MTH Vs. Lionel Trial

[RhB_HJ]

QUOTE: Originally posted by chuckn

Read the transcripts. snip......... AutoCad's automatic numbering of components may also account for the similarities in part numbering of many of the components given that the same person was responsible for both designs and was using the same software and templates (I wonder if he was using legitimate copies of the program[8D]).


The designer was invovled in "double dipping/moonlighting" of the worst kind and his actions as well as his co-defendents are not something to be proud of or emulated.

Chuck,

Here I was reading and reading and reading! Finally a realistic break in the proceedings! Thanks for the laugh![:D][:D]

The designer, whoever he may be, certainly wasn't the sharpest knife in the drawer. Well to put it bluntly: that's utter stupidity!

BTW guys, I don't usually do CTT but this was an interesting read.

[Kooljock1]

If this suit does not involve the stealing of plans for the mechanical or electronic parts of a given locomotive, but only the plans for the castings themselves, I have a hard time seeing merit in the suit.

A model of a N&W Class A auxillary water tender should be just that. And if done correctly, all scale models of the same should be identical.

If Korea Brass had stolen and used plans on a semi-scale RailKing model, and LIONEL then passed the okay on these, I could see great merit on the part of MTH. But that is not what is alleged.

I suppose the greatest slap to the LIONEL faithful is viewing this suit in the light of the pages of exact knock-offs of LIONEL accessories in the MTH catalog. Many of these have never gone out of current production at LIONEL, and yet, MTH has reproduced them with impugnity, using even the original LIONEL catalog numbers!

I can understand MTH's use of the IVES name, as LIONEL under either MPC or LTI let that service mark lapse by no longer using it on the O-27 track clips.

But when it comes to building an item, what is the difference between buying it off the shelf and copying the design, or getting a CAD drawing of the same? Either way, mechanicals and electronics have to be designed to be compatible with the manufacturers operating system. And the dies and tooling still have to be cut. And changes to the castings still need to be made to accomodate the operating systems and mechanicals.

This is a very complex issue. I just hope the jury pool in Michigan is better than that in Los Angeles!!!

Jon [8D]

[Anonymous]

Read the transcripts. The design engineer for Samhongsa was doing the work from home on his home computer (he explains why in the transcript and that he also had permission to do so). He did two sets of plans, one for Samhongsa, one for Korea Brass. They were not identical plans or duplicates/copies, they were plans for the same "prototype". The AutoCad drawings were based on the Samhongsa template so they bore Samhongsa trademarks which is what they were found guilty of, being in possesion of copyrighted material. AutoCad's automatic numbering of components may also account for the similarities in part numbering of many of the components given that the same person was responsible for both designs and was using the same software and templates (I wonder if he was using legitimate copies of the program[8D]).

I've seen the MTH version and the Lionel version of the N&W "A" side by side as well as seeing the inside/guts. They are not the same models. As OGRR noted in it's extensive review of the two locomotives, they looked more like cousins than identical twins.

The designer was invovled in "double dipping/moonlighting" of the worst kind and his actions as well as his co-defendents are not something to be proud of or emulated.

[nblum]

Well, I hope you're prepared to eat crow and apologize to the defendants if the jury either finds for the defendants, Lionel and Korea Brass, or makes a token financial award to MTH. I consider this an entirely possible scenario because the jury may not find credible evidence that anything criminal was done, and/or they may conclude that the financial reverses suffered by MTH had nothing or little to do with the events in Korea.

It is clear that no one here other than myself has actually read the transcripts of the Korean trial on the TM Books and Video website. I suggest you do so if you want to see why I suggest that these unfortunate legal outcomes for MTH could well come to pass.

[spankybird]

Neil,

QUOTE: MTH and Samhongsa call that theft. Lionel and Korea Brass call that business as usual…

Were the three employees of Samhongsa and one of Korean Brass convicted of stealing [?] Yes they were by their court system.

MTH isn’t the only ones calling this theft, so did their own court system.

As I said before, I am a design engineer by trade. If I were to do something like this, I would be facing 20 years.

[ChiefEagles]

Since this started, I ahve been sitting back and reading and also reading other articles on this issue. Seems to be a MTH case and Lionel was the "bad boy". Lionel is a great company but looks like they goofed and will have to pay.

[nblum]

I believe it is not me who is closed to seeing facts but you who are taking as facts items that have not been established as fact in an American court, and making assumptions about the meaning of these events.

Individuals such as the Manns of Sunset Models/Third Rail, who regularly deal with Korean factories, have stated that it is routine for individuals to move from firm to firm and bring their designs with them. MTH and Samhongsa call that theft. Lionel and Korea Brass call that business as usual, because such designs are not trade secrets by the legal definition. The court will try to sort out that difference of opinion.

