Upper Deck Settles With Konami

[blowoutcards]

Upper Deck Settles With Konami

Wednesday, 27 January 2010
The damages phase of a trial that pitted Upper Deck against its one-time partner was over almost before it began. How much it's costing the California card maker is a mystery.
A damages tril in the Konami Digital Entertainment v. Upper Deck case was scheduled to begin Tuesday, but after a jury was sworn in and opening statements given, the long-running dispute came to an abrupt end when the two companies settled privately for an undisclosed award.

Last month, United States District Judge Valerie Baker Fairbank ruled that Upper Deck counterfeited over 600,000 cards from the Yu-Gi-Oh! trading card game, and was liable to the Japanese company for damages.

Yu-Gi-Oh! is based on a Japanese animation show. Upper Deck and one of its subsidiaries had been a distributor for the product.

In depositions filed with the court last year, Upper Deck admitting it had ordered the printing of the cards, which the court ruled violated trademark, copyright and unfair competition laws.

The bogus cards were printed in China during 2007 and imported to the U.S. without KDE's knowledge or authorization.

Discovery in the lawsuit revealed that Upper Deck employees, including its Chairman, Richard McWilliam, participated in a 2008 meeting in McWilliam's office, where they discussed that the cards made without authorization by Upper Deck "did not look authentic enough". Samples of the counterfeit cards were then shredded according to testimony from Upper Deck executive Stephanie Mascott.
The jury seated for the damages trial, consisting of four men and four women, could have been in for a two-week stay but were excused once attorneys for both sides declared their truce about mid-afternoon Tuesday.

Upper Deck Settles With Konami | Sports Collecting News, Memorabilia, Baseball C-Sports Collectors Daily

[blowoutcards]

JANUARY 27, 2010 | ANTITRUST & TRADE REG.

Yu-Gi-Oh Case Is Yu-Gi-Over

By Ciaran McEvoy

Daily Journal Staff Writer

LOS ANGELES - The Upper Deck Co. ageed to pay an undisclosed sum to Japan-based Konami Digital Entertainment Inc. Tuesday to settle a counterfeiting lawsuit after acknowledging it produced hundreds of thousands of fake Yu-Gi-Oh! trading cards.

The afternoon deal was struck after each side had given opening statements in a trial to determine damages. U.S. District Judge Valerie Baker Fairbank excused the four-man, four-woman jury.

As part of the deal, Upper Deck agreed to a permanent injunction barring it from distributing the Yu-Gi-Oh! Trading Card Game and to make a series of undisclosed payments to Konami. Previously, Upper Deck had been the exclusive distributor of the popular game.

Upper Deck's first settlement payment is due Friday and its last is due March 31, according to discussions in court.

Fairbank set a July 26 hearing to discuss an official dismissal of the lawsuit.

"We are pleased that it's over," said a grinning Benjamin J. Fox, a partner at Morrison & Foerster in Los Angeles who represented Konami, outside Fairbank's courtroom. Konami had asked for at least $50 million and up to $150 million in damages.

"Upper Deck is extremely pleased with the cooperative resolution with Konami," said Richard K. Howell, a partner at Rutan & Tucker in Costa Mesa.

Before trial, Upper Deck conceded its printing and distribution of the approximately 611,000 phony cards violated trademark and copyright laws as well as unfair competition laws, according to court documents. The fake cards were printed in China in 2007, imported to the United States and distributed without Konami's authorization, court papers state. Konami Digital Entertainment Inc. v. The Upper Deck Co., CV 08-6630 (C.D. Cal.)

The counterfeiting stemmed from Upper Deck's agreement with its sub-distributors, which called for unsold Yu-Gi-Oh! products to be returned to Upper Deck. The card company repackaged the unsold cards with fake cards, which it marketed as "rare," in order to sell the product to consumers, according to court papers.

During pre-trial depositions, five current and former Upper Deck employees invoked their Fifth Amendment privilege against self-incrimination. One Upper Deck employee testified she witnessed the company's chairman Richard McWilliam shredding fake Yu-Gi-Oh! cards in his office after determining they did not look authentic enough, court papers state.

ciaran_mcevoy@dailyjournal.com