Konami sues Upperdeck over fake Yu-Gi-Oh cards
Posted On: March 20, 2009 by Milord A. Keshishian
Upper Deck Enjoined From Selling Yu Gi Oh! Cards; Prescient Threats Of “Mutual Assured Destruction” In Counterclaims
Los Angeles, CA - In October of 2008, Konami sued Vintage Sports Cards, Inc. in the Central District of California for sales of allegedly counterfeit Yu-Gi-Oh! trading cards (details blogged here). The Court entered a permanent injunction against Vintage and, after taking expedited discovery, Konami discovered that Upper Deck - Konami’s exclusive distributor - was the alleged source of the infringing cards distributed by Vintage.
Upper Deck allegedly was the source of “at least 531,240 counterfeit Rare Cards” provided to Vintage. And in October of 2008, Konami’s attorneys discussed Upper Deck’s role in the distribution of allegedly infringing cards with Upper Deck’s lawyers. During counsels’ communications, Upper Deck’s lawyers allegedly threatened Konami with “mutual assured destruction” through litigation.
Konami then provided Upper Deck with access to the seized cards and subpoenaed records from Upper Deck to determine the scope of the alleged counterfeiting and infringement. One day before responses were due, Upper Deck refused to comply with the subpoena raising an objection of improper service on its California office.
On December 10, 2008, Upper Deck filed suit in the District of Nevada alleging Konami breached its agreements and committed fraud. The complaint also contained causes of action for slander and civil conspiracy arising from Konami’s communications to third parties that Upper Deck provided counterfeit cards to Vintage. In response, on the very next day, Konami terminated its distribution agreement with Upper Deck. Upper Deck then raised the stakes by filing suit in Amsterdam on December 16, “seeking an interim order requiring specific performance of the European version of the parties’ distribution agreement.” Konami then alleged that Upper Deck misrepresented the holdings of the Dutch proceedings in that “the five-page interim order did not decide any issue in this action,” despite Upper Deck’s assertion to the Central District of California.
Konami amended its complaint to add Upper Deck as a co-defendant and moved for preliminary injunction against Upper Deck, which motion was denied without prejudice (details blogged here). Konami then renewed its motion for preliminary injunction against Upper Deck (read here), which injunction was granted.
On February 26, 2009, the Central District of California granted Konami’s preliminary injunction application enjoining Upper Deck from manufacturing, advertising and distributing the Yu-Gi-Oh! cards (read order here). In response, Upper Deck filed suit, in the District of Nevada, against Konami alleging trademark infringement of its hologram mark, in addition to Nevada unfair competition and deceptive trade practices claims. (Ryan Gile blogged here)
And now, as the cherry bomb on top of the “mutual assured destruction” sundae, Upper Deck has filed its counterclaims in the Central District of California (copy available here), wherein it asserts eleven causes of action including breach of contract, breach of implied covenant of good faith and fair dealing, fraud, slander per se, and civil conspiracy. Updates to the fireworks are sure to follow. The case is Konami Digital Entertainment, Inc. v. Vintage Sports Cards, Inc. et al., CV08-06630 VBF (C.D. Cal. 2008).
http://www.iptrademarkattorney.com/2009/03/upper_deck_enjoined_from_selli.html
Back last fall Konami, who owns the original Yugioh card game, runs it officially (card packs, tournaments, etc...) in Japan and the rest of Asia, and licenses it for the rest of the word, sued a company called Vintage who repackages older booster packs together with rare cards in blister packs and distributes them for resale through various mass market stores like Toys-R-Us, Walmart, Target, Shopko, etc. Konami found some of these blister packs that had genuine booster packs, but counterfeit rare cards, for sale in Toy-R-Us stores in the LA area.
In December, on the basis of info passed on to them from Vintage, Konami added Upper Deck to the lawsuit. Upper Deck has the licensing for distribution and organized play (tournament) rights for North America and Europe -- I think also for South America. I haven't a clue about Australia. Upper Deck immediately countersued.
Konami yanked all the rights and told Upper Deck to quit distributing product or running events -- that they, Konami, were going to do so from now on. Upper Deck got a stay that let them continue to do so -- actually two stays, one in Nevada for the U.S. and one in the Netherlands for Europe. Upper Deck has sponsored tournaments, distributed product, and generally done business as usual, including planning for upcoming tournaments, during December, January and early February.
Konami files more paperwork. Upper Deck files more paperwork.
And now a California court has upheld Konami's side, at least for the time being. Last week Upper Deck canceled all planned organized play and support. Yesterday and today they have been taking things off their webpage -- their official Yugioh TCG forums went down yesterday. Earlier today the banned/limited card list and rule book was up, but by evening it was gone, and the last of their Yugioh pages seem to have followed shortly after.
I figured if Upper Deck was pulling things off the internet a court must have ruled against them, but the first news report I've seen confirming this has been only in the last couple of hours.
Of course Upper Deck is saying they had nothing to do with the fake cards. And this is all Konami's fault. And it is the worst thing to possibly ever happen to the game. Of course Konami is saying they are the best thing since sliced bread and it's all Upper Deck's fault.
In the meantime Konami is planning its own organized play, seems to actually be getting things up and running fairly quickly without much delay, and seems to be scrambling to make this go as smoothly as possible. The lawyers on both sides will no doubt be kept busy for months, or years, to come though.
And those packs of fake cards? I probably bought one here in South Dakota, over a thousand miles away from LA, in our local Toys-R-Us. Oddly, one of the cards is almost certainly fake, the other may very well not be....
Edited: Actually, upon further searching, I have three cards that are almost certainly fakes. I thought I had gotten a good one, but no -- I actually own two copies of that card. One, the one I looked at first, is genuine -- I pulled it from a pack during the McDonald's Happy Meal promotion a couple of years ago. But going through my cards, I have another copy -- and that one is most probably a dud. I thought the packs here in Rapid only had two rares included, but my friend's daughter said they had three and remembered what the third card was -- and by golly, I have two copies of it also, one good and one bad. Good Grief....
http://starwefter.livejournal.com/24228.html