MTH has a factory in Korea. That factory is not operated by MTH directly but by a gentleman who left Samhongsa to partner with MTH in this factory. It is no different than the situation that Lionel or K-Line or other vendors have with partners in Asia, unless you can show us the legal documents showing 51% ownership of the factory by MTH. In the past, it was not possible for a non-Korean or non-Chinese citizen to own more than 49% of a facility in those countries. Perhaps that has changed. In any case, it has little to no bearing on the issues of leadership in the industry we've been discussing. Lionel had 100% control of its own factory for many years and that didn't stop MTH from creating a large business using factories they had 0% ownership of. Obviously this is not a critical factor in success in this industry. Now that MTH has at least partial ownership of a factory, and Lionel has no factory, Lionel has had more success in the marketplace in recent years than MTH from all reports.

[spankybird]

Neil,
I am so sorry that you are closed to so many facts. The CTT web page clearly states that without a doubted the designs were stolen, which you accept as normal way of doing business.

In the 2000 Lionel catalog, it boast of its greatness of producing the Big Boy. You have been the one saying that Lionel is the great leader new tech. Their greatness of the new century is 7 years after MTH did it.

I have never said the MTH is the leader in “O” gauge, nor did I make any reference to that about CTT web page.

If we want to accept your number so Lionel’s value, then it is surprising that MTH at it’s small size was able to develop DCS. Why didn’t they do it 8 years sooner, maybe it was their size and youth as a business.

As far as layoff, look at the overall country . Many companies have had layoff, many have closed completely, even Lionel layoff 325 or so people in 2001. This has nothing to do with leadership, but more with who has money to by trains.

And I am sorry, MTH has several time stated in their news letter and it was also in CTT mag that MTH does have its own engine factory.

[nblum]

Sorry, but I have no idea what you are referring to. What's on the CTT webpage that leads you to believe that MTH is the leader in the industry and Lionel is hopelessly behind? Which engine are you referring to? Is making a single engine seven years ago versus this year a big deal? Sounds fairly trivial in the big picture to me.

And if MTH is such a great leader, compared with Lionel, why did it take them eight years to introduce command control? Why did they have to layoff in the range of half their staff a few years back? Looks like they're the ones playing catchup in the marketplace and technology over the last four or five years.

Lionel, strictly speaking, doesn't have a partner in Korea. I was using that term, perhaps incorrectly from a legal standpoint, for their major subcontractor in Korea, Korea Brass. MTH has a similar situation. They do not own a factory in China where much of their stuff is made, and they do not own the Korean facility on their own. The Korean facility is also a partnership, with a Korean entrepreneur they have worked with previously when he was with Samhongsa.

[spankybird]

Neil, you have to read the front page of CTT web page. You also have to start to face reality. If your loved Lionel is such a leader, why did they introduce this engine 7 years after MTH[?] Why do they need a partner[?]

In fact MTH now has it own factory in Korea, owned by MTH to make its engines.

[nblum]

Your facts are incorrect. Only one individual was sentenced to time in prison, and from what I recall, that sentence was never carried out and no imprisonment occurred. The actions in the Korean court consisted of what one might call "a slap on the wrist." Perhaps the court realized that the usual way of doing business in this industry in Korea was at variance with accepted practice in the rest of the world, and had to respond to Samhongsa and MTH with some token penalty.

That was quite a few years ago. In the interim, Lionel has made plenty of locomotives, with Korea Brass, Ajin and others. Samhongsa is out of the train business, perhaps no longer finding MTH a suitable partner for business prosperity. Rumor had it that at one point, Samhongsa approached Lionel about partnering. Not exactly the actions of a company that felt deeply wronged and angry at Lionel.

Korea Brass was selected by K-Line to make many of their new scale steam locomotives. So yes, I'd guess that Korea Brass and Lionel's actions back then and more recently, make them leaders in the industry. More so than Samhongsa, which is out of action, and MTH, which has chosen to become the leader in lawsuits rather than the leader in producing three rail trains, from all appearances :). Perhaps the lawsuits derive more from sour grapes and frustration than any legitimate claim to having been competed with unfairly? The jury will give us some indication of that, as I have been pointing out.

[spankybird]

Gee Neil, If no wrong doing was done, then why did the Korean courts find three former Samhongsa and one Korea Brass employees guilty and they did or are still doing jail time for this.

By the way, is this another example of how Lionel is the leader in the 21st century[?]

Do you really believe that Lionel was not involved with the design and building of these engines [?] If so, is non-involvement another example of there leadership [?]

