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HAELAN LABS., INC. v. TOPPS CHEWING GUM CO.

May 25, 1953

HAELAN LABORATORIES, Inc.
v.
TOPPS CHEWING GUM CO.



The opinion of the court was delivered by: GALSTON

In determining the respective rights of the parties to exclusive use of the names, pictures and biographical sketches of the baseball players, the Court must consider the terms and the validity of as many as six separate contracts for many of the players. There are involved here the contract rights in respect to over five hundred players, requiring examination of contracts numbering in the thousands. The conduct of each party in soliciting a particular player, or in using his name or picture, is also material. The time and labor involved in determining the rights in issue on these motions have been so considerable that for final hearing on these issues, and that of damages, the aid of a master to be appointed will doubtless be called for. The contracts involving the five hundred players, or more, present as to each player in effect a cause of action in itself.

The parties, recognizing the complexities involved, have chosen to limit the bases upon which they seek temporary injunctions on this hearing; e.g. for the time being the plaintiff is not raising any issue in respect to the validity of the Russell contracts. On the defendant's part, is has not placed the new contracts, except for renewal, obtained with players subsequent to the trial in evidence on this hearing.

 In supporting its motion for a temporary injunction restraining the defendant from seeking to obtain the licenses to the names, pictures or biographical sketches of baseball players alleged to be under exclusive contract to it for 1953, the plaintiff has separated the players into various categories, based upon different factors which the plaintiff believes justify the Court in granting the injunction. As a general classification, the players may be separated into those with whom the plaintiff had exclusive contracts for 1953 at the time of the trial, as shown in Exhibits 29 and 29-A, and those with whom the plaintiff obtained contracts subsequent to the trial.

 In view of the decision of the Court of Appeals that either party here could obtain exclusive grants of the right of publicity of players' names, pictures and biographical sketches, the fact that one party's contracts pre-date the contracts upon which the other party relies, should be sufficient of itself to entitle the party with the earlier contracts to an injunction. The plaintiff relies upon the aspect of the Court's decision in claiming the right to an injunction to some two hundred players from among the four hundred odd players appearing in Exhibits 29 and 29-A. It has renewed its contracts with these players for the year 1953. On its part, the defendant makes no claim to having any conflicting exclusive rights for 1953 with any of these two hundred players.

 Miss Joan Crosby testified at the hearing on these motions that the plaintiff did not exercise its option to renew contracts with eight of the players who have been included by the plaintiff in the above group. These players are Ray Blades, Vernal L. Jones, Terry Moore, Tom Poholsky, Joe Presko, Mike Ryba, Bill Sarni and Clyde Wares. The plaintiff, however, is entitled to an injunction in respect to the remaining players in this first group. The names of the players are embodied in finding No. 7.

 Conrado Marerro may also be placed in this group. Schedule A, attached to the Shorin affidavit, in support of the defendant's motion for a temporary injunction, lists Marerro as one of the players with whom the defendant signed a new contract as distinguished from those players renewing previous Players Enterprises contracts. In its brief, the defendant states that its exclusive right to players who signed new contracts 'will be temporarily disregarded' on these motions. As noted, these new contracts are not in evidence. As a consequence, it may be concluded that the defendant does not challenge the plaintiff's prior rights to this player at this time.

 Two players, Lumin Harris and Wally Moses, are treated together by the plaintiff. It claims exclusive contracts with the two players pre-dating the Players Enterprises contracts under which the defendant asserts conflicting rights for 1953. The plaintiff's contract with Harris for the years 1952 to 1956 inclusive, is dated May 18, 1951, while the earliest Players Enterprises contract with this player, effective through October 31, 1952, with an option to renew, is dated May 24, 1951. The plaintiff's contract for the years 1952 to 1956 with Moses is dated May 22, 1951, while the Players Enterprises contract with the player, effective through October 31, 1952, with an option to renew, is dated May 12, 1951. However, the plaintiff had a contract dated March 17, 1951 with Moses for the year 1951, with an option to renew for 1952.

