Fanatics, Panini and Stuff
When you look at the federal court docket, it is filled with lawsuits. In quite a few, Panini sues to enforce it’s trademarks. As it notes on one case, “Panini is the owner of the unique and proprietary trademarks and tradenames “PANINI,” “RATED ROOKIE,” “PRIZM,” “DONRUSS,” “KABOOM!,” “OPTIC,” “OBSIDIAN,” “SELECT,” “BLACK,” “IMMACULATE” and “NATIONAL TREASURES” in both word and design formats.” In one particularly saucy case, Panini sued a company putting its marks on cards of porn stars. See https://www.totalprosports.com/general/panini-bangbros-lawsuit-sports-cards/.
Legally, What is a Sports Card?
As Panini notes, “Sports trading cards generally have two key ingredients: (1) a license from a sports league for that league’s marks—such as team logos and color combinations—and (2) a license from that league’s players association for the use of player names, images, likenesses, signatures, and the like (“Major League Licenses”). With those two ingredients—and only those two ingredients—a licensee can proceed with the production and sale of a fully licensed, trading-card set complete with league logo, team uniform, and player image (and perhaps much more).” BOTH are necessary, as “neither an individual league nor an individual players association has or could itself produce and sell fully licensed trading cards.”
Panini further divides cards by collector type. Panini admits, “Mass Market cards are targeted to casual collectors, such as youngsters, and enthusiasts. Mass Market cards are the modern successor to the wax-paper-wrapped, bubble-gum packets of decades past. Mass Market cards are likely to be found trading and circulating in the schoolyard.” By contrast, “Premium cards are premium products with high-end printed features and one-of-a-kind differentiators such as hand-signed autographs or pieces of jerseys integrated into the cards—or both.” Further, “Large price differences… distinguish the two different types of cards, and quality differences make the two types of cards suitable for different collectors with very different aims.”
Who’s on First?
Three major companies are most known in the sports trading card sphere- Topps, Upper Deck and Panini.
Topps
In 1951, Topps produced its first baseball cards in two different sets known today as Red Backs and Blue Backs. It was more similar to a deck of playing card than what you see now. Topps changed its approach in 1952 with a larger 407 card set of baseball cards and packaged them with its signature product, bubble gum. Topps generally obtained the rights to depict players on merchandise by signing individual players to contracts. Another gum manufacturer, Bowman, sued Topps and tried to stop them from combining baseball and bubblegum. The fight continued until 1956, when Topps bought out Bowman.
Fleer then emerged as competition and signed Ted Williams. Fleer and Topps fought for years until Fleer sold its remaining player contracts to Topps for $395,000 in 1966. The decision gave Topps an effective monopoly of the baseball card market. The Major League Baseball Players Association was then established and negotiated rights with Coca-Cola and others. However, Topps refused to bargain. It Topps pointed out it didn’t need the MLBPA because it had individual player contracts. As the sport grew, so did Topps nneed for licenses. Topps held an exclusive license with MLB, as well as a nonexclusive license with the MLB Players Association. Topps also had an exclusive agreement with MLS.
In 2021, Fanatics stepped in and acquired future exclusive licenses with Major League Baseball and the MLB Players Association to produce baseball cards. In January 2022, Fanatics acquired Topps for $500 million dollars.
Upper Deck
Upper Deck was born as a trading card company, not a candy company. It was founded in 1988. On December 23, 1988, Upper Deck was granted a license by Major League Baseball to produce baseball cards, and just two months later, on February 23, 1989, delivered its first two cases of baseball cards to a local card shop in Tulsa, Oklahoma. Its product was so different, it escalated in popularity. The 1990 set included the industry’s first randomly inserted autographs and limited number editions of certain superstars. Upper Deck was also the first to insert swatches of game-used material into cards when it made jersey cards in 1997.
On March 20, 1990, The Upper Deck Company was granted licenses by the National Hockey League and National Hockey League Players Association to produce hockey cards. The company also obtained licenses from the National Football League and the National Basketball Association in 1990, making the Upper Deck Company the first trading card company in 10 years to be licensed by all four leagues.
In July 2005, Upper Deck won the liquidation auction of former competitor Fleer-SkyBox International’s brand name, assets, and business model. It grew fast and even sought to acquire Topps in March of 2007. It lost the bid to Madison Dearborn Partners and Tornante Company.
Thereafter, Upper Deck started losing licenses. On August 6, 2009, Major League Baseball announced it entered into a multi-year deal with new owner of Topps, giving it exclusive rights to produce MLB trading cards. Upper Deck would retain its rights to produce cards bearing player likenesses via its contract with the MLBPA but will be unable to use team logos or other trademarked images. On April 7, 2010, Upper Deck announced it would no longer be licensed to produce NFL trading cards. It mostly trades in hockey, professional wrestling and entertainment cards currently.
