allege that Score Board, in selling items signed under prior contracts with various athletes, violated Upper Deck's "exclusive rights" to sell the indicia of the athletes. Upper Deck also contends that Score Board's resale of collectibles purchased on the "secondary market" (from third parties) violates Upper Deck's exclusive rights. Score Board counters that its contracts with Mickey Mantle and Joe Montana *fn3" permitted the sale of the memorabilia even after their contracts' expiration date. Score Board also maintains that it can lawfully purchase (and resell) indicia of Upper Deck athletes from third parties. The Court agrees with Score Board.

 A. The indicia of Mickey Mantle

 1. Sell-off rights: the primary market

 The issue over the indicia of Mickey Mantle is straightforward. Mantle signed a license agreement with Score Board on April 19, 1991, granting Score Board "the non-exclusive, non-assignable right" to sell items personally signed by Mantle for Score Board. (Score Board/Mantle Contract P2.) The contract, which was to expire on January 31, 1993, explicitly gave Score Board the right to sell any remaining merchandise after the expiration date:

 
11. Sales after termination
 
(a) Should this Agreement expire by its own terms, Licensee shall be permitted to sell its remaining inventory of Licensed Product following the termination date of this Agreement; provided, however, Licensee shall have paid all royalty amounts due Licensor hereunder.

 (Id. P 11(a).) The language here could not be clearer.

 Mantle subsequently signed a licensing agreement with Upper Deck (UDC) for the period of February 1, 1993 through January 31, 1996, granting UDC

 
exclusive worldwide rights to use and reuse . . . Mantle's name (as well as any nicknames), image, likeness, artists' portrayal of image or likeness, visual representation, signature (or facsimile thereof), photograph, voice, biography, statistics and endorsements ("Publicity Rights") on and in connection with the advertisement, promotion, give-away, and/or sale of any sports or entertainment item, product, merchandise or goods (the "Products") or services or other activity (the "Services"), in any sales, promotional and/or marketing area related to the sports or entertainment industry.

 (Upper Deck/Mantle Contract P 1.1) The Upper Deck/Mantle exclusivity clause provides:

 
During the term of this Agreement, and any renewals thereafter, Mantle shall not render any services for or on behalf of, nor shall Mantle authorize his Publicity Rights to be used in or as part of, or in advertising, publicizing or promoting any item, product, merchandise, goods, service or activity, except as noted below in Section 1.2 C. and D.

 (Id. P 1.2) As one of the exceptions mentioned above, the contract explicitly recognizes Mantle's agreement with Score Board and the fact that "sell off of remaining inventory after expiration [is] allowed." (Id. P 1.2(C)(8).) The agreement contains thirteen additional exeptions to Upper Deck's "exclusive" rights. (Id. P 1.2(C), (D).)

 Upper Deck concedes (as it must) that, even after the Score Board/Mantle contract expired, Score Board was entitled to sell genuine Mantle product supplied by Mantle during the course of the Score Board/Mantle agreement. The only issue regarding the Mantle indicia is the legality of Score Board's sale of Mantle's products purchased on the secondary market.

 2. The secondary market

 Upper Deck argues that Score Board's participation in the "unsavory" secondary market violates the Lanham Act and California's antidilution statute. This secondary market activity, Upper Deck contends, causes consumer confusion by falsely representing that Score Board is affiliated with both the athletes and Upper Deck, "the sole sources of authorized memorabilia bearing the Athletes' Indicia." Plaintiffs claim Score Board's secondary market participation -- in which Score Board allegedly does not follow Upper Deck's patented authentication procedures -- has tarnished the marks, and injured the reputation of Upper Deck and the athletes.

 Upper Deck ignores the long-standing "first sale" doctrine, which states that once a product enters the market, its trademark is not infringed by subsequent sales. See Sebastian Int'l, Inc. v. Longs Drug Stores Corp., 53 F.3d 1073, 1074 (9th Cir.) ("Resale by the first purchaser of the original article under the producer's trademark is neither trademark infringement nor unfair competition."), cert. denied, 516 U.S. 914, 133 L. Ed. 2d 207, 116 S. Ct. 302 (1995); Allison v. Vintage Sports Plaques, 1996 U.S. Dist. LEXIS 19783, 40 U.S.P.Q.2D (BNA) 1465, 1468 (N.D. Ala. 1996) (applying first sale doctrine to rights of publicity in context of sports trading cards).

 The first sale doctrine applies even when there is a likelihood of consumer confusion. In Sebastian, for example, the plaintiff, a manufacturer of hair care products, sold its goods only to an organization of professional salons and distributors, all of whom agreed to resell the manufacturer's products only to other members of the organization. Sebastian, 53 F.3d at 1074. Sebastian sought to prevent Longs Drug Stores (not a member of the organization) from reselling Sebastian products that Longs had purchased from third-parties (presumably from members of the organization, in violation of their contracts with Sebastian). The Court rejected Sebastian's argument that since Long's resales had confused consumers "into believing [falsely] that there is some type of affiliation, association, or approval between Longs and Sebastian," the first sale doctrine should not apply. Id. at 1075. The Ninth Circuit explained, "The 'first sale' rule is not rendered inapplicable merely because consumers erroneously believe the reseller is affiliated with or authorized by the producer." Id.

 In NEC Electronics v. CAL Circuit Abco, 810 F.2d 1506 (9th Cir.), cert. denied, 484 U.S. 851, 98 L. Ed. 2d 108, 108 S. Ct. 152 (1987), the Ninth Circuit applied the first sale doctrine to computer chips sales, despite the district court's finding "that some purchasers . . . mistakenly thought their chips were protected by [the producer's] servicing and warranties." Id. at 1508. Like the plaintiff in NEC, Upper Deck claims that Score Board's sale of memorabilia purchased on the secondary market will confuse consumers into thinking that the items have met Upper Deck's heightened standards of authenticity. As the NEC Court explained, though, this alone is not enough to sustain a Lanham Act claim. NEC, 810 F.2d at 1510 ...


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