 The plaintiff's prior rights to Harris are undisputed by the defendant. There is, however, opposition in respect to Moses.

 From the record, the defendant does not have an exclusive contract with either Harris or Moses for the year 1953. The evidence also indicates that it is not using, nor does it intend to use, either player in its 1953 card series.

 In respect to the remaining players appearing in Exhibits 29 and 29-A as to whom the plaintiff seeks an injunction, it has chosen to base its claim to exclusive rights for 1953 on the additional ground of the Court of Appeals decision that use by one party, with knowledge of prior conflicting rights, constitutes a tort which makes the tortfeasor's alleged rights 'illegal' and invalid.

 As to the majority of these players, the defendant does not claim to have exclusive contracts for 1953. It contends, however, that the plaintiff's contracts with these players were executed subsequently to earlier contracts signed by them with Russell Publishing Company or with Players Enterprises. The use of these players by the plaintiff during 1952, it is argued, resulted in each of plaintiff's contracts being 'tainted with illegality' and 'utterly invalid' under the decision of the Court of Appeals. 2 Cir., 202 F.2d 866, 869. Thus the parties, in supporting and in opposing the plaintiff's claim to an injunction as to these players, rely on the same legal grounds.

 The instructions of the Court of Appeals on remand require a determination (at least on final hearing) of the following facts:

 '1. The date and contents of each of plaintiff's contracts, and whether plaintiff exercised its option to renew;

 '2. Defendant's or Players' conduct with respect to each such contract;

 '3. The date and contents of each of defendant's contracts under which defendant claims, and whether defendant exercised its option to renew; and

 '4. Plaintiff's conduct with respect to each such contract.' (Emphasis added.)

 These instructions make it clear that the 'knowledge' the Court had in mind was the defendant's or plaintiff's knowledge, if any, of the plaintiff's or defendant's contract rights as to each particular player, rather than the knowledge on its part that the plaintiff or defendant had contracts with players generally. The following statement of the Court, made in respect to the Russell contracts, further bears this out:

 '* * * plaintiff, in its capacity as exclusive grantee of a player's 'right of publicity,' has a valid claim against defendant if defendant used that player's photograph during the term of plaintiff's grant and with knowledge of it.' (Emphasis added.)

 There is also the following in the Court's supplemental opinion:

 'The last sentence under point 2 of our opinion might suggest that, as long as one of the parties had a contract with a ball-player giving it exclusive rights, any subsequent contract made between that player and the other party before expiration of the prior rights is necessarily invalid. * * * Where the party soliciting such a subsequent contract knows of the prior rights and actually proceeds to use the grant given in violation thereof, its contract is tainted with illegality and is utterly invalid. * * * Hence such a contract would convey no rights even if it ran beyond the duration of the other party's prior rights.' (Emphasis added.)

 There is evidence that the defendant, through its president, Shorin, was aware of plaintiff's baseball picture card gum in 1948. The evidence does not show, however, that this general awareness included knowledge that particular players had actually signed contracts with Bowman Gum. If this were all the evidence in the way of knowledge in the defendant of the plaintiff's prior rights, the plaintiff would not be entitled to an injunction as to any of the remaining players in Exhibits 29 and 29-A. However, in respect to many of the players, the negative covenant in the New Players Enterprises contracts excepted 'the rights given under existing contracts with Bowman Gum' from the exclusive grant given. This exception must be interpreted as knowledge or constituted notice to the grantee of the existence of prior rights in Bowman Gum. It raised at least a duty in the grantee to make the necessary inquiries to try to ascertain the extent of these rights. The evidence fails to disclose any attempt on defendant's part to make an effort to determine the nature of the rights under these 'Bowman Gum' exceptions. In this connection it may be noted that the Court of Appeals in its opinion stated as follows:

 'Since Players acted as defendant's agent, defendant is liable for any breach of plaintiff's contracts thus induced by Players.'

