FYI Memo on Unauthorized Internet Selling of Athearn Products

[Anonymous]

The following letter was on Trainorders., and I have copied it and passed it on for informational purposes only. I hope this is not true.
This might be someone's idea if a joke, but it does not look like it.

> IMPORTANT ANNOUNCEMENT
> Unauthorized Internet Selling
> Action Required
>
> Dear Dealer,
>
> We are pleased to announce that Horizon has contracted with Net
Enforcers, Inc., to assist us in the identification and elimination of
unauthorized distribution of our proprietary brands. Net Enforcers,
based in Coral Springs, Florida, will utilize a combination of automated
search tools and personnel to identify unauthorized resellers of Horizon
products both on the popular auction sites and third-party sites. Net
Enforcers will seek to shut down the auctions of these unauthorized
resellers thereby enforcing Horizon's trademark rights and copyrights as
appropriate.
>
> This program is designed to protect you, an authorized dealer and your
respective online sales from unauthorized resellers. To assist Net
Enforcers in distinguishing authorized from unauthorized dealers, we are
providing them under a confidentiality agreement the Web site addresses,
and Ebay, Yahoo!, and Froogle dealer selling IDs.
>
> Please assist us in identifying these unauthorized sellers by sending
us the ID numbers that you list your auction under for each site by
September 1st, (please, no passwords). You may provide this information
to your Sales Rep, or send via email to [e-mail]
<mailto:[e-mail]> The deadline to get this information to
us is September 1, 2004.
>
> Additionally, please note that any authorized retailer who distributes
Horizon brands to an unauthorized reseller is in violation of our
Retailer Agreement, and we will take action. We've posted our Internet
Sales Policies on our Web Site (below).
>
> Horizon is dedicated to shutting down unauthorized selling of our
branded products and to protecting our legitimate, authorized retailers.
We appreciate your help in this important matter.
>
> Sincerely,
> Mike Feeney
> Director of Sales

[Javern]

i would think most manufacturors have a rule similar to this, as far as selling on ebay they are reffering to those who sell in volume, not a dude selling off some of his stuff

[Anonymous]

I just checked the Horizon website, and all it says about internet sales is:
"Internet Sale Policies
Horizon Hobby, Inc. distributes its products through a network of authorized retailers. Horizon Hobby, Inc. will grant its authorized retailers use of its intellectual property for the promotion of Horizon products on these retailers’ websites or online auctions. Horizon Hobby, Inc. reserves the right to only provide warranty coverage for products purchased from authorized retailers and to refuse warranty coverage on products purchased from unauthorized retailers."

So that letter may just be the next step.

[darth9x9]

The Hard Rock Cafe had a similar policy and they tried to hunt and destroy people who resold HRC pins on eBay and other auction sites (as they were not authorized/licensed to resell pins). It lasted less than a month as eBay said it wasn't eBay's responsibility to police the resale of merchandise - that is the manufacturer's responsibility. I doubt this will last long.

[Anonymous]

I don't think Horizon can control what ANYBODY does with existing stock from orders prior to their takeover of Athearn. After the takeover may be a different story.

[AntonioFP45]

Wow! I've bought a couple of "New In The Box" Athearns off of Ebay. Prices were low. Hopefully the vendors I won the units from were legal.

10-4!

[Fergmiester]

This is interesting as I was in my "other" LHS the other week and they too had opted out of dealing direct with Horizon. Reason being Horizon not only wanted reference checks, notarised bank statements and credit ratings they also wanted direct access to bank accounts to inspect the books and see what the turnover was. So what they decided to do is bring in Athearn via Canadian distributors. So my question is: Is my LHS an authorized dealer? Not that it matters as the more I here about Horizon the more I seek to do business with other manufacturers.

[MAbruce]

QUOTE: Originally posted by Fergmiester

This is interesting as I was in my "other" LHS the other week and they too had opted out of dealing direct with Horizon. Reason being Horizon not only wanted reference checks, notarised bank statements and credit ratings they also wanted direct access to bank accounts to inspect the books and see what the turnover was.

