Law of Cards: Executive Trading Countersues Upper Deck

Law of Cards: Executive Trading Countersues Upper Deck

It seems this election year everyone is bickering a little more than usual. Politicians are busy disagreeing with each other as to why each of their vague visions for the future of the country is right (or wrong). Attack ad after attack ad is aired, all of which boil down to, "Be afraid, be very afraid of the other side!"

Throngs of voters wonder how the deluded voters on the other side could be so dumb. And this year, to continue with this allegedly patriotic spirit, two trading cards companies are trading barbs. No, they're not over political issues. Rather, it's over political trading cards.

As I previously wrote, last month UD brought a declaratory judgment action against Executive Trading because Executive sent UD a cease and desist letter.

Legal translation: Basically a, "Hey, leave me alone!" lawsuit in response to a "Hey, stop what you're doing!" letter.

In response to this lawsuit, Executive filed a few counterclaims against UD. Twelve, actually.

Legal suggestion: Come on Executive. You couldn't come up with one more? Heck, 13 counterclaims like the 13 original colonies? It's an election year. Stick with the theme!

Executive's counterclaims read like a list of warnings on a medication commercial:

  • Unjust enrichment
  • Copyright infringement
  • Breach of contract
  • Theft of trade secrets
  • Breach of fiduciary duty
  • Negligent and fraudulent misrepresentation, etc., etc.

According to Executive, the story starts in May, 2010. A Mr. VanGrinsven from Executive contacted UD to see if both companies could work together "to produce and market a collectable set of politically-themed trading cards." We know UD was initially interested because on July 9, 2010, it and Executive entered into a Confidential Agreement.

Legal translation: The Confidential Agreement outlined that Executive would provide allegedly confidential materials to UD, and UD would keep those materials secret.

Allegedly, things started off well. On August 10, 2010, UD proposed it would work with Executive to "in part, develop, manufacture, market and sell political trading cards and any derivative products." To help things along, Executive traveled to UD headquarters on August 20. They allegedly met with UD CEO, Richard McWilliam, who stated that although UD was frequently approached by third parties, "Executive Trading's idea was one of the best he had ever seen and his response was very positive."

Personal aside: Really? Political trading cards? The best idea ever? UD must be approached by a lot of crackpot ideas.

After this meeting, things were going so well, Mr. VanGrinsven prepared to move to California in September, 2010.

As you’ve probably guessed, things began to fall apart.

Starting in September, 2010, Executive was allegedly "met with delay and stalling" by UD. For example, in January, 2011, UD allegedly stated it was "still interested in a partnership with Executive Trading but we will be unable to give it the attention it needs until the middle of the year."

Things continued like this for five months (and Executive's counterclaim painfully goes through ALL of the communications that went back and forth during this time period, which when you're finally done reading, you feel like you're five months older). Finally, in July, 2011, UD told Executive that:

After receiving further feedback from our sales team, it has become clear that the mass retail outlets have minimal interest in placing this set; therefore, we would not receive the distribution ended to justify producing a political set leading up to the next election.

We certainly appreciate your efforts, and hope the opportunity to get a similar product on shelf presents itself in the future.

Legal translation: The electorate has spoken, and you've been voted out of office! Buh-bye.

On July 28, 2011, UD formally broke things off and told Executive that it would not produce a set of political trading cards and could not move forward with any business arrangement with Executive.

So, six months later, UD released its own World of Politics cards, an insert set -- without Executive.

Legal translation: To be fair, UD didn't release a set of political trading cards, it released a set of political trading inserts to be included in 2011 Upper Deck World of Sports release.

As you can guess, this ticked Executive off. To use Executive's own words:

Despite representing to Executive Trading that Upper Deck would not produce such works without Executive Trading, Upper Deck moved ahead with Executive Trading's idea, and used its proprietary information, to the complete exclusion and detriment of Executive Trading and in breach of the Confidential Agreement.