 A number of these players with Bowman Gum exceptions were used, as shown in Exhibit 60, by the defendant in its 1951 baseball card candy series. An examination of the various contracts discloses the fact that in many instances the earliest Russell or Players Enterprises contract with the player was executed at a later date than the player's contract with Bowman for 1951. The exclusive rights granted in the 1951 Bowman Gum contract included an agreement by the player to grant similar rights to 'no other manufacturer of chewing gum or confections.'

 The actual notice of rights in Bowman Gum under existing contracts appearing in the New Players Enterprises contracts, and the failure of the defendant to make inquiries to avoid conflicts with any prior rights, require the conclusion that the defendant used the grant given it with knowledge of prior existing rights. As the evidence indicates that the plaintiff has a grant for 1953, it is entitled to an injunction as to the players named in finding No. 12 on the ground that the defendant's use of their names and pictures in 1951 was an 'illegal' use.

 It is noted that the Players Enterprises contracts contain a provision wherein the player agrees not to renew any contracts with other parties. Even assuming, as a general principle, that this provision is valid and enforceable, the fact that the defendant interfered with the plaintiff's prior rights rendered it unenforceable in the circumstances considered above.

 These same circumstances constitute the ground for granting an injunction in the case of Wally Moses, who was mentioned earlier. His New Players Enterprises contract contains a Bowman Gum exception, and his name and picture were used by the defendant in 1952. Such use constituted an interference with the 1951 Bowman contract, so that the defendant cannot invoke any enforceable rights under the Players Enterprises contract of May 12, 1951.

 Similar circumstances entitle the plaintiff to an injunction in respect to Gerry Coleman. In a letter, dated April 17, 1951, plaintiff's counsel notified the defendant that the plaintiff claimed prior rights to the use of Coleman's name and picture. Apparently the rights asserted by the plaintiff were those based upon its contract for 1951 with option rights for 1952. The plaintiff's 1951 contract with Coleman is dated August 23, 1950, while that of Players Enterprise is dated August 31, 1950 and the Russell contract is dated October 2, 1950. Therefore, the defendant's use of Coleman's name and picture in its 1951 series constituted interference with knowledge of prior rights, making the defendant's rights invalid under the Court of Appeals decision. Some other players were also named in the April 17 letter, but the Players Enterprises contracts upon which the defendant bases its rights seem to ante-date the plaintiff's contracts for 1951 as to them.

 The defendant used other players in its 1951 series whose New Players Enterprises contracts also excepted Bowman Gum from the grant given. They include the following players:

 Robert Feller

 John Groth

 Jim Hegan

 Gene Hermanski

 Sid Hudson

 Tom Galviano

 Henry Sauer

 Warren Spahn

 William Werle

 Al Zarilla

 Gus Zernial

 Ray Scarborough

 As to these players, however, their earliest Russell or Players Enterprises contract pre-dates their 1951 Bowman Gum contract. The plaintiff points to the fact that it had contracts with these players pre-dating the Players Enterprises contracts, giving it rights for 1950 with an option to renew for 1951, which it has exercised. There is, however, a significant difference in the 1950 and the 1951 contracts of the plaintiff. The 1951 contracts are the first Bowman Gum contracts to include 'confections' in the clause restricting the player from making similar grants for other products. In the earlier 1950 Bowman contracts, the clause under which the player agreed to withhold permission to use his name and picture was limited to 'no other manufacturer of chewing gum.'

 In 1951, the defendant manufactured toy and candy products as well as chewing gum. Its 1951 baseball card series was put out with a candy product and not with gum. The clause 'no other manufacturer of chewing gum' found in the Bowman contracts for the year 1951, by its terms covers the defendant. However, from the language of the grant, it is reasonable to assume that what was intended by the parties to the contract was to withhold the use of the player's name and picture with competing gum products; for example, the clause granting the exclusive 'publicity rights' states that it is for 'the advertising, promotion and sale of its chewing gum products', while the negative covenant is an ...


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