I spent many years in commercial credit, and that's pretty standard activity that should be done on an annual basis. I imagine that most LHS’s are not large enough to be tracked through the standard credit agencies like Dun & Bradstreet, so they need to be approached on an individual basis and asked for disclosure of this sort of financial information. It’s just common sense from a seller’s standpoint to know your re-sellers. The last thing you want to do is sell inventory to a retailer that might evaporate next month. Bankruptcy proceedings often net very little on the dollar for unsecured creditors.

You can't fault Horizon for doing something that ALL industries do as a standard (and prudent) business practice.

[rogerhensley]

Just because it was posted to TrainOrders doesn't make it true. It may be, but nothing said here has confirmed it. :-)

[AntonioFP45]

QUOTE: Originally posted by Fergmiester

This is interesting as I was in my "other" LHS the other week and they too had opted out of dealing direct with Horizon. Reason being Horizon not only wanted reference checks, notarised bank statements and credit ratings they also wanted direct access to bank accounts to inspect the books and see what the turnover was. So what they decided to do is bring in Athearn via Canadian distributors. So my question is: Is my LHS an authorized dealer? Not that it matters as the more I here about Horizon the more I seek to do business with other manufacturers.

Yep! The cold realities of modern business practices includes the model railroad world. Obviously Horizon is trying to "legally" protect its interest but it looks like they're taking a bit of a "Union Pacific" style strong arm approach, sad to say.[V][8)]

I've recently purchased an Athearn U33B and several FP45s ONLY because no one else makes decent versions of these models. Now I have to invest more money just to replace the motors with low current drawingMashimas and the wheels with NWSLs to get them ready for DCC/Sound. I'm not planning on purchasing anymore Athearns in the future and in fact may put some of my older Athearns for sale on Ebay as I get more of the higher quality "PAKS" units. (Proto, Atlas, Kato, Stewart).

Still, I'm not putting down Athearns, they're a great bang-for-the-buck! [;)][:D][8D] Hopefully Horizon doesn't make it too difficult for businesses. I've already heard an LHS rep say that if he gets "goosed around by Horizon" with their demands, he'll cut them loose as the IM, Atlas, and other RTR lines sell well in his shop. [8D]

10-4!

[BRAKIE]

I don't think Horizon can stop Hobby Shops from selling on e bay.Once a Hobby Shop pays any distributor it becomes the Hobby Shops own to do as they wish-even give it away if the hobby shop owner wishes to..
Now with all the hatred there is against Horizons buyout of Athearn and MDC there is a lot of BS going around including from hobby shop owners that can not get credit due to their bad credit ratings with other distributors.No hobby shop owner is going to tell his customers that he has a bad credit rating.Shops like these MUST PAY CASH UP FRONT ON DELIVERY.Their orders come COD.No cash- no order simple as that.
Now to look good in front of his customers he will put the blame on Horizon or any other distributor including Walthers that refuses to give that shop credit..You ever wonder why it might take weeks to get your order? How about the old standby-It's back ordered even though (Say) Walther's shows it in stock? Then you have hobby shops that are slow pay.Of course slow pay is frown upon by any distributor has it ties up the Distributor's money..The reason I know this is because I have work in hobby shops part time and I also know at least 3 shops that has bad credit..As their orders come COD..
So,I would not get fired up over a letter that might be a hoax..

[simon1966]

QUOTE: Originally posted by BRAKIE

I don't think Horizon can stop Hobby Shops from selling on e bay.Once a Hobby Shop pays any distributor it becomes the Hobby Shops own to do as they wish-even give it away if the hobby shop owner wishes to..

A company can set rules for re-sellers of their product. An excellent example can be found in the toy train business. Re-sellers of the Learning Curve brand Thomas The Tank wooden trains were held to very strict rules concerning retail pricing. Stores were limited in the number of days per year that they could put the product on sale. I think they were allowed 2 weeks of sale per year. In simple terms, if you did not agree to the re-seller agreement, you did not get to be a re-seller.

[BRAKIE]

Well,I can still get Athearn at discount prices including the new releases at 3 discount hobby shops-I would say local but,they're not so local seeing it requires a hours drive.
So,then this would be in the agreement? I never heard of that and up to last year I worked part time in a hobby shop.Interesting..Learn something new every day.[:D]

[Anonymous]

Hey guys, check out this link from Ebay - see section #3

http://members.ebay.com/ws2/eBayISAPI.dll?ViewUserPage&userid=net_enforcers_inc

This is essentially what this is all about. Net Enforcers did not only just recently go into business for Horizon. They've been around awhile becuase this is a fairly common practice. They've been doing it for many other companies. Horizon ain't the first. In fact, they're coming pretty late to the game. Further, Ebay didn't establi***hat guideline (#3)) for Horizon. It's been around awhile, again because it's a fairly common practice.