Which brings us to today: Executive suing UD for allegedly being a bad business partner and stealing Executive's "proprietary" information.

Now, after reading everything, I hate to be harsh, but even if Upper Deck did everything that Executive Trading alleges, it’s unclear if it did anything illegal like violating a copyright or breaching a contract.

For example, Executive states that UD went forward with Executive's "idea" and "used its proprietary information." First, I'm sorry, but "ideas" can't be protected by copyright. Second, while the term "proprietary" is littered throughout the counterclaims, the exact "proprietary information" that was allegedly used or stolen is not explained. It's a long complaint and I can't point to a specific, identifiable trade secret that's allegedly at issue here.

Legal translation: Politicians' statements on how they'll act in certain positions are always vague. They never say "If X happens, I will do Y." Like that, Executive's counterclaims do not say "The proprietary information at issue in this suit is X" and "UD stole it because it appears in Y."

That's an important factor for me, because I litigate cases like this on a contingent fee basis. And if the potential client cannot point to thetrade secret or themost important information that was taken, we'll reject the case. If it's just "something" nebulous that was stolen, I won't vote to bet my firm's time, resources and money on bringing such an action.

As I see it, if Executive cannot explain what the "proprietary" information is, and why UD never would have learned about it but for the Confidential Agreement, it's likely not going to win.

The whole focus of the allegedly "proprietary" information appears to be the idea of a political trading card set. Well, that's not proprietary. In attempting to find Executive's copyright registration, I typed in "political trading cards" into the Copyright Office's database and found this:

Registration Number / Date:

TXu000754027 / 1996-08-07

Title:

Political trading cards.

Copyright Claimant:

Thomas Lawrence Behlert, 1949-, a.k.a. Larry Beezer

Date of Creation:

1996

Basis of Claim:

New Matter: selection & arr.

Names:

Behlert, Thomas Lawrence, 1949-
Beezer, Larry

Yeah, way back in the election year that gave Bill Clinton his second term, someone copyrighted a set of political trading cards.

Legal translation: If Executive's trade secret is just the idea of a political card trading set, this is what we call in the legal business "a bad fact."

As the case progresses, maybe the issue of what's "proprietary" will be cleared up. Maybe there's something there that is the equivalent of a trade secret. But at this time, I don't see it.

On the bright side, Executive's counterclaims do provide an amusing story about Upper Deck.

"On or about July 5" Executive sent a cease and desist letter to UD about the World of Politics trading cards and asked for an answer by July 20. On July 10, Upper Deck asked if it could have until August 2 to respond. Executive Trading said sure.

August 2 came around, and UD asked for four more days because Upper Deck's in-house counsel "computer had crashed," so it couldn't respond.

Executive again said sure. Why not. We're all friends.

So, what happened? On August 3, Upper Deck sued Executive.

Legal conclusion: If you wanted to sue, just sue! Don't lead them on, too!

It being an election year, let's put it to a vote. Did UD lead Executive on for a year, and then steal Executive's trade secrets? Or, is Executive just angry that it got out-maneuvered in the cut-throat trading card world?

Vote early! Vote often!

Here's a copy of Executive's complaint and an exhibit they filed.

The information provided in Paul Lesko's "Law of Cards" column is not intended to be legal advice, but merely conveys general information related to legal issues commonly encountered in the sports industry. This information is not intended to create any legal relationship between Paul Lesko, the Simmons Browder Gianaris Angelides & Barnerd LLC or any attorney and the user. Neither the transmission nor receipt of these website materials will create an attorney-client relationship between the author and the readers.

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Paul Lesko is a shareholder at Simmons Browder Gianaris Angelides and Barnerd LLC and the chair of its Intellectual Property Department (http://www.simmonsfirm.com). Don’t hold the fact that Paul is a lawyer against him, he’s also a rabid baseball and college basketball fan, and an avid baseball card collector. Paul can be found on Twitter @Paul_Lesko and Google+.

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