MTH Vs. Lionel Trial

[TicketAgent]

I'm trying to find out any news that might be coming out of the trial in Michigan. Does anyone have an update? ( I searched on "trial" and could not find any postings, which was a surprise).

Thanks.

Bob

[3railguy]

Your best bet is to visit the courthouse and try to get as much info as you can such as court dates and/or any transcripts. Any info you get here is likely to be blown heresay . People just get all wet over this stuff. for some reason.

[nblum]

A jury trial has been going on for a couple of weeks or so in the Southern Division of the Eastern District of Michigan Federal Court. Lionel, Korea Brass and Yoo Chan Yang are the named defendants, MTH the plaintiff. Korea Brass and Yoo Chan Yang submitted some very interesting proposed jury instructions at the beginning, that, if accepted, would raise the bar as to the burden of proof that the items claimed "stolen" are trade secrets, actually were "stolen" and have been directly involved in any financial losses. Maybe someone familiar with the trial, if it is public information, could tell us whether these jury instructions were accepted as is. Given that this trial is already weeks old, the expenses must be rather large for such small companies. MTH has agreed this past Thursday to drop one of the other suits they filed about three months ago, which is also interesting.

[KeithL]

Anyone know of any updates on the trial, or how long it's expected to take? Is there anyplace online where one can have access to updates on the proceedings? Should be an interesting case...

Keith

[Bob Keller]

Our expectations are that it should wrap up any day, and we'll post a story when the jury returns a verdict.

[ChiefEagles]

That is a good thing Bob. Thanks.

[3railguy]

QUOTE: Any info you get here is likely to be blown heresay . People just get all wet over this stuff. for some reason.
--------------------
John Long

Sorry for this comment in my origional post. This subject has come up on forums in the past and they often turned in to multi page flame wars by now. Apparently, it just isn't the case here.

[Bob Keller]

FYI closing statements begin this morning, so factoring that and jury instructions, the case will probably go to the jury today. As they say on TV "Film at 11."

[nblum]

Thanks for the updates Bob. Unlike some other media outlets, it's good that CTT allows discussion of these issues. I think it is very likely the results of this case will decide the future of the O gauge three rail industry for decades to come. If MTH wins and receives the 30 million + damages they are rumored to be asking, and if this decision is sustained through any appeal, they will effectively wind up owning the Lionel name. Mike Wolf has stated in public he wishes to own the Lionel name and dissolve the company, so that would drastically change the shape of this industry. If MTH loses or wins token damages, Lionel will go on as an independent company and the future of the industry will be quite different (and better, I might add). One way or the other, MTH will need to face the QSI lawsuit in Oregon federal court that is awaiting this decision. If MTH loses here, they will have less resources to fight that battle and once again the future may be different than otherwise.

All in all, a likely turning point of the sort we haven't seen in two, maybe three decades, and well worth the news coverage and discussion, IMO. So thanks again.

[Bob Keller]

I think I can say with some certainty that Mike Wolf does not want to dissolve Lionel. Own it yes, destroy it, no.

[nblum]

Bob, I'm only quoting what Mike Wolf said some years ago at the TCA Museum. Dissolving and destroying are pretty much slightly different words for the same end result, in my opinion. Since the time of that original comment, the Lionel manufacturing operation has been offshored, so that terminating that operation, as Mike Wolf suggested, is no longer an issue.

Since we are talking hypothetical, but quite possible issues here, wouldn't, for example, dissolving the Lionel company in Michigan and using the Lionel name on current MTH products be "destroying" the company? It seems to me that would be a likely scenario. Lionel would disappear as a unique entity and be subsumed under the MTH corporate identity if this scenario, which seems entirely possible if MTH winds up owning Lionel. MTH will be able, for the first time, to put the Lionel name on their reproductions, but otherwise, Lionel would cease to exist as a company and "brand." Not a good outcome in a lot of ways, as far as I'm concerned, so I'm hopeful it won't occur.

[Anonymous]

With the trial lawyers apparently in a position to make money off of the model railroad industry perhaps Kalmbach should start a court case forum and perhaps a weekly segment on Court TV.

Steve

[Anonymous]

Well, maybe Monday will bring more news.

[Anonymous]

Tony Lash reported some news over on the OGR forum but then Richie Melvin deleted it as usual. OGR=[censored] Why doesn't he just delete the entire forum?

