Inside the Panini vs. Fanatics Lawsuit: Trade Secrets and Contract Conflicts
The trading-card industry, built upon exclusivity and speculation, has descended into a fierce legal battle involving two major behemoths: Panini and Fanatics. A proposed deal between these giants collapsed spectacularly, setting off accusations of employee raids, stolen trade secrets, and restrictive client contracts.
Setting the Scene: The Battle Between Panini and Fanatics
Fanatics, having already acquired industry mainstay Topps, has methodically solidified its market position. Its strategy involved securing exclusive long-term licensing agreements with major sports leagues—the NBA, NFL/NFLPA, and MLB—and forming Fanatics Collectibles, an equity venture alongside these leagues and their respective players’ associations. According to Panini, Fanatics didn’t stop there; it targeted Panini’s workforce, intellectual property, and critical business relationships.
Panini’s response was swift and aggressive, filing a federal antitrust lawsuit along with a separate trade-secret case in Texas. Panini claims Fanatics deliberately poached employees, alleging these departing workers improperly took sensitive trade secrets, including confidential data stored on hard drives.
Additionally, Panini contends that Fanatics interfered with key suppliers critical to its operations, such as printing services and essential relationships involving jerseys and autographs. Moreover, Panini argues that Fanatics structured contracts with leagues and athletes that were overly restrictive, effectively stifling market competition and innovation.
Fanatics’ Defense: Strategic Moves or Unfair Tactics?
Fanatics has forcefully refuted Panini’s claims, characterizing its actions as legitimate strategic competition. According to Fanatics, the company simply outperformed Panini by offering superior financial guarantees to the leagues, along with equity stakes that provided significant upside potential. Fanatics maintains it leveraged its extensive marketing power and business relationships fairly, arguing that any sensitive materials Panini referenced have been returned, and characterizing the allegations as attempts to unfairly restrict employee mobility.
Fanatics also underscores the context of their failed buyout offer of Panini—exceeding $2 billion—during 2022-23. They highlight that Panini’s allegations of unfair competition and antitrust concerns arose only after these buyout negotiations collapsed. This timing raises critical questions about the authenticity and motivations behind Panini’s claims.
Ongoing Legal Proceedings and Market Uncertainty
Currently, the federal antitrust case remains active, having survived initial motions and now deeply entrenched in the discovery phase. Simultaneously, the trade-secret litigation in Texas moves forward with equal vigor. The dispute has also triggered hobby-shop class-action lawsuits against Fanatics, adding yet another layer of complexity and uncertainty.
Both Panini and Fanatics have committed extensive resources toward their respective legal battles. However, neither has yet achieved a decisive courtroom victory that could clarify or stabilize the market. This ongoing litigation leaves collectors and industry insiders in limbo, uncertain about future market dynamics and wary of potential impacts on their investments and businesses.
High-profile card sales, such as recent notable cards featuring athletes like Caitlin Clark and Paul Skenes, continue to make headlines and temporarily bolster market confidence. Yet, beneath these optimistic headlines, the industry remains deeply unsettled and anxious for a resolution.
Lessons for Businesses: Why Legal Counsel and Due Diligence Matter
At the heart of this fierce battle lies a critical lesson for all businesses—particularly those operating in highly specialized and competitive sectors. Contracts, intellectual property protections, and clearly defined business relationships are not mere formalities; they are essential safeguards. When entering negotiations, especially mergers or acquisitions, businesses must carefully consider potential outcomes and meticulously document agreements and promises. A skilled business attorney isn't just recommended—it's essential.
Had either company employed more rigorous due diligence, greater transparency, and comprehensive legal oversight, the catastrophic fallout from this failed merger might have been avoided or substantially mitigated. Legal experts could have provided essential counsel on the nuances of employment agreements, trade secret protections, and antitrust considerations, reducing vulnerabilities that both companies now face.
The Road Ahead: Legal Clarity and Industry Implications
The central unresolved question in this legal drama will shape not only the future of the trading-card industry but also broader conversations about fair competition and market exclusivity: Can an industry truly thrive if one entity exclusively holds licenses, critical talent, market access, and sets the rules?
Until the courts render their decisions, both the legal and economic implications remain profoundly uncertain. The outcome will establish critical legal precedents and define the boundaries of competitive conduct, impacting the trading-card industry and potentially influencing similar market sectors.
In the end, the current turmoil underscores a fundamental truth: transparent governance, careful legal planning, and sound contractual oversight aren't just advisable—they’re indispensable.
Frequently Asked Questions
- Exclusive licenses can raise antitrust concerns if they foreclose rivals from critical inputs or distribution channels without pro-competitive justification. Risk assessments consider market power, duration, scope, and whether efficiencies (e.g., improved output or innovation) outweigh competitive harm.
- A trade secret is information that derives economic value from not being generally known and is subject to reasonable measures to keep it secret. Protections include NDAs, access controls, employee training, device and data security, exit protocols, and rapid response plans for suspected misappropriation.
- Employee mobility is lawful, but violations can occur when contractual restrictions (non-solicit, confidentiality, invention assignment) are breached or when former employees take or use protected information. Enforceability varies by jurisdiction; narrowly tailored, reasonable restrictions are more defensible.
- Use clear, enforceable agreements; maintain documented, arms-length negotiations; avoid inducing breaches; and implement compliance training. When approaching counterparties bound by contracts, seek written assurances, respect notice/termination clauses, and consider obtaining consents where appropriate.
- Conduct competition and market-power analysis, review key contracts for exclusivity/termination rights, audit IP ownership and confidentiality regimes, assess data security and employment covenants, and model regulatory exposure. Build mitigation plans (carve-outs, transition services, consents) before signing.
Protect Your Business with Proactive Legal Counsel
Contract disputes, trade secret claims, and antitrust challenges can derail even the strongest companies. If your organization is navigating mergers, acquisitions, or competitive licensing arrangements, consult an experienced business and intellectual property attorney early. Proactive legal guidance can help safeguard your trade secrets, ensure compliance with competition laws, and strengthen your contractual protections before problems escalate. Contact us now.