Lionel sues K-Line

[AlanRail]

It's bad for the consumer to have less choices and pay higher prices? Who knew?
I thought that with several manufacturers producing the same type,model, roadname of trains that that was bad for the consumer.

When MTH went after Lionel many said that that was bad for the hobby, now that Lionel is giving it to K-Line, I guess that must be bad for the hobby too.

And yet as the gods make War, why can't we mere mortals just continue to play? Unless I have this wrong, if one or more of the gods die, we'd have one less duplicated engine to purchase. And if the price is too high on the limited production run by the remaining manufacturers, well who said we would be forced to buy it??

Industry ethics has little to do with my purchases. I buy because I can afford it and I like it. My train, TV, computer, or auto purchases are not politically motivated or else I would never have bought K-Line's Bush/Saddem/bin Ladin cars. Or would I?

Anyway, gossip, inuendo, lawsuits, insults and Greed, etc are the motivations that make buying interesting not motivating; I like musing that I bought a train from Wolf who sued Lionel; and now I'm buying this engine from Lionel, a company that is in litigation with the manufacturers of that engine running over there on my layout.

Cool.

[Anonymous]

First: Manufacturing of toy trains has, for the most part, moved offshore, as everyone here knows all too well. That situation is basically irreversible. If China becomes too expensive a manufacturing base, the toy makers will move to some lesser-developed nation and start all over again (just as they did first with Japan, and then with Suth Korea and Taiwan. Learn to live with it, and keep in mind that we have nobody but ourselves to blame. We want everything, and we want it cheap. That is what signaled the end of U.S. manufacturing, and there's no way that's going to reverse itself.

Second: Nowhere in the legal filing is a finger pointed at anyone overseas. It's been my experience that employees in most Asian cultures and countries are as honest or even more honest than most Americans in any event, so pointing a finger at some unknown entity, barring something not known at the present time, is just plain wrong at best, and tinged with racism at worst.

There's no point in crying over spilled milk. These various firms are out to protect their own interests, and that's just what they will and even must do to survive. Buy your trains when you see what you like, and while they're still available. More importantly, try backing off the consumer approach to the hobby, for a while at least, and spend some time developing the modeling approach instead. The hobby ISN'T all about acquiring the latest object.

[trigtrax]

There's the possibility here that nothing was ripped off.. Even in it's filings Lionel mentions differences between it's products/schematics and what K-Line was producing.
This could be a case of Peirson doing some moonlighting for K-line while still working at Lionel... I mean why was the K-line logo on his computer? If you're gonna steal something you just steal it. You don't leave your business card at the scene.
Anyway, this could drag on as long as the last case did.. Over all I think it's bad for the consumer. We're gonna wind up with less choices and pay higher prices.

[Bob Keller]

No, actually the court document doesn't mention anything about anyone in Asia ripping anything off. The focus is in the US of A.

[Bob Keller]

I don't believe that China or Korea have anything to do with the issue at hand.

[artyoung]

One thing I would like to request of the staff of CTT : This time around, PLEASE don't call again for the TCA to yank the memberships of those involved - the Standards Commitee nor the membership at large - it's not in the club's charter to do so. That said, let's all hope that a setlement can be reached instead of more years of bad press and wasted money for legal fees. I'll always love ( and buy ) toy trains, but I'm really getting tired of the B.S. from the non-enthusiast corporate managers who make them. Put all that effort into something other than raiding / stealing / screwing each other, and the real innovators just might lead their companies to a market share based on quality, as the old, original companies did. Remember, Brand Loyalty came from the efforts of the Frank Pettits of the time, not the Roy Cohns. I'm headed for the basement, "See you at York ! "

[okiechoochoo]

I think you all misunderstood. I know there has to be a profit made but what is wrong here is that the greed to make that profit has led companies or individuals to stoop to stealing the technology it takes to make the profit. This leads to greater profits because they can still charge the market rate but do not have the investment in developing the technology. You can call it what you want but that is greed. Stealing is wrong and in my opinion, if the case is proven, I hope it bankrupts the companies that did it.

[Anonymous]

Manufacturers price their products at the prices people are willing to pay, consistent with making a reasonable profit on the item. They make $1,000 O gauge locomotives because, presumably, there are enough people out there willing to pay $1,000 for those items. Nobody can fault a company--any company--for trying to make the maximum profit possible on a given item. Ultimately, it is the consumer who determines if that profit (a component of price) is too high. I'm not willing to pay $1,000 for an O gauge locomotive, but that's just me. There obviously are others out there who don't bat an eye at paying that price. What is the profit margin on that locomotive? I really don't know, but how often does a consumer stop to calculate a profit estimate on an item before he/she completes the transaction?

