Upper Deck Co. v. Panini Am., Inc., Case No.: 20cv185-GPC(KSC)

Decision Date29 June 2020
Docket NumberCase No.: 20cv185-GPC(KSC)
Parties The UPPER DECK COMPANY, a Nevada corporation, Plaintiff, v. PANINI AMERICA, INC., Defendant.
CourtU.S. District Court — Southern District of California

Craig McKenzie Nicholas, Shaun A. Markley, Nicholas & Tomasevic LLP, San Diego, CA, for Plaintiff.

Benjamin J. Fox, Morrison & Foerster, LLP, Daniel A. Solitro, Locke Lord LLP, Los Angeles, CA, Charles Phipps, Pro Hac Vice, Locke Lord LLP, Dallas, TX, Joyce Liou, Morrison & Foerster, San Francisco, CA, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

Gonzalo P. Curiel, United States District Judge

Before the Court is Defendant's motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). (Dkt. No. 12.) Plaintiff filed an opposition and Defendant replied. (Dkt. Nos. 16, 19.) Based on the reasoning below, the Court GRANTS in part and DENIES in part Defendant's motion to dismiss.

Background

On January 29, 2020, Plaintiff Upper Deck Company ("Plaintiff" or "Upper Deck") filed a complaint against Defendant Panini America, Inc. ("Defendant" or "Panini") alleging eight claims under the Lanham Act and related state law causes of action. (Dkt. No. 1, Compl.) The eight causes of action are: 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 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. ("UCL"). (Id. )

Upper Deck is a worldwide sports and entertainment company that produces sports memorabilia products, trading card products, as well as many other sports and entertainment products. (Id. ¶ 2.) For decades, Upper Deck has been and continues to have an exclusive license with Michael Jordan ("Jordan") to "use his image, name, likeness, marks, and other rights on and in connection with, among other products, trading cards." (Id. ¶ 4.) It has been the only trading card manufacturer to have a license agreement with Jordan. (Id. ¶ 7.) Jordan's name has been registered as a trademark with the U.S. Patent and Trademark Office since at least 1988. (Id. ¶ 16.) Jordan's jersey number 23 is also a federally registered trademark. (Id. ¶ 17.)

Panini is one of Upper Deck's main competitors in the trading card market and also enters into exclusive license agreements for, among other licensed products, trading cards and since 2009 has had exclusive license agreements with current active players of the National Basketball Association ("NBA"). (Id. ¶¶ 6, 8.) However, its license does not include the right to feature Jordan in any Panini's trading cards. (Id. ¶¶ 8, 32.)

Jordan's name is distinctive, famous and easily recognized throughout the world. (Id. ¶ 16.) In 1984, the Chicago Bulls drafted Jordan third overall in the NBA draft after a stellar collegiate career. (Id. ¶¶ 17, 18.) While in the NBA, Jordan won six championships with the Chicago Bulls; as a result, his name and image along with the number 23 is and continues to be legendary and may be the most famous name and jersey number in the history of professional sports. (Id. ¶ 20.) Millions around the world easily recognize these marks. (Id. ¶ 21.) As a result, trading cards featuring Jordan's publicity rights are highly valuable and highly sought after in the marketplace in the primary and secondary markets. (Id. ¶ 22.) Further, a new trading card featuring Jordan in his 23 number jersey has not been released for at least 10 years which has left collectors with an insatiable appetite for any Jordan trading card. (Id. ¶ 25.)

The market for sports trading cards is extremely lucrative; for example, a single rare trading card featuring Jordan sold on eBay for $350,100. (Id. ¶ 26.) Moreover, the background imagery of a trading card can have substantial bearing on the value of the card. (Id. ¶ 44.) 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. (Id. ¶¶ 44-45.)

In November 2017, Panini printed the 2017-2018 Donruss Basketball Retro Series card featuring Scottie Pippen which did not include any image of Jordan. (Id. ¶¶ 35, 37 (photo).) Four months later, in April 2018, Panini released its 2017-2018 Donruss Optic Retro trading card set which was its more expensive and higher end version of the Donruss Basketball Retro series released in November 2017. (Id. ¶ 36.) Within the set, Panini included the same exact image featuring Scottie Pippen ("Pippen Card") on the 2017-2018 Donruss Basketball Retro Series, but this card included a small image of Jordan in the bottom right corner of the card. (Id. ¶ 37 (photo).) Panini later released its 2018-19 Panini Contenders Basketball trading card set. (Id. ¶ 38.) Within this set, Panini included a card of Dennis Rodman ("Rodman Card"), the background of which prominently featured Jordan. (Id. )

Upper Deck alleges that Panini deliberately altered and manipulated Jordan's image into the background of these 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. (Id. ¶¶ 9-10.) As part of the exclusive license, Jordan assigned Upper Deck the right to begin an action relating to a third party's infringing use of Jordan's rights. (Id. ¶¶ 27, 50, 94, 99.) Defendant moves to dismiss the complaint for failure to state a claim on all causes of action which is fully briefed.

Discussion
A. Legal Standard as to Federal Rule of Civil Procedure 12(b)(6)

Federal Rule of Civil Procedure ("Rule") 12(b)(6) permits dismissal for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police Dep't. , 901 F.2d 696, 699 (9th Cir. 1990). Under Federal Rule of Civil Procedure 8(a)(2), the plaintiff is required only to set forth a "short and plain statement of the claim showing that the pleader is entitled to relief," and "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

A complaint may survive a motion to dismiss only if, taking all well-pleaded factual allegations as true, it contains enough facts to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955 ). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. "In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotations omitted). In reviewing a Rule 12(b)(6) motion, the Court accepts as true all facts alleged in the complaint, and draws all reasonable inferences in favor of the plaintiff. al-Kidd v. Ashcroft , 580 F.3d 949, 956 (9th Cir. 2009).

Where a motion to dismiss is granted, "leave to amend should be granted ‘unless the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency.’ " DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986) ). In other words, where leave to amend would be futile, the Court may deny leave to amend. See DeSoto, 957 F.2d at 658 ; Schreiber, 806 F.2d at 1401.

B. First Cause of Action - Unfair Competition, 15 U.S.C. § 1125(a)

Defendant moves to dismiss the false endorsement claim1 under 15 U.S.C. § 1125(a)(1)(A) and false advertising claim under 15 U.S.C. § 1125(a)(1)(B).

The Lanham Act was intended to make "actionable the deceptive and misleading use of marks," and "to protect persons engaged in ... commerce against unfair competition." 15 U.S.C. § 1127. Section 43(a) of the Lanham Act provides, in pertinent part:

(1) Any person who, on or in connection with any goods or services ... uses in commerce ... [any] false or misleading representation of fact, which--
(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or
(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities,
shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

15 U.S.C. § 1125(a)(1). " Section 1125(a) creates two distinct bases of liability: false association, § 1125(a)(1)(A), and false advertising, § 1125(a)(1)(B)." Lexmark Int'l, Inc. v. Static Control Components, Inc. , 572 U.S....

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