News: $40.7 award to MTH

[Kelly Shaw]

A federal court judge has affirmed a $40.7 million award to MTH Electric Trains. Read about it here.

http://www.trains.com/Content/Dynamic/Articles/000/000/005/517vkoih.asp

[nblum]

One has to marvel at the common sense of a judge and jury that affirmed a verdict that MTH's plans for the 392E were a trade secret that belonged to MTH. These people are either incredible dummies or MTH's lawyers are incredible wizards at distorting reality. The American legal system at its finest, make no mistake.

[daan]

If the items listed are actually the ones which Lionel must stop producing it is not only the 40.7 mil which they suffer.. They can start all over again on half their catalogue..

[Anonymous]

Wow, that will shoot up collector's prices for those locos!

[prewardude]

Unbelievable. I can see them being banned from making the modern trains, but the prewar stuff? Jesus...

And that brings to mind another question in all of this: How is it that Lionel can continue to make "Ives" O27 track clips, but MTH is making standard gauge repros with the Ives TM on them? Who actually owns the Ives name now?

This is one heck of a mess.

[Kooljock1]

So let me get this straight...LIONEL hires Mike Wolf.

Mike Wolf WHILE A LIONEL EMPLOYEE runs a project to re-produce the Pre-War LIONEL Hiawatha through Samhongsa.

LIONEL has now been banned by the court from producing a train set they themselves originally designed, and then paid Wolf and Samhongsa to copy in the early 90's.

It just doesn't make sense.

LIONEL has now been banned by the court from producing a train set that has been an almost synonomous symbol of LIONEL trains since the early 1930's: The Blue Comet in tinplate.

Again, LIONEL hired Mike Wolf. Mike Wolf as a LIONEL EMPLOYEE contracted with Samhongsa to produce this set FOR LIONEL.

It just doesn't make sense.

The LionMaster Challengers are on the list. Can anyone with any knowlege of the hobby compare these to their MTH brethren?

The JLC Challenger is on the list. Has anyone other than perhaps Sunset/3rd Rail produced an engine even close to this?

I can understand some of the other offerings on the list, but these stand out as real problems for me. I know, I know...MTH claims that it might not be the designs themselves, but rather the "production schedules" that matter. And I can understand that argument. But only in the case of those engines that were shipped close to the MTH schedule. How does the "Empire State Express", with a FIVE YEAR WAIT fit in with that?

I guess there are many legal "issues" I'm just too dense to understand. I just hope that this whole mess can settle down with the major players healthy and all earning a decent profit.

Jon [8D]

[IRONROOSTER]

From the article
"MTH in 2000 accused Lionel and its South Korean manufacturing partner of using drawings that were stolen in South Korea to produce locomotives. The drawings, actually computer files, were for mechanical and electrical subassemblies."
It's not the loco as a whole, it's these subassemblies. They can make the loco, they just have to develop their own subassemblies that are different from MTH.

The other question is: How badly is Lionel hurt by this award?
Enjoy
Paul

[1688torpedo]

This lawsuit is really ridiculous.How can a Federal Judge ban Lionel from producing trains like the prewar Hiawatha,Blue Comet,and the 392E.? These trains were originally Desinged by Lionels Engineering dept in Irvington,New Jersey Back in the 1930's when Joe Bonnano was in charge there.Mike Wolf has a lot of gall to think he is Joshua Cowan.Well he certainly is not ! This would be like if General Motors took Ford to court over some product infrigement issues and some Federal Judge bans Ford from using designs to reproduce a Model T if they so desired to reproduce one.Mike Wolf has one big ego and I will never support his company at all.As far as the Judge goes ,He should read a history of Lionel and discover who really desinged the prewar trains.He needs a Dunce Cap on his head!!!! Keith Woodworth.

[Anonymous]

Fear Not: when the qsi mth lawsuit get all said and done mth will be in sad shape. That goes around comes around and it happens every day if you had enough time to follow everything the went bad or good. Dave Roxin.

[Anonymous]

Guys, please read the MTH press release. There's a link from the CTT home page (4th item down in the middle of the page). It's right below the story we posted a few days ago about the judge's decision (that information comes straight from the court docket).

Near the end of the MTH release is information about why the 392E and some other locomotives that seemingly had nothing to do with this lawsuit trial are on the "banned" list. If you don't read it, you're going to look foolish when you keep posting things like "the judge should have a dunce cap" and "read Lionel's history."

Neil Besougloff
editor, Classic Toy Trains

[dougdagrump]

Maybe I'm being unrealistic but it sure would be nice to see them settle this by Lionel paying Mth maybe a seven figure settlement plus a big royalty on each item sold.
Just wishful thinking on my part I guess [|(]

[prewardude]

Thanks for the link, Neil. That helps to explain it. For those who haven't read it, here it is: http://www.trains.com/Content/Dynamic/Articles/000/000/005/518tpuns.asp

[nblum]

Let me be the first to point out that both Korea Brass and Lionel claim that none of these drawings or plans were actually used in the manufacture of locomotives. The jury refused to believe them and their expert witnesses. Thus if they are telling the truth, the injunction means nothing. Nothing, except that you can bet dollars to donuts that if Lionel tries to produce a 392E, MTH will be back in court trying to get them to stop, no matter where the drawings and plans come from. This legal strategy, such as the two dismissed lawsuits against Broadway Limited/QSI, is a business strategy, not about right and wrong, in my opinion. That is why the injunction is preposterous. Proving a negative, in science or law, is very difficult and it gives MTH an unfair advantage in undoubted future wrangling in the court. That is why it is imperative that Lionel appeal and win reversal.

[Anonymous]

There is only one way to stop MTH, quit buying their stuff.