Panini
Panini is an Italian company most known for the international publication of books, comics, magazines, stickers, trading cards and other items. It is headquartered in Modena, Italy, and named after the Panini brothers who founded it in 1961. It looked for ways to gain a foothold in the United States. It found a path with the acquisition of Donruss.
Donruss produced baseball cards from 1981 to 1998, until then-parent company Pinnacle Brands filed for bankruptcy. Baseball card production resumed in 2001, when then-parent company Playoff Corporation acquired the rights to produce baseball cards. From 2007 to 2009, Donruss released baseball card products featuring players that were no longer under MLB contract after MLB decided to limit licensing options in 2005. Playoff could not obtain Pinnacle/Donruss’ baseball and hockey licenses, On March 13, 2009, Panini s.p.a. of Italy (which had previously acquired the exclusive license to produce NBA trading cards beginning with the 2009–10 season), announced that it had purchased Donruss Playoff.
It its recently lawsuit against Fanatics, Panini describes itself saying, “For over sixty years, Panini Group has produced and sold trading cards outside the United States. Panini Group entered the United States trading-card business in 2009 through its subsidiary, Panini America, Inc. (“Panini”).”
Panini details its own history in the lawsuit:
- “In January 2009, the NBA announced a four-year exclusive deal with Panini to produce and sell NBA player trading cards. At the time, the NBA controlled both the League and player licensing rights, so that deal covered the NBA League itself and its players association.
- Later that year, after securing the NBA deal, Panini bought the assets of Donruss Playoff, L.P., an American trading-card company that at the time held nonexclusive licenses with the NFL and NFL Players Association.
- So by the end of 2009, Panini was producing and selling NBA player trading cards (exclusively) and NFL player trading cards (nonexclusively).
- And in 2011, Panini secured a three-year, nonexclusive license with the MLB Players Association.”
Panini stated in the lawsuit that it “holds exclusive licenses with the NFL (through March 2026), the NFL Players Association (through February 2026), and the NBA (through September 2025). Panini also holds a license with the NBA Players Association through September 2025. Panini previously held a nonexclusive license with the MLB Players Association that expired in December 2022.”
Not So Fast!
About 17 days after Panini sued Fanatics, the National Football League’s Players Association sent a letter to all of the agents for its players:
“NFL Players Inc. has terminated its trading card agreement with Panini. Effective immediately, Fanatics has the exclusive right to make NFLPA-branded trading cards. This decision has no impact on any individual Players’ contractual agreements) with Panini. If you represent any Player(s) with an existing Panini agreement, the NFLPA recommends that you encourage the Player(s) to fulfill his contractual commitments to Panini.”
Panini responded:
“We believe this was a totally unwarranted and improper action by the NFL Players Association in conjunction with Fanatics, especially in light of the unprecedented sales by Panini of NFL trading cards… Panini has grown the category of sports trading cards by over 1,000 percent since 2009, to the benefit of all concerned. We believe the only party who benefits from this action by the NFL Players Association is Fanatics, and not the players, the leagues or consumers. We note that in addition to the NFL Players Association license, Panini has licenses with the NFL and over 360 individual players. Panini will honor all of its contractual obligations.”
What’s on Second?
Fanatics
Fanatics started essentially as an online store for sports apparel. It was the first real website that was able to provide the sports fan with easy access to the world of licensed items and clothing. It’s grown tremendously, now a leader in sports collectibles, NFTs, trading cards, and sports merchandise, as well as sports betting and iGaming. Michael G. Rubin has grown from the 1998 creator of an apparel and logistics company, Global Sports Incorporated, to the leader of a multibillion-dollar e-commerce company. In 2011, Rubin acquired Fanatics from its founders, brothers Alan and Mitchell Trager. He’s combined franchises and expanded the name fanatics to the echelon of success. He hosts an annual who’s who “white party.” He’s himothy.
Fanatics started in apparel, with 10-year deals with Nike, the National Football League and Major League Baseball that granted Fanatics the rights to design, manufacture and distribute all Nike fan gear sold at retail for both leagues. In 2021, Fanatics announced plans to evolve into a global digital sports platform through expansion into the world of NFTs, trading cards, gambling and gaming, ticketing, media and more.
In August 2021, Fanatics secured long-term Trading Cards manufacturing and distribution rights from MLB, MLBPA, NBA, NBPA and NFLPA, which were set to start in 2026.It then acquired Topps and lifestyle and streetwear brand Mitchell & Ness. In May 2023, Fanatics set a deal in motion to aquire PointsBet’s US business in an acquisition worth $150 million and marking the sports giant’s first major leap into U.S. sports betting.