Thanks to CTT for allowing this topic to be discussed here.

pax[C):-)]

[Anonymous]

IN a subject as important as this, how can we not discuss it. As long as it does not degenerate into a flame war over MTH VS Lionel.
It's definetly what would happen if MTH ended up owning Lionel. WOuld they discontinue TMCC in favor of DCS? Personelly i feel that for MTH to win such a lawsuit would be devistating to the hobbie as a whole. THis hobby has prospered due to increased competation. I own One lionel, 3 Atlas, 4 Weaver, and 3 k-line. I Have 4 sets of MTH Passenger cars, but no engines. SO i have no real favorite between MTH and Lionel.
Does anone know what MTH is alleging? What design secrets were stolen?
ALso i bet Mike Wolf would keep the Lionel name up and running, it is way to valuable to destroy.
Bill

[spankybird]

This law suit is about the designs of how to make an ‘O’ gauge articulated (? Spelling) engine, such as the Challenger, Big Boy, Allegheny, etc. MTH introduced it first Challenger in 1994. The engine manufacturing company which developed this engine with MTH is in Korea. Two design engineers left this company and went to work for the Korean company that made engines for Lionel. It is believed that they took MTH designs from their former employer to use to jump start Lionel development to make this type of engine. Lionel did not introduce one until 2001, long after MTH has been making these.

MTH says that Lionel was aware of the stolen design and was part of there decision to proceed with this project.

[ChiefEagles]

If that is true, that was not nice. Must be something there or the lawyers would not have gotten MTH to file. HUMMMM

[spankybird]

Being a design engineer, in this great country of ours, this is considered industrial spying. Even if the designs are not patented, we must sign a confidentially agreement. It basically means that things that I design while at work, is there property. They paid me to do it, therefore they own it.

[MartyE]

This will be interesting to see how this all plays out. In any event, if Lionel were to go away or be taken over by MTH then our hobby as a whole could be in for a downward spiral. The two keep eachother moving.

[Anonymous]

I too am concerened about the ownership of the mighty L, I'm not opposed to other products either, I also see the benifit of compatition.
But ,As far as confidentiality,I have sent Prototypes to a major O scale mfgr. and had such agreements only to have my product reverse engineered and sparked a new line of products never produced by them.
So,,,,I have seen first hand how it can be in the "toy train" industry.,,,Kinda sad

[Anonymous]

Yes, this entire scenerio is very interesting and is generating rumors like crazy. Some guys are really getting whipped up into a frenzy over it.

It's my opinion that if Lionel ever gets bought out by MTH we'll be treated to a toy train renaissance like nothing ever experienced before.

Bill
www.modeltrainjournal.com

[Anonymous]

As I understand the case Lionel came out with certain engines way too fast after MTH came out with the same ones.

MTH, not MTH's lawyers, decided to sue saying that it was pretty likely that designs were stolen right down to LIONEL having the same part numbers that MTH had used on similar parts.

SHEECH! they did not even try to hide the theft by changing the part numbers on the Lionel labeled designs and drawings.

The thing is if Lionel did not know and was simply an innocent purchaser for value they may walk. BUT and a big BUT is that did not it seem a bit surprising to Lionel that the designs were completed and ready for production way too fast


Alan

[Anonymous]

Lionel will not be sold to MTH

Typically if MTH wins the suit and a large award from Lionel; Lionel will offer to either take this to the next level and appeal OR offer a settlement to MTH to get something now instead of waiting years for a resolution and further appeals of the matter to higher courts ( maybe to the Supreme Court).

MTH will be offered a payout plan by Lionel too. To be paid out over years if necessary. If we're lucky, MTH will try to get a license to use TMCC.

Alan

[Anonymous]

Geeseh! First this, then the UP stuff. It would seem that Lionel is pretty stupid when it comes to legal issues.

[Anonymous]

I don't think its so much stupidity,as they've just been able to fly under the radar and now it's cought up with them,,,,,,Integrity really IS a good thing!!!

[spankybird]

Jack makes a good point here. Maybe this is why Lionel has made so many upper management changes in the past few years.

And Penncentral8885:

From my many years of doing design, I have been involved with reverse engineering. Sometimes by looking at a part, you can tell how it was made. But it does not include the tooling designs or manufacturing processes. It is my understanding that this was also part of what was stolen.

tom

[nblum]

The reason that they are having a jury trial is to determine whether MTH's allegations have any justification, or perhaps are themselves distortions of the truth in an attempt to win in court what MTH has not been able to win in the marketplace. Since we will have a decision in a few days or less, assumptions about Lionel's culpability or bad management should at least wait until that decision is rendered, IMO. Likewise, decisions about whether MTH may have perverted the use of the legal system as many businesses do these days should also await an outcome in court.

[Anonymous]

What is it on these forums anyway

Just because you file a lawsuit doesn't mean that you are perverting the legal system!!! Even if you ultimately LOSE!

MTH, UP, QSI what are they all perverts to everyone here???


Alan

[Anonymous]

Let's hope that when the court comes out with their decision, it will be made public to all of us who are interested. That includes uncensored discussion on the OGR forum.

[Anonymous]

nblum is probably right about the perverting of the legal system. It seems to me that Lionel started all this when they threatened to sue T-Reproductions and other small cottage industry manufacturers for using the Lionel name and reproducing Lionel items years ago. They stopped reproductions of the Hellgate Bridge and the Standard Gauge roundhouse sections...