agreement. First, a logical reading of the contractual conditions supports this analysis. Since the initial agreement was to terminate only upon completion of a certain number of autographs, it strains credulity to think that Score Board would have no right to sell the items autographed on that final day.
Second, there is ample evidence that both parties contemplated unlimited post-contractual sell-off rights. Score Board's president, Kenneth Goldin, has testified that Score Board tries "at all costs to make sure no sell-off provisions [setting a period of time after the expiration of an agreement that the licensee has to dispose of inventory featuring the licensed products] are included in the contracts." (Goldin Dep. at 221:20-25.) Score Board avoids such provisions so it does not "have to dump a large quantity of product in the marketplace over a short period of time . . . ." (Id. at 222:11-14.) Through his agents, International Management Group ("IMG"), Montana stated in a February 4, 1994 letter that "Score Board is permitted to sell off its existing inventory of products which had been autographed by Joe Montana during the term of the Contract. . . ." (Prince Letter, Feb. 4, 1994.) An internal memorandum written by Montana's agent confirms the parties' mutual understanding: "Joe signed two memorabilia contracts with Scoreboard, the last one which terminated on June 30, 1993, they have an unlimited sell off period." (Lund Memo, June 3, 1994 (emphasis added)).
Third, there is substantial evidence -- even from Upper Deck executives -- that standard industry practice permits the post-contractual sale of autographed sports memorabilia. Stuart Ellis, a former president of UDA, testified that when contracts are silent as to sell-off rights, the licensee generally may sell its remaining inventory.
Similarly, Al Thomas, the UDA executive who negotiated the UDA/Montana contract with IMG, has stated that "it is customary in the memorabilia business for there to be a sell off of inventory after the expiration of an endorsement agreement." (Thomas Decl. P 6.) Finally, Ken Goldin, president of Score Board has declared that, "absent such 'sell off' provisions, it is customary to sell inventory at any time." (Goldin Decl. P 4.) Upper Deck offers no evidence that standard industry practice prohibits post-contractual sell-off.
Fourth, Score Board's position is not weakened by any relevant case law. California law appears to be silent on sell-off rights in the sports memorabilia industry, and decisions from this Circuit and from other jurisdictions reach contradictory conclusions depending on the industry involved. Compare NEC Electronics v. CAL Circuit Abco, 810 F.2d 1506, 1509 (9th Cir.) (holding, in case involving sales of computer chips, that "once a trademark owner sells his product, the buyer ordinarily may resell the product under the original mark without incurring any trademark law liability"), cert. denied, 484 U.S. 851, 98 L. Ed. 2d 108, 108 S. Ct. 152 (1987) and Advanced Sports Concepts, Inc. v. Baden Sports, Inc., 1993 U.S. Dist. LEXIS 20311, 29 U.S.P.Q.2D (BNA) 1227, 1229 (S.D. Ohio 1993) (noting that, where a contract for oversized basketballs is silent as to post-agreement sell-off rights, "trademark law generally does not reach the sale of genuine goods bearing a true mark even though such sale was without the owner's consent" (quoting Weil Ceramics and Glass, Inc. v. Dash, 878 F.2d 659, 671 (3d Cir. 1989)) with Bill Blass, Ltd. v. Saz Corp., 751 F.2d 152, 154 (3d Cir. 1984) (holding, in action concerning designer coats, that "the sale of trademarked goods after termination of a license amounts to trademark infringement"). In light of the uncertainty and industry-specific nature of the case law, the Court will rely on the other factors explored above to determine the nature of Score Board's sell-off rights under its agreement with Montana.
It is clear, therefore, that the Score Board/Montana agreement contemplated sell-off rights after the contractual period. The inquiry thus should end here. It is of no consequence for this case if, for some reason, Montana and IMG later convinced Upper Deck that Score Board had no sell-off rights. Such misrepresentations would speak to IMG's liability to Upper Deck (currently the subject of another action in this district), not to Score Board's liability. Nonetheless, it may be instructive to take a look at the Upper Deck/Montana agreements.
Upper Deck (as UDC) and Montana entered into a licensing agreement dated January 8, 1991. The agreement granted UDC the right to use Montana's name and likeness for the purpose of producing, promoting and advertising its products, as well as the right to have Montana make certain personal appearances and attend photography sessions. (UDC/Montana Contract PP 2.1, 2.2.)
The agreement seeks to give UDC exclusive rights with respect to trading cards only:
During the term of this Agreement, Montana shall not render any Services for or on behalf of, nor shall Montana authorize his name, likeness, image, photograph, caricature, voice or biography to be used in or as part of, or in advertising, publicizing or promoting, any product of any other person, business or entity which product consists of Trading Cards or Holographic Products.
(Id. P 2.3.)
In 1992, the shareholders of UDC joined with others to form UDA, which began negotiating another contract with Montana. The parties signed an agreement, effective October 1, 1992, which purported to give UDA the exclusive right to Montana's autograph. (UDC/Montana Contract, P 2.2.)
In addition, the contract gave UDA the non-exclusive right to use Montana's name and likeness in connection with the production and sale of any of its products, even those that did not include Montana's original autograph. (Id. P 2.1.)
Although Upper Deck now contends that this contract gave it the exclusive rights to sell any and all memorabilia signed by Montana, the evidence suggests otherwise. First, the UDA/Montana agreement includes an exception to its exclusivity provisions, which provides:
Notwithstanding the foregoing to the contrary, UDA acknowledges that Montana has previously granted to Scoreboard, Inc. until June 30, 1993, the non-exclusive right to use the name, likeness, photograph and biographical information concerning Montana and services of Montana in the production of and distribution of items bearing the autograph of Montana and that such arrangement shall not constitute a breach of the agreement.