Wednesday, May 15, 2019

The Japanese Baseball Card Lawsuit You Never Heard About

Here is an interesting fact you probably didn't know about Japanese baseball cards.

In the mid 2000s a renegade group of NPB stars sued their teams (10 teams in total, all except for the Hawks and Eagles) for allowing Calbee and BBM to use their images on baseball cards (and also for allowing video game makers to use it in their games).  It was the probably the most significant baseball card lawsuit since the major ones in the US in the 1950s and 60s, but nobody has written anything about it in English (or much in Japanese either), so I thought I would remedy that deficiency with this post.

A group of 34 players joined the lawsuit including some of the biggest names in NPB at the time: Koji Uehara, Takahashi Yoshinobu, Shinnosuke Abe, Shinya Miyamoto, Kosuke Fukudome, Daisuke Matsuzaka and Michio Ogasawara were among the named plaintiffs.

The litigation would actually span several years and two courts, the Tokyo District Court (Decision of 1 August 2006 1265 Hanrei Taimuzu 212) and, on appeal, the Intellectual Property High Court (Decision of 25 February 2008 2008WLJPCA02259001) which would both issue lengthy judgments.  In this post I'll focus on the first one issued by the Tokyo District Court in 2006 and perhaps in a future one I'll focus on the 2008 case which was an appeal of the first (spoiler alert: the outcome was the same in both).

The first decision is worth looking at in the context of this blog not so much for the legal doctrines the court applies (which I'll cover nonetheless, but I'll keep it brief) but because they contain a treasure trove of hitherto unknown information, both historical and contemporary, about how the business of baseball cards is carried out in Japan and how the complex relationship that exists between players, teams, the league and the card makers is organized.  It tells us everything from why Calbee photographs are so crappy (hint: Calbee doesn't have any photographers) to why "no logo" sets like recent Donruss and Panini ones have never existed in Japan to how players get paid (if at all) for appearing on cards.

So lets get started.

1. The Basis of the Lawsuit

The lawsuit turned on the player contract that each player signs with their teams.  Though each player signs an individual contract with their team, the terms of their contract are dictated by an NPB Agreement which assures that all players sign the same contract with just their salary and term differing depending on the player.  Article 16 of the standard player contract was mostly copied directly from s. 3(c) of Major League Baseball's Uniform Players Agreement (translated into Japanese of course)  which states:

3.(c) The Player agrees that his picture may be taken for still photographs, motion pictures or television at such times as the Club may designate and agrees that all rights in such pictures shall belong to the Club and may be used by the Club for publicity purposes in any manner it desires. The Player further agrees that during the playing season he will not make public appearances, participate in radio or television programs or permit his picture to be taken or write or sponsor newspaper or magazine articles or sponsor commercial products without the written consent of the Club, which shall not be withheld except in the reasonable interests of the Club or professional baseball.

There are two significant differences in the NPB agreement from the above.  The first is that the NPB agreement adds a clause stating that the teams agree to share any proceeds in an "appropriate amount" they receive from the use of player images with the players.  The second is that the second part of the provision in which the player agrees not to make public appearances, etc without consent of the team is more restrictive on the player in Japan.  The MLB one is limited to "during the playing season", while the NPB one is year-round.  Also the MLB one states that the Club won't withhold consent except when it is in the interests of the Club or MLB, while the NPB one contains no words to that effect which limit the Club's ability to refuse consent.

At the heart of the case was a basic question: Whether or not NPB teams could use this provision to sell player images to card makers.  The provision, after all, only gave them the right to use their images for "publicity purposes" and its not really clear if selling it to baseball card (or video game) makers falls under that.

2. The Facts and What the Case Tells us about Japanese Baseball Card Contracts

Based on the above provision the teams entered into agreements with both Calbee (from 1973) and BBM (from 1991) in which they gave them the rights to use the images of players on their cards.  Neither Calbee nor BBM received individual consent from any of the players directly.  This, it should be noted, is significantly different from MLB practice in two respects.  The First is that NPB is not itself a party to these contracts - the card companies contract directly with the teams (who retain the rights to their logos, unlike the US where the teams do this all through MLB).  Second is that the teams hold the rights to use the images of players rather than the Player's Association which is the case in the US. Despite the fact that the Japanese provision is based on the MLB one, in America it is interpreted narrowly and the provision has never been viewed as giving the teams the right to sell rights to use player images/names to card companies.  Historically in the US players negotiated individually with the card companies until the 1960s (hence the awkward differences in player selection between Topps and Bowman sets in the early 50s) and since the 1960s the Players' Association has negotiated on their behalf.  This means that in Japan, unlike the US, the teams hold all the cards (pardon the pun) and explains why you never see Japanese cards that  feature players but no team logos, like a lot of  sets in the US do since some makers only contract with the Players' Association and not MLB.