[Anonymous]

Transcripts are still up on the Toy Train review web site. These outline who did what to whom.

[nblum]

The testimony in Korea from the individual who had access to the Samhgonsa drawings and specifications was that he did not use that information in designing the locomotives that Lionel paid to have produced. Since the drawings were primarily the mechanical innards of these products, and those of Lionel and MTH locos differ substantially, his testimony is, at the least, believable. Folks who have had model train tooling made in Korea point out that many of the firms that produce this stuff are interrelated by family, marriage and share employees who have worked for the other firms. It is the custom to share information of this sort in Korea. Perhaps this is why the trial in Korea did not lead to the demise of Korea Brass as a company, nor any significant penalties or jail time for the alleged "perpetrators."

Indeed, today, Korea Brass is thriving and Samhongsa has gotten out of the train business altogether. MTH has argued that this is the product of decreased sales of MTH locomotives due to Korea Brass having access to MTH's "trade secrets." Some pundits in the industry think it's because PS1 locomotives were considered antiquated by the late 1990s and the drop in sales had nothing to do with anything Korea Brass did or didn't do, and everything to do with what MTH did or didn't do.

One rumor at the time has it that when Mike Wolf heard Lionel was going to produce scale locomotives in Korea, he went around to all the producers and tried to intimidate them into NOT working for Lionel. Obviously that didn't work and the rest is history.

So you see that this story is considerably more complex and nuanced than some here are aware. The jury will let us know which version is the more believable.

[Anonymous]

spankybird;what happened in my case was the concept that I had applied to an item worked like a charm but the product was availible from other mfgr's without my addition.
I had everything in a nice neet package so a consumer could hook it up set it and it was done!
what they did was took the electronics and that concept and made a product that would work with anything it was hooked to.

[spankybird]

That is what Lionel is say spodwo. But lets face some reality of today’s manufacturing. You are correct, Korean Brass is who stole the designs, but how could Lionel decide to proceed with this project with out knowing how Korean Brass could produce this engine, when they have never done it before. This is what MTH is say, Lionel knew about it from the start, therefore they are also part to it.

[spodwo]

From this website regarding the lawsuit:

http://www.trains.com/Content/Dynamic/Articles/000/000/004/876qmgpp.asp

I can only assume that the perception of this lawsuit is "baseless" because Lionel didn't know about the theft . Korean Brass, since it is contracted by Lionel, is the offending party and not Lionel? Is that the read I am getting?

It does seem that there was theft of plans.

[nblum]

Yeah, I agree, Alan and Jack, only your opinions are worth expressing :). Some of us are complete ignoramuses about the legal system. My father was a graduate of Columbia University School of Law and pleaded cases before the Supreme Court and a close friend is one of the premier bankruptcy lawyers in the New York area. I have no one to ask about these difficult questions :). I have extensive exposure to patent and liability jurisprudence through my own biotech patents and our university's risk management and legal affairs office's activities. I'm thinking of going to law school just so you guys will allow me to have opinions about these issues ;).

The fact remains that most modern legal systems remain very susceptible to unethical and unjustified legal undertakings by deep pocket plaintiffs or those who merely have an axe to grind and the money and tenacity to pay for prosecution of a complaint. Saying that the legal system is flawed in this way does not mean that anyone has come up with a practical idea for something better. The fact also remains that in the end result, some lawsuits are marginally justified or unjustified except for the passion of the plaintiff that they've been done wrong by life and/or others. But it's the best system available.

I'm fairly familiar with the MTH vs. Lionel lawsuit because many of the documents from the Korean version of the trial were published on the TM Video and Books website and the details of the case have been discussed ad nauseum by some of the principals, including MTH. My view, based upon this admittedly fragmentary evidence, is that there is good chance that this lawsuit represents primarily wishful thinking and a Hail Mary attempt to achieve through the legal system what could not be achieved in the marketplace. Does MTH have the right to pursue a largely baseless lawsuit, if this is what it is? Sure. Do I have the right to express doubt about the justification for the lawsuit based upon public information. Sure. If the jury decision is to award MTH millions of dollars and is upheld on appeal, I'll be glad to admit I was wrong and apologize to Mike Wolf and his colleagues at MTH [:)]. Hopefully those who have been abusing us doubters will reciprocate if the finding is for the defendants or the award is $5,344 :[:0].

[Anonymous]

QUOTE: Originally posted by AlanHN

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

I agree Alan. Is it only you and I that understand the legalities of such proceedings?

[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...

[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]

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

[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.

[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

[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!!!

[Anonymous]

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

[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]

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]

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