CMG Worldwide takes tussle over vintage baseball cards to court

July 21, 2008

New York Yankees first baseman Lou Gehrig died in 1941 of a disease that came to bear his name. Six years later, second baseman Jackie Robinson famously broke through baseball's color barrier with the Brooklyn Dodgers, earning the league minimum $5,000. He died in 1972.

Mark Roesler believes the best earning years still lie ahead for both legendary players, as well as many others like them. But first he must untangle their image rights in federal court in Indianapolis, where the nation's two largest baseball card companies recently began squabbling over licensing.

"It's a big deal if you can say you're a Babe Ruth and can still generate seven figures 63 years after your death," Roesler said. "But it's a lot of work."

He should know. Roesler, 52, is CEO of Carmel-based CMG Worldwide Inc. Founded in 1981, CMG helped pioneer the legal concept of a deceased celebrity's right of publicity.

His 45-employee firm now represents the heirs of several hundred actors, musicians, athletes and historical figures. When modern advertisers want to use the image of celebrities like Marlon Brando or James Dean, they negotiate the deal with CMG.

It's a business Roesler must fight regularly to protect. On June 9, CMG and New York-based baseball-card maker The Topps Co. sued Carlsbad, Calif.-based rival sports memorabilia firm The Upper Deck Co. Inc.

The complaint alleges that Upper Deck committed trademark infringement when it recently produced a series of baseball cards that include Gehrig, Robinson and a dozen other deceased baseball legends CMG represents.

According to court papers, CMG had cut a licensing deal with Upper Deck in 2004. But after Upper Deck allowed its rights to lapse, CMG inked a new deal with Topps in March.

Topps, Upper Deck and their attorneys did not respond to IBJ's request for comment.

The two baseball-card makers are bitter rivals, Roesler said, which makes the matter more contentious. He described CMG as simply an impartial partner that's happy to do business with either memorabilia company.

"This is like the Israelis and the Palestinians," he said. "Topps and Upper Deck, they just don't like each other."

Cards are big business

Gehrig's and Robinson's salaries peaked at less than $40,000 annually, a small fraction of what the players' heirs now can earn each year through licensing deals for baseball cards and other marketing opportunities.

U.S. sales of new sports trading cards topped $1 billion annually during their peak in the 1980s, and they continue to bring in about $600 million, according to Dallas-based Beckett Media LP, which publishes a leading pricing and news guide for sports cards and athletic memorabilia.

Baseball cards account for nearly two-thirds of the sales, said Brian Fleischer, Beckett's senior baseball market analyst. Most collectors can't afford to buy cards produced when Robinson or Gehrig were playing. But thanks to their continued popularity, there's great interest in fresh cards.

What's more, Fleischer said, card publishers have introduced gimmicks to boost demand. For its annual Legends series, he said, Upper Deck often purchases authentic vintage memorabilia--such as famous players' original bats or jerseys--at auction. It then cuts those objects into pieces and affixes the slivers to new baseball cards. It can thus charge a premium. On eBay, Fleischer said, the cards sometimes fetch thousands of dollars.

So it was a coup for Topps when it snatched Upper Deck's rights to CMG's vintage players.

"Competition is healthy, but it's a ferocious competition," Fleischer said. "Topps is not stupid. They know Legendary Cuts is a big deal for Upper Deck."

It's a battle the players themselves never anticipated. A quarter century ago, when Roesler launched CMG, laws about the residual financial rights of public figures' intangible assets, such as their names, images and mannerisms, barely existed. So he pioneered them.

Roesler, an attorney with an MBA, got his start working for locally based Curtis Publishing, which owned a portfolio of artwork that Norman Rockwell painted for the Saturday Evening Post. The art's popularity surged in the Americana wave following the U.S. bicentennial in 1976. And Roesler learned that licenses for popular images can be extremely valuable. Ambitious to form his own firm, Roesler researched major celebrities, including Elvis Presley, James Dean and Babe Ruth. After forming CMG, he approached their heirs and successfully pitched what must have seemed like something for nothing back then: CMG would continuously protect their public images and negotiate licensing fees from any business that wanted to reproduce them.

Breaking legal ground

It was a new area of intellectual property, and CMG has spent many of the years since lobbying to pass laws increasing protection of celebrity images, clarifying how much they're worth, and establishing who controls them.

For example, CMG helped Malcolm X's widow, Betty Shabazz, secure licensing fees to use his historic image in Spike Lee's 1993 film. And the families of Nicole Brown Simpson and Ronald Goldman hired CMG to establish the ongoing value of O.J. Simpson's name and image. The firm's conclusion became the basis for a 1997 jury verdict awarding $25 million in punitive damages to the families.

Modern technology has upped the stakes for deceased celebrities, spawning a proliferation of marketing opportunities.

They maintain Web sites, appear on T-shirts and postage stamps, and promote everything from vodka to jeans.

For example, before Apple promoted the launch of its iPhone with an Academy Awards ad featuring Marlon Brando, Marilyn Monroe and Peter Sellers on the telephone, it first called CMG.

Roesler said many of the celebrities it represents still generate millions of dollars in annual income. He declined to divulge CMG's revenue.

Despite all of CMG's work, right-of-publicity laws still differ from state to state. In some states, including Indiana, statutes are fairly comprehensive and clearly allow celebrities to pass their images along to their heirs, said Ice Miller LLP Senior Counsel AJ Correale, who chairs his firm's Entertainment Group. But in other states, like New York, publicity rights end with death.

Legal tussles

Because the law isn't universally settled, CMG must be constantly vigilant, or court rulings could chip away at the foundations of its business.

For example, CMG has been embroiled in a legal tussle over the rights to Marilyn Monroe's image for nearly half a decade. When a court earlier this year decided Monroe's image is subject to New York law instead of California's, it was a major setback for CMG.

Correale said CMG clearly doesn't want its baseball card dispute to drag on similarly.

"This case is notable since it may address the fact that not all of the estates of some of the deceased ballplayers depicted in the baseball cards may actually have the right to grant these types of right to others for commercial purposes," Correale said.

What's beyond dispute is the continuing popularity of the players--and the big dollars at stake.

Even though Robinson and Gehrig have been gone for decades, the public still has great interest in them, said Freddy Berowski, who runs the research desk at the Cooperstown, N.Y.-based National Baseball Hall of Fame.

He said visitors still ask about them daily, curious about Robinson's iconic role in race relations and Gehrig's heroism and courage in the face of an incurable disease.

"I'd suggest those are among the most popular names we get for people wanting research," Berowski said. "There's always an interest in the Hall of Famers."

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