The terms of the contracts that the teams negotiated were, interestingly, different for Calbee and BBM.  With Calbee the original agreements they had with some (but not all) teams beginning in 1973 did not actually oblige Calbee to pay anything for the rights. These teams viewed the cards as a way of promoting the team and increasing the popularity of certain players, and thus they made what may have been a rational business decision to literally gave the rights to Calbee for free (which also means that the players received nothing).  The decision also notes that under special agreements Calbee would produce cards of a specific team during pennant races to be distributed exclusively at their stadiums (which I think is a reference to the Chunichi and Hiroshima regional issues, but its not clear) which the teams also gave Calbee the rights to for free.

At various points  Calbee and the teams entered new contracts which moved away from this "free" model and began requiring Calbee pay for rights. The current contracts (at least in 2006) required Calbee to pay each team a set amount based on the number of cards from that team which it produced.  Thus the amount each team receives depends on how many Calbee cards of its players Calbee produces.

 BBM on the other hand never received the right to produce cards for free.  Since it entered the card market in 1991 it has had a standard contract that it enters with each team which, interestingly, only varies according to its length.  For some teams they have 5 year contracts, others 3 year contracts and other still 1 year contracts.

BBM has to pay each team 6% of total sales for the right to produce cards which it is obliged to pay in April, July and December (I believe this is calculated pro-rata per team, not each team getting 6% of all sales, which would take up almost everything).  For "special" sets (its a bit unclear what this means, but I guess this refers to the team sets BBM is always putting out) they have to pay each team a flat rate of 20,000 Yen per card. As with Calbee, the teams distribute the money they receive from BBM according to different methods that they decide on themselves.

The first contract Calbee signed was, of course, with the Giants on 14 November 1972.  The Giants were among the teams that charged Calbee a fee from the beginning and they were (and continue to be) among the more generous teams in terms of how much of the revenue they share with players.  Originally they gave the players 75% of the money received (to all except Shigeo Nagashima, who got more) and kept 25% as their fee for the use of the Giants logo on the cards.  More recently they have bumped the player's cut up to 80%.  Additionally they require the card companies to provide samples of the cards they will produce which the team distributes to players for their approval (ie if a player doesn't like the photo used on a card, they have an opportunity to complain about it before it is released).

The Yakult Swallows on the other hand, didn't enter a contract that required Calbee to pay until 1981 and may not have begun paying players until as recently as 1994 (when Atsuya Furuta, also a plaintiff in the lawsuit, played for them).  They are also a bit stingier than the Giants, only giving players a 70% cut of the money they receive from Calbee, and evenly splitting the money the receive from BBM. They don't seem to provide players with the ability to preview cards either.

The Baystars are an interesting example.  They have contracted with Calbee since 1973 and received money from Calbee, but until 2004 they didn't pass any of it on to their players.  Instead each year they paid them....in cards!  Players were entitled to 30 copies of whatever card they appeared on as compensation (excluding limited number ones), which from the perspective of wealthy ballplayers must have been a joke. After 2004 they started sharing actual cash with their players, but on an extremely stingy basis - only passing on 20% of their take.  The Baystars also require Calbee to use photos taken by the Baystars own cameraman (who mainly takes pictures for the team's own magazine).  This is another interesting point that comes out in the decision - Calbee (and BBM) are at the mercy of the teams in terms of choosing cameramen.  For some they have to use the team's own cameraman or a cameraman employed by a company related to the team, for others they use newspaper cameramen.  They don't actually employ their own photographers, which may explain the crap photo selection in recent years!

The other teams had policies that fell in between these, with some paying a flat fee instead of a percentage and varying in some other details that aren't worth reciting in full here.

As an aside, an interesting historical nugget that the decision provides is that the Court reviews the practice before the Players agreement came into effect in 1951.  Prior to that the teams and NPB (or its predecessor organization) obtained permission from the players directly in order to give the rights to produce:

Between 1946 and 1950 Bromides featuring Takehiko Besho and other Giants players;
In 1948 a Gensokupan Insatsu Sha Karuta set featuring Michinori Tsuboichi and 44 other players;
Between 1948 and 1950 a Menko set featuring Takahiko Besho and other players.