[Anonymous]

QUOTE: Let me be the first to point out that both Korea Brass and Lionel claim that none of these drawings or plans were actually used in the manufacture of locomotives. The jury refused to believe them and their expert witnesses.

With Lionel, Korean Brass and the Expert Witness telling the truth or not, set aside, I believe the destroying of the documentation is probably what swayed the jury to disregard the testimony in question. Had no documentation been destroyed, and given that the documentation that was destroyed contained no such information as to the use of the drawings, the jury may have thought otherwise.

[Anonymous]

I believe Rod has a valid point. Destroying documentation makes it look like you're trying to hide something, whether you are trying to or not. Bad move on Lionel's part.

I find the judge's remark that the jury was sophisticated because 8 members has college degrees to be a little strange. What subjects were the degree in? Liberal arts? The sciences? Economics? Basket weaving?

I don't know, but it seems to me that just because you went to college & got a degree doesn't mean you're "sophisticated."

Tony

[1688torpedo]

[:)][:)]Hello Neil ! Thank you for the Information on the MTH Press release.However it was not on the forum when I made my original post on Nov 2nd. The reason I made my original post was that Lionel first made the 392E,Hiawatha,and Baby Blue comet over 65 years ago and it did not make sense to me that a company with the original records and prototypes in their archives would need the help of a overseas vendor to produce Prewar Trains at all. Having said that the second reason for my post is that Mike Wolf ,Jerry Williams or anybody else never bought or paid for the rights to Manufacture Lionel Trains Pre or Postwar.To date only General Mills,Richard Kughn,and Wellspring/ Neil Young have made such an Investment.No one else.Period! This is why Richard Kughn came down hard on the unathorized production of Lionel Trains when he bought the Company in 1986.He had to in order to protect his investment and to prevent forgeries of Lionel Trains in the Collector Market. Right now Williams reproduces postwar Lionel and M.T.H reproduces prewar.Is this Right.? I don't think so. Marx and Weaver with Third line are quite possibly the only companies that have never reproduced any Lionel Product whatsoever.Marx is in the catbird seat as they have a unique product nobody else copies and Marx in turn does not copycat other products,This is as it should be as it would eliminate look -a-like or me too products that are in the market today .Its my own personal two cents worth and thats it. Again Thank You for posting The M.T.H. Press release,Albeit Two Days later. Keith.[:)]

[Anonymous]

QUOTE: I don't know, but it seems to me that just because you went to college & got a degree doesn't mean you're "sophisticated."

Right on! I'm a perfect example[;)]

[Anonymous]

Would you rather have a group of backwoods hillbillies with maybe 5 teeth between them and a third grade education to decide the verdict on what turned out to be a very technical case?

[nblum]

Good point. I'd rather have an arbitration panel with unbiased expert engineers and intellectual property attorneys hear the case. Juries were never designed for highly technical litigation, and this is one reality that has pushed tort reform. Who wants a lay jury handling a case involving recombinant DNA technology or complex medical malpractice? The wrong outcome is sometimes more readily obtained related to the skill of the attorneys, rather than the facts of the case. Usually those with expertise are actively excluded from juries, unfortunately.

[AlanRail]

The facts have been determined by the jury; it is now up to the US Court of Appeals 6th circuit (assuming Lionel appeals) to determine what if anything the judge did that was wrong that affected the outcome in a way that would reverse the finding of the jury.

I know that Neil thinks allowing the verdict in the Korea case was a judicial error and for me, I dont agree that the award wasn't doubled. I don't know what other issues Lionel can raise.

However, Lionel will have to come up with some error on the part of the trial judge in order to have the matter reversed and remanded back to the trial judge.

Alan

[3railguy]

If MTH goes bankrupt, can Lionel use the tooling?

[AlanRail]

no

why would MTH going bankrupt, permit an infringement of their trade secrets technology by a competitor.

I think that Wolf phrased his reasoning as to why he is pursuing the matter like a businessman should. His competitor took unfair advantage of work he owns and used it without paying for it. That gave Lionel an edge that was not rightful or legal.


And if Wolf took unfair advantage of QSI’s patents then he too should get rightfully bean-ed. And I suppose there will be no end of abuse from the forum for him doing so.

Alan

[superwarp1]

And it contines.

I don't know who is right, who is wrong. I really don't care but 40 million for toy trains? Come on get real

Gary

[Anonymous]

I would like to know what MULTIPLE of MTH's TOTAL ANNUAL SALES is represented by 40.7 million dollars.

[AlanRail]

gary

Lionel was at the plate twice and struck out both times.

I spoke today with an attorney that deals with unfair competition and theft of trade secrets in commercial litigation; he was also unsure how the judge ruled that part of the award wasn't a double-dip (unjust enrichment and lost profits).

It's up to the appeals judge. to reverse and remand back to the trial judge.


Alan

[Anonymous]

I'm siding with MTH on this one. All of this happened on Maddox's watch and the blame should go to him and Bob Grubba. They were the Lionel management at the time of the theft.

[Anonymous]

QUOTE: All of this happened on Maddox's watch and the blame should go to him and Bob Grubba.

That's a little unfair to Maddox. The information out there says the incriminating email went to Grubba. You'd have to know what information (if any) he passed on to Maddox to include him in the blame game.

[Anonymous]

QUOTE: Originally posted by TheTruthofTrains

QUOTE: All of this happened on Maddox's watch and the blame should go to him and Bob Grubba.

That's a little unfair to Maddox. The information out there says the incriminating email went to Grubba. You'd have to know what information (if any) he passed on to Maddox to include him in the blame game.

The fact is, Maddox was the CEO of Lionel at the time. Ignorance of the facts or the email is no excuse. Grubba worked for him and he bears the ultimate responsibility.

[Anonymous]

I wish MTH and Lionel would agree on a settlement and just move on.