I have a couple of questions though. Is this letter real? From what I see, it's pure hearsay at the moment. The guy who posted it at Trainorders is known to have a very strong dislike for Athearn and their products. He has a long history of it. They're constantly jabbing him over at Trainorders over his boycott of Athearn. You'd be very hardpressed to find a post from him that says anything complimentary (unless it's done in sarcasm) about Athearn. I have serious reservations about his objectivity about most any mfgr, and not just Athearn, based on most of his posts there. This letter could indeed be very real, but considering the source makes it less than a certain bet. Many of the others who jumped all over that thread were also themselves guys who already don't buy Athearn products or don't buy through Ebay. None of that makes sense to me. If you don't buy Athearn products or don't buy off of Ebay or other such auctionsites, it's not affecting you,.so why would you even bother to care? Besides, Horizon is not doing anything immoral or illegal. I'm not saying you have to like such business practices, personally I don't either. But I'm in the hobby to enjoy it as a hobby, not to worry about business practices that don't affect me. Enjoy the hobby and back to the modeling!

Greg
.

[Bikerdad]

QUOTE: Horizon Hobby, Inc. reserves the right to only provide warranty coverage for products purchased from authorized retailers and to refuse warranty coverage on products purchased from unauthorized retailers."

Such a reservation is legally useless. Unless Horizon can prove that the products were stolen, AND the consumer knew it, they have to honor their warranties if the product was supplied by Horizon (or companies that it has acquired) into "commerce." Leastawise, that's how I read Title 15, Chapter 50, U.S. Code

How the case law bears on this, that I don't know. As for any company attempting to control how its products are sold, well, they can try, but not always succeed. They can only control their own merchandising materials (logos, trademarks, slogans, etc), not the product itself. So, somebody can put a picture they took themselves, along with their own written description, up on E-Bay.

[Anonymous]

Bottom line: Are we going to be penelized for selling or buying Athearn Products on eBay?

[Anonymous]

Let me get this straight, I could get sued if I were to sell an Athearn engine I painted on my website?!?!?! That doesn't seem right.

[dharmon]

It is designed as a measure to keep controls over distribution and sales from retailers. There are many sellers on Ebay that are stores using the site for sell their merchandise that are not Horizon Authorized. An individual seller is within his right to resell what he wants, as long as he doesn't misrepresent the item as NEW. By definition, it may be in an new in an unopened box, but if you buy it retail and sell it, it is used. Just like a car. It becomes used the minute you cross the boundary of the dealership. So combined with stricter production runs to tighten the surplus, they clamp down on the EBay only retailers, trying to make Horizon distribution the only way to go if you want to sell Athearn. Dougal they're not going to come after you unless you go into business selling NEW Athearn products. And if they did, the courts would toss em on their butts.

[Bikerdad]

To reiterate one point: it is NEW if it has never been sold at retail. If a gadfly liquidator purchases the entire inventory of a shop that is closing, then sells it on E-Bay, it is new product, regardless of whether or not the seller is "authorized" by Horizon, and Horizon can't touch the liquidator except with regards to unauthorized use of merchandising materials.

Was the sale to the liquidator "retail"? no.

[BRAKIE]

Guys,If you check into this you will see what it really means..I can not get on e bay and sell Athearn or any of the product lines that Horizon carries and state 'Authorized Horizon Dealer" when in all truth I am not. and use their logo in the process..That applies to Lionel as well..I can not say I am a Authorized Lionel seller or License repair shop if I am not and use the famous Lionel logo in my ad..
Please read the following carefully.
http://www.netenforcers.com/

[Anonymous]

Larry said it well. That's basically what Ebay says in section 3 of that link I posted. That link again is:

http://members.ebay.com/ws2/eBayISAPI.dll?ViewUserPage&userid=net_enforcers_inc

Scroll down to section 3 titled "Unauthorized Manufacturer Dealer Representation" Horizon might have sounded heavy handed to us in that letter (if they even actually sent it), but it was intended for or directed to us, was it? It's actually a great time to be in the hobby, compared to even just 10 years ago. Have a good weekend all!