Anyway, back to the lawsuit at hand.

3. The Player's Arguments and the Court's Decision

The players who launched the lawsuit were dissatisfied with this state of affairs and specifically the fact that Art. 16 of the players' agreements was interpreted by the teams as giving the teams the right to contract with card makers to sell their images on the one hand while also preventing the players from individually doing that on their own.  They advanced three main legal arguments against the practice.

The first centred around the definition of "for publicity purposes" contained in Art. 16.  The players argued that selling their images to baseball card makers (and video game makers) went beyond "publicity purposes" and was a purely commercial use of their image.  They drew a specific analogy with how the identical term in the MLB player agreement was not viewed in the US as giving the teams the ability to do so and argued it should be interpreted narrowly.  They also drew similar comparisons with J-League Soccer and Korean Baseball.

The second argument they made was that the provision, by completely denying them the right to their own image, was grossly unfair and unreasonable and thus ran counter to public policy.  This was based on Art. 90 of the Civil Code which states that "a juristic act which is against public policy is void" - a general catch-all provision that Japanese courts sometimes rely on to void contractual provisions which are unreasonable.

Finally they put forward an argument based on Article 19 of the Anti-Monopoly Act, which bars unfair trade practices (basically arguing that it was a vertical contract that, by preventing them from selling their image on their own, was an unfair restraint on trade).

Unfortunately for the players the Court ruled against them on all three of their arguments.  With respect to the first, the Court noted the different business models of Japanese teams and their histories and held that the narrow interpretation of "for publicity purposes" used elsewhere was innapropriate in the Japanese context.  Thus the phrase was interpreted broadly enough to allow teams to sell player images to card makers.

The second argument was also rejected based largely on a broader analysis of the player's contractual situation.  Citing among other things the high salaries players were earning since the introduction of free agency, and the fact that teams shared the revenue with players and that the system was reasonable within the broader business model employed by teams, it refused to find the practice to be unreasonable or unfair to the extent necessary to be counter to public policy.

Finally on the Anti-Monopoly Act argument they lost mostly on a technicality - they were not considered "enterprises" and thus couldn't fit themselves within the rule in the Act they were relying on.

4. Conclusion

Court documents and judicial decisions are a pretty useful way of finding information that otherwise isn't publicly available, since the parties to a lawsuit have to produce evidence they normally wouldn't present publicly.  I could probably write a dozen post exploring the significance of individual bits of trivia the case reveals to peculiar aspects of the hobby (and I may yet do so).  But for now its worth recalling that the decision contains a lot of interesting information about the contractual relationships between the main actors in the production of baseball cards in Japan: the players, the teams, the League and the card makers.

In contrast to the United States, we learn that players in Japan are in a really weak position with respect to the use of their images on cards (and anything else for that matter).  The ability to license player images has been a huge source of income for the MLB Players Association since the 1960s and helps to explain why it became such a powerful organization after that decade, which probably played a role in introducing free agency and turning journeymen middle infielders into multimillionaires.  In Japan, the player's union has no such source of independent finance and remains extremely weak, as do the players in general.

We also learn, interestingly, that what a player makes from his appearance on a card is highly dependent on what team he plays for (or at  least it was at the time of this decision).  Giants players were given wads of cash while Baystars players got paid in their own cards.

Whether this is a good system, and whether the outcome of the decision is beneficial, is another question altogether and would really require a consideration of a bunch of stuff outside the baseball card hobby.  Having teams themselves being the locus of all contractual negotiations might bring some benefits (it prevents the division of rights in the US that leads to no-logo sets) for example but also its drawbacks (the teams might benefit from giving the rights to the League, which would be in a stronger position to bargain with card makers.  Probably the Giants stand in the way of this).

Anyway, I'll try to do a post about the follow up appeal case at the Intellectual Property High Court at some point.  That might take a while.  The decision I reviewed here was 64 pages long, while the appeal decision was 123 and it takes a lot of time for me to plug through these things in Japanese!







6 comments:

  1. Okay... I've gotta bookmark this post and come back later when I have more time. This sounds really interesting.

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    1. Thanks, there is a bit of interesting stuff in there!

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  2. Oh wow, that was a super interesting read. I can see both sides of this case for sure.

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  3. Great stuff! This addresses a lot of stuff I've wondered about in how all this works.

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    1. Thanks. I was curious about a lot of this stuff too, which is why I thought it would be useful to put it out there!

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