Upper Deck Files Suit After Konami Takes Control of Yu-Gi-Oh!

Upper Deck has filed a $75 million lawsuit against Konami Digital Entertainment, alleging that Konami breached the contract between the two companies when it announced last week it was taking over all operational and business aspects of the Yu-Gi-Oh! trading card game. Upper Deck served as the exclusive distributor of the game since it arrived in North America in 2002. Konami is the licensor of Yu-Gi-Oh!

Konami officials did not release any statements indicating why the move was made. “We are fully committed to maintaining a very high level of game support, from sales to organized play, and to providing a seamless transition during this process,” said Kazumi Kitaue, chairman and CEO of Konami Digital Entertainment.

Meanwhile, in a statement sent to Yu-Gi-Oh! players, Yumi Hoashi, VP of Konami’s card business said, “By handling all aspects involved with the Yu-Gi-Oh! trading card game, Konami expects to provide the highest level of customer and retail support. We also look forward to taking advantage of the existing synergies between our well-developed gaming platforms to introduce exciting new Yu-Gi-Oh! TCG products and tournament opportunities.”

In its suit, however, Upper Deck lays out a picture suggesting a rocky relationship between the two companies has existed for the past four years. Upper Deck accuses Konami of breaching the exclusive distribution agreement “in numerous respects,” including ignoring Upper Deck’s recommendations for improvements to product content; withholding approval of promotional materials and activities, including an e-commerce website that was to be designed by Upper Deck; and failure to work with Upper Deck to prevent millions of counterfeit Yu-Gi-Oh! cards produced in China and the U.S. from reaching the market.

In addition to the breach of contract allegation, Upper Deck’s suit claims Konami is guilty of fraud, slander and conspiring to “sabotage the ability of Upper Deck to perform under the distribution agreement ... in an effort to defraud Upper Deck and gain economic advantage for themselves.” They also say Konami’s American and European entities met earlier this month to “finalize their scheme to ... improperly revoke Upper Deck’s distribution rights.”

The situation is similar to the decision by Nintendo of America in 2003 to take over distribution of the Pokemon trading card game from Wizards of the Coast. Wizards of the Coast also sued for breach of contract. The case was eventually settled several months later, but the terms of that settlement were not disclosed.

The Yu-Gi-Oh! game has consistently been among the top-selling trading card games in the U.S. since its arrival.