Upper Deck Forced to Settle with Konami Digital Entertainment, Inc.

UPPER DECK FORCED TO SETTLE WITH KONAMI DIGITAL ENTERTAINMENT, INC. AFTER ADMITTING TO
COUNTERFEITING HUNDREDS OF THOUSANDS OF
Yu-Gi-Oh! TRADING CARD GAME CARDS
The Upper Deck Company permanently barred from acting as an authorized distributor of the Yu-Gi-Oh! TRADING CARD GAME

El Segundo, CA – (February 3, 2010) – Konami Digital Entertainment, Inc. (KDE) is pleased to announce that it has resolved its litigation against The Upper Deck Company (Upper Deck), KDE’s former distributor of its immensely popular Yu-Gi-Oh! TRADING CARD GAME (TCG). The lawsuit was settled to Konami’s satisfaction following opening statements during the trial in Federal Court in Los Angeles on January 26, 2010.

“At this point, Upper Deck doesn’t have a lot of Life Points. We’re talking about behavior that, from a defense attorney’s standpoint, I can’t defend and I am not going to defend,” noted attorney Richard Howell, of Rutan & Tucker, who represented The Upper Deck Company during the trial. “I’m here defending a counterfeiter. And now I have to deal with that issue.”

“We are extremely pleased with the successful resolution of our case against Upper Deck,” said Kazumi Kitaue, Chairman of KDE. “Konami’s goal is and has been to protect Duelists from counterfeit Yu-Gi-Oh! TCG cards and to protect the integrity of the Yu-Gi-Oh! TCG. This goal was achieved when Upper Deck was prohibited for eternity from distributing counterfeit Yu-Gi-Oh! TCG cards and from holding itself out as the authorized distributor of the Yu-Gi-Oh! TCG.”

“This entire situation came as a huge shock to us. As a company that has based their entire business model on producing authentic entertainment and sports licensed products, Upper Deck went against their very core beliefs by counterfeiting Yu-Gi-Oh! TCG Cards,” commented KDE’s Vice President of Card Business Yumi Hoashi. “It was very disheartening to learn that a trusted business partner would take these actions to dupe us and the Yu-Gi-Oh! TCG community."

The litigation began in October 2008, when KDE discovered that counterfeit cards from the Yu-Gi-Oh! TCG were being sold in Toys R Us stores by a sub-distributor for Upper Deck. KDE filed suit, and the sub-distributor told KDE that the counterfeit cards were supplied by Upper Deck.

“As a leading company in this card industry, Upper Deck should have known more than well that counterfeit activities would irreparably harm the trust of Duelists and the integrity of the Yu-Gi-Oh! brand,” said KDE’s Hoashi. Upper Deck initially denied those charges and issued press releases announcing that any suggestion that Upper Deck would be involved in counterfeiting activity is “absurd.”

Failing to own up to its actions, Upper Deck sent out a press release on January 29, 2010 stating its satisfaction with the settlement and how the judge ruled against KDE in several areas. The ruling that United States District Judge Valerie Baker Fairbank made on December 23, 2009 was simple. She ruled that Upper Deck violated trademark, copyright and unfair competition laws by counterfeiting Yu-Gi-Oh! TCG cards.

Discovery in the lawsuit revealed that Upper Deck had counterfeited Yu-Gi-Oh! TCG cards, and that it took extensive steps to cover-up that activity. The cover-up included a meeting in the office of Upper Deck’s chairman, in which he and at least one other Upper Deck employee compared samples of authentic Yu-Gi-Oh! TCG cards against fakes made by Upper Deck, and shredded the samples in the chairman’s office, as well as an e-mail from an employee of Upper Deck to other employees asking to provide her information how to obtain Yu-Gi-Oh! TCG security foils “in secrecy.”

Following almost one full year of court proceedings, Upper Deck finally admitted to having printed in China and importing to the U.S. hundreds of thousands of bogus Yu-Gi-Oh! TCG cards. Mr. Howell of Rutan & Tucker noted in the opening statement to the jury: “The behavior is still undeniably wrong. And I am in here, as counsel for the two defendants, asking you to hold my clients accountable for that behavior; asking you to hold my clients responsible for this conduct that there is no dispute, and there was no disputing even before this case started today, that it was wrong.”

KDE announced in mid-December 2008 that it would assume responsibility for the distribution of its Yu-Gi-Oh! TCG in territories outside of Asia. As the Court’s recent ruling confirms, KDE’s decision was due to Upper Deck’s involvement in printing and distributing counterfeit Yu-Gi-Oh! TCG cards.

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Konami Press Release

For previous news about this case please refer to this Legal Times: Old and New, Upper Deck Konami and YuGiOh