Greg

[jsanchez]

It sounds like another stupid move by Horizon, e-bay is the largest market now for trains, hundreds of hobbyshops remain open because of e-bay, including mine. I knew this would be coming, another thing Horizon is doing is not allowing stores to discount their trains more than 15%, I've noticed far less advertising of Athearn products by mail order firms, there also seems to be a lot less Atheran at trainshows, another large market, I imagine they will have folks going around to trainshows to stop unauthorized sales.
Also if you look at the new 2005 Walther's catalog, there is not a mention or single listing of Athearn or MDC products, this is the number 1 source of model train info, how can you be a serious player in train business and ignore Walthers?(Bowser and Branchline were added among other new lines, its the best HO catalog yet).
Most of the companies that have tried to stop e-bay selling have been designer cosmetic and designer women's clothing firms, I guess Athearn must be making designer trains.
If e-bay is good enough for Disney, IBM, Dell, Sears, JC Penny's, Circuit City and other large firms why would Horizon not want business conducted this way? If a hobbyshop can't use e-bay to sell surplus Athearn or to get new customers by selling new Athearn releases on E-bay, then they would be better off to focus on other less restrictive product lines. In the end it is the hobbyist who will be cut short. Best wishes to all those at MDC/Roundhouse who lost their jobs.

[BRAKIE]

James,Of all the hobby shop owners I know you're the first to say E bay is good for your business...[:D] Of course these same chaps also has no kind words for any internet shop or mail order shop.. [}:)] BTW most of these shops has discount prices and praise Horizon because they no longer have to deal that much with Walthers..Even the hobby shop where I use to work before it close due to the owner retiring,the owner would go out of his way then deal with Walthers.
As far as the Walther's catalog I have not bought one since I got my computer and since the price shot up to $16.95..

[Anonymous]

James, I hate to say this but you're all wrong on the Ebay thing. Check out a follow up post on Trainorders on this subject. You'll see that Horizon has even supposedly officially stated they encourage their authorized dealers to use ebay and other online auctions to sell product.

http://www.trainorders.com/discussion/read.php?3,782785

Further, I challenge you (well, not seriously) to attempt to sell Disney, IBM, Dell, etc items on ebay and portray yourself as an authorized dealer of these same products, (which you obviously are not) and see how fast and hard the likes of Disney, IBM, etc come down on you. They'll have the Feds knocking on your door, and not just their team of lawyers. I wouldn't recomend trying it. Nothing personal, really, but your logic again has some flaws.

I like Walthers and I like Athearn. I think Walthers got hurt more by losing Athearn than Athearn got hurt by losing Walthers. The many LHS's that I shop at that still carry Athearn (4 out of 5), also still buy product from Walthers. So they haven't stopped buying Athearn product, they just don't buy it from/through Walthers. With all of the new Athearn product still being pumped out, it doesn't look like Athearn is really hurting or struggling since the whole Horizon thing. Perhaps it's still too early to tell, but there aren't any signs showing yet.

I don't wish unemployment on anyone, (nor the MDC folks). But if you have an issue with them losing their jobs, the issue is really with the original owner and founder of MDC as he's the one who sold the company. The move to the new owner's facility was a given in the deal. Personally I don't have an issue with him, he deserves to enjoy his well earned retirement, and also, from what I've seen published, the employees at MDC have been offered postions down at the new facility - it appears that many have chosen not to relocate. I probably would not have opted to move either, if I were happy living in the original local, but it's not like they weren't given the option.

I don't mean to make this sound like an Athearn lovefest, as I don't particularly like blind loyalty to any given manufacturer. Nor do I mind real flaws by Athearn being made known, so we can all make informed decisions. However, I will bring to light any statements or posts that contradict the facts or where the logic does not follow, if only to attempt to bring some objectivity or balance to the discussion. Otherwise, we'd have bad information and make poorly informed decisions in our purchases. This particular time it concerns Athearn. Next time it will likely be another, and Kato, Atlas, P2k, etc all deserve similar treatment. Enjoy the Hobby!