What really sets Fanatics apart is their deals with the sports league which ties them to the league’s retail infrastructure. In 2015, the NBA announced a multi-year partnership with Fanatics to operate its 25,000 sq ft flagship store in New York City. Fanatics also operates the online NBAStore.com. In March 2016, the NFL and Fanatics agreed to a new long-term extension to operate NFLShop.com. The NFLPA also granted Fanatics the rights for player merchandise. In December 2015, MLB announced a merchandise deal that split the rights between Fanatics and Nike. In August 2021, it was announced that Fanatics would take over the MLB baseball cards license from Topps after 2026. With the subsequent purchase of Topps by Fanatics in January 2022, the license began immediately.
Fanatics Burns Panini
As noted in its recent lawsuit against Fanatics, “Panini currently holds an exclusive license with the NBA through September 2025, a license with the NBA Players Association through September 2025, and exclusive licenses with the NFL and the NFL Players Association through March and February 2026.” It simultaneously accused Fanatics of stepping on its turf, arguing, “Fanatics began its Anticompetitive Conduct by secretly securing long-term, exclusive licensing deals with the NBA and MLB, along with each of their respective players associations, the NFL Players Association, and later the NFL itself. Although the exact terms have not been made public, the NBA and NBA Players Association deals are for at least ten years and the NFL, NFL Players Association, MLB, and MLB Players Association are for twenty years. So Fanatics has locked up all three major sports for the next decade and two of them for the next two decades.” Based on this accumulation of rights, Panini claims, “Fanatics has tortiously interfered with Panini’s existing contracts and future business and engaged in unfair competition and commercial disparagement through disseminating false, derogatory statements about Panini.”
Making Panini further upset, “Fanatics acquired another trading-card company, Topps, which immediately gave it active licenses with MLB (exclusive), MLB Players Association (nonexclusive), and Major League Soccer (MLS) (exclusive).”
And if that wasn’t enough, Panini accuses Fanatics of “raiding Panini’s employees.” And not just employees, as Panini alleges, “And it signed star, rookie NFL and NBA players to exclusive deals for their original, handwritten autographs, denying Panini access to them during the coming years when Panini still holds exclusive rights at least to those Leagues’ marks. Fanatics acquired control of and proceeded to interfere with Panini’s source of specialized manufacturing for over ninety percent of Panini’s requirements.” In its lawsuit, Panini readily admits, “(Fanatics) cut off Panini’s main supply of player jerseys for use in trading cards.”
The irony is dumbfounding. Panini has produced self-competitive product year-around under different names. It generates “one-of-one” cards by the hundreds. And the original meaning of a memorabilia patch is often meaningless, as people pay for a 1” by 1” piece of cloth which often has never even been in the same room as the player adjacent to it on the card. Irony, though, doesn’t matter to federal courts.
A Game of Monopoly
Fanatics responded with a countersuit and saying:
“Panini’s lawsuit is a baseless last-gasp, flailing effort by a company that has lost touch with its consumers, is failing in the marketplace and has tried unsuccessfully for years to sell itself… Panini is trying to blame Fanatics for its own inability to keep pace with what players, fans, and even its own employees want.”
Panini specifically blames CEO Michael Rubin , saying he approached Panini in May of 2023 to threaten that Fanatics would no longer supply Panini with any jerseys for Panini to offer to consumers as elements of its trading cards” and “would not stop its pressure campaign against Panini and continue to sign exclusive deals with players.”
The Federal Trade Commission and Justice Department will be asked to take a look at whether these advantages Panini has had constitute unfair practices and monopolization. Certainly, Fanatics has played chess while Panini has played checkers
Fanatics defends itself as an innovative disruptor that overthrew an undesirable status quo, much like Panini did for the last decade. In its 101-page counter-lawsuit, it describes Panini as an antiquated foreign incumbent that rightfully lost its preeminent position after growing complacent and alienating its customer base:
“Panini’s strategy is an admission of its ineptitude: rather than elevating the collector experience, granting licensors access to downstream opportunities, or improving the broader industry, Panini is trying to undermine its competitor through unfair tactics so that it may continue to treat its American subsidiary as an ATM serving its private owners in Italy.”
What’s Next?
Lawyers. Lawyers are next. There will be moves and counter moves, but the NFLPA’s shot across the bow will be litigated. Was it premature? What induced it? What about the 1000 other “one of one’s” planned for next MLB, NFL or NBA season? We will have to wait and see.
Update: 09/20/2023
Panini v. WWE.pdf
Further Reading:
Panini Lawsuit 2.pdf
Panini Rated Rookie TM Lawsuit.pdf
Panini v. Fanatics.pdf