Upper Deck agrees to pay millions to Konami in settlement of counterfeit claims

AP Photo - Major player still left in UD stable is Tiger Woods.

If you read the Upper Deck Press Release on the matter it sounds as if Konami went begging a deal from the Carlsbad, California trading card maker screaming like a little girl to use the common vernacular. In reality Upper Deck, whose CEO Richard McWilliam watched as five other executives pleaded the Fifth Amendment against self incrimination, is going to pay millions of dollars to Konami in the settlement. Hours before the case was to go to trial with Konami seeking tens of millions of dollars from Upper Deck for among other things, counterfeiting Yu-Gi-Oh Trading cards, a deal was reached to keep it out of court.

"Konami's main goal was to have the truth come out, and we're pleased that what happened with the cards has been revealed," Ben Fox, a partner at Morrison & Foerster representing Konami, told the New York Post.

Konami had a long term distribution deal with Upper Deck which fell apart and in court recently UD officials did not deny the company printed over 600,000 fake Yu-Gi-Oh cards in China. A total of five UD executives invoked their constitutional rights against self incrimination when it came time to testify. One executive did tell the court she saw McWilliam shredding the cards in his office. Upper Deck for decades has been touting it's anti counterfeiting devices in memorabilia and was one of the leaders in the industry world wide in fighting counterfeiting. The company even worked with law enforcement agencies in battling the crime, often taking the lead.

When most collectors and industry experts we spoke with heard of the admissions they were shocked. Many were not. Upper Deck has long had a dubious reputation among its dealer base dating back to the firm's early days when these dealers often accused UD of selling products out the back door to special friends. Pete Williams wrote the book Card Sharks based on many of the company's practices which dealers alleged were under handed.

As it turns out Upper Deck will make two, multi-million dollar payments to Konami as part of the deal to keep the case from being settled in the courtroom. The amount is sealed as are just about all cases Upper Deck has settled over the years. Konami was seeking at least $50 million and as much as $150 million with punitive damages added in. Upper Deck no longer distributes the YGO card game which has been one of the most popular in the collectible gaming genre.

The UD Press Release stated on the eve of the case going to trial the court ruled against many of Konami's monetary claims which severely damaged its case.

"These ruling sent Konami and its attorneys into retreat as Konami's case was disintegrating. These events, and these events alone, provided the framework for the case to be resolved after opening statements were presented to the jury," read the statement.

In addition, Upper Deck's attorney chimed in.

"Upper Deck is extremely pleased with the cooperative resolution with Konami," said Richard K. Howell, a partner at Rutan & Tucker.  "Sometimes it simply takes a courtroom, the presence of a jury, and the start of a trial for a party like Konami to finally recognize that it will be unable to live up to its pre-trial rhetoric."

McWilliam blames Konami for hurting the game playing public with its "exaggerated claims."

Upper Deck has taken it's lumps lately. It stood firmly behind Tiger Woods, a key player in the Upper Deck Authenticated portfolio. This even after other firms were dropping Woods after his admission of being a serial womanizer and going off to a sexual addiction clinic. The latest with Konami is seen as another blow by industry experts.

While the press release states "Favorable outcome for trading card giant" it remains to be seen which giant gets hurt the most. Upper Deck's reputation has suffered certainly and paying millions of dollars to a former partner while admitting it counterfeited products leaves a lot of collectors with more than a bitter taste.