If you don't like the prices, and feel that the $1,000 locomotive should really sell for $500. . . well, either wait for a blowout sale or explore some other alternative. But don't blame the manufacturer.

[Bob Keller]

Again, there is nothing wrong with making a profit. That is one issue.

Lawsuits, who should sue who - if anyone should sue anyone, rights, greed, who stole what from who - if anyone stole anything from anybody, business ethics (or lack thereof) are additional topics.

Again, there is nothing wrong with making a profit.

[trigtrax]

Yes profit is not against the law but the problem is profit has become the Law. What is the point of having a business that makes toy trains, or anything else for that matter. You must promote the product you make, you must serve your customers... Then the profit will follow... What I'm seeing all around is make the profit and hope the customer follows. Right in this lawsuit Lionel is claiming they have the better Speed control and they want the profits from it.. but they haven't given it to their customers, they want the rights but not the responsibility. Worse yet I'm not convinced they actually own the rights to closed loop speed control. That technology has certainly been used in other areas and was just borrowed for toy trains.. The main chips of TMCC are off the shelf 100 Khz IF drivers from Stereo Receivers. I'm sure if someone came along with enough money they could overturn a number of these patents and rights these companies are claiming. The issue is the O-Gauge market is just too small to allow those expenditures.

[Bob Keller]

Let's not forget, this isn't the Soviet Union. Profit isn't against the law. No profit, no trains. Lionel, MTH, K-Line, Weaver, Williams, Third Rail, Etc. are not "non-profit" corporations like the Red Cross.

[okiechoochoo]

The real culprit here is MONEY, otherwise called profit and greed.

[jnichols]

QUOTE: Originally posted by 3railguy


Had MTH not sued Lionel, Lionel would not be sueing K-Line. Sort of like a computer virus that spreads through email, MTH has caused all the ill will.

Oh come on now! MTH has caused all the ill will!?!

I am staying clear of this topic... The minds of the Lionel loyal are difficult things to understand... [;)]

[RI Jim]

Wow, there's as much hot air over here as there is on the "other" O gauge forum. Four pages of it, no less! And there's STILL people who will defend Big L to the death and blame MTH for the whole mess, no matter what. When I'm finished laughing, I guess I'll crack a cold one and go run my trains. It's the weekend, after all. [:D]

[brianel027]

That's an interesting news story Reading. Just as interesting is to go over to the OGR site and read the PDF of the court papers than Lionel filed.

Unfortunately there's very little love of trains as far as the train business goes, and far more love of money. There are a few here and there in the companies who work in some way making trains who also are involved in the hobby and operate trains. But most don't. Though all the train companies like to claim innovation on this and that, it appears there is far more copying and unethical "borrowing" of other companies ideas.

You can clearly see this on the high end products. On the low end beginner products (the ONLY place where the market has a chance of growing), there is almost an industry wide lack of ideas or product development. The K-Line "Keystone Classic" Cars... great price point! But no originality, with item offerings stuck firmly in the past. Where's the innovation in that?

Or a lack of committment to any reasonable level of quality. The K-Line Operating Barrel Loader is a fine idea for a kid's train layout. But the thing looks cheap and poorly made. With a few revisions, it can be made to operate mechanically from the front of the layout. Paint the whole thing, turn the building around so the windows face the track, add building illumination and spotlights on the platform and it becomes pretty neat.

What few ideas there are, like the battery powered train sets are to borrow the title of a Neil Young song "A Piece of Crap" and do little to really involve kids in the real hobby of electric trains. At least the thing runs on "Dad's 3-rail train layout." Oh, I almost forgot... they are nearly scale sized, like any kid will really notice that.

There has been some innovation in track, but only to make sure than no one's track works with anyone elses track (or not without difficulty). Gee, that'll help the hobby.

The Lionel sets that ran (and ran poorly) in only one direction were no better. The all-plastic single motor Lionel locos are only a tad better. The stuff is all made in China... how much cheaper can the production costs get? Maybe Burma or Indonesia? One might understand if the stuff was more reasonably priced at a MSRP level. I doubt even lower production costs would motivate them to put a little more quality into the trains that really matter... starter trains!!!

When K-Line did break the mold and introduced die-cast cars, others soon followed. The detailed milk cars... the hiddle coupler tabs... the list goes on. The business is so cut-throat and competitive that no one can afford to be left behind. When M.O.E. comes up with a good idea, the first thing you read on the forums is when will Larry and K-urly offer the same thing? But when the original 3 Stooges were running buzz saws and hammers over each other, it was funny. With the new stooges, M.O.E., Larry LLC, and MD K-urly, the attacks, copying and ongoing legal actions are all about