Greg

[BRAKIE]

Greg,Well said and I could not agree more..Sadly we have not seen the last of the buyouts.There will be more in the next few years and more then likely with the same results as the hobby gets leaner and somewhat meaner..I call this the rationalization of the hobby plant...
As far as MDC..Clarence Menteer purchased MDC/Roundhouse in 1939 and has served as its president for more than 60 years according to the statement on the Roundhouse web page.http://www.mdcroundhouse.com/ that alone tells us he would be retiring someday..So,I feel MDC could have close its doors and those workers would have lost there jobs anyway.Of course we have no way of knowing if these folks was offered jobs at Athearn or what type of job buyout they had-if any.Plus,How many will retire? To my mind there is to many unanswered questions concerning the MDC employees to past any kind of harsh judgment..
Now make no mistake I feel sorry for those folks that lost their jobs but,it a hard cold fact of life companies will be bought and jobs lost.Been there myself more then once..

[Anonymous]

Horizon had done much to incurr my wrath. They have forced me after spending four years pursueing a college degree to provide credentials for a business in custom run locomotives, to change my plans as in my location Athearn was the only economical base for which to make my product. Now I have to consider other options thanks to them.

For my personal modeling, except for the products that only Athearn makes to complete my plans currently under way, I will not buy any Athearn ever again. Proto-2000 and Atlas also make the locomotives I need and I believe everyone will agree they run much better than Athearn any day of the week. Bowser makes most of what I need in the way of steam locomotives and even provides me with a way to model Union Pacific locomotives again as their Challenger and Big Boy kits are only sold as Undecorated kits, thus making it outside the perview of the Union Pacific trademark battle. What these three companies can not provide I am willing to scratcbuild.

For my rolling stock I was planning on tappiong Branchline and Accurail to fill my needs. The fact that Branchline and Bowser were added to the Wathers Catalog only makes my life more convenient. I feel if horizon doesn't need Walthers, then I do not need Horizon as the Walthers catalog is my benchmark for what is avialable. I will miss Model Die Casting as well. But Accurail makes everything MDC did and better in my opinion.

In closing Horizon has incurred my wrath and I refuese to do business with them unless they pay me to use their stuff. Which I dont think will happen. Besides I am getting the urge to build something, where is my mill file?

James

[BRAKIE]

James,Think of this..What will you do when the other manufacturers are bought out by distributors? No,We have not seen the end of buyouts including the buyout of all major brands inlcuding Atlas and Kato USA...Sound far fetch? Don't bet the farm.

[BNSFNUT]

Here in NYS I think they would run afoul of our laws.
Here once you obtain an item leaglly and it is not a illegal copy of a copyrighted item you can do with it what you want. Any attempt to stop you is agianst the states fair trade laws. They can not tell you where or how much to sell it for (Sony found this out the hard way) This would be like Dodge telling me I can't sell my Neon.
As for not wanting to honor warranty our laws state that all products ar warrantied aginst defects in workmanship and material FOREVER even if there is no warranty offered. I would not be surprised if other states have laws to the same effect.

[StillGrande]

Nothing about this says John Q. Public can't sell their Athearn stuff on ebay or anywhere else. What it says is you have to take your own pictures, not imply you are an authorized dealer, and not steal their advertising.

The Walthers catalogue lists what Walthers distributes. Horizon, as a distributer, wants to not pay another distributer to sell their stuff. I don't expect GM to list Fords on their websites or catalogues.

And James, as for getting around the UP thing. Model Railroaders are specifically exempted from the UP Licensing format. You as an independent, not for resale modeller can slap UP decals on just about anything you want. Trying to make a profit selling UP labelled merchandise (custom, if you prefer) just might get you a "friendly" letter from UP asking you to stop.

This seems to be on the road to becoming another mountain out of a molehill discussion.

[Anonymous]

QUOTE: Originally posted by BRAKIE
James,Think of this..What will you do when the other manufacturers are bought out by distributors?

Simple. Scratchbuild.

I am so disgusted with how things are turning out, I am about to take that plunge already. Living in Wyoming, Self Sufficiency is the rule for a lot of model railroad items. As everything is almost a special order item.

As long as I can obtain DCC decoders I am good to go. (If I can find plans on how to make my own that supports four digit adressing I can make my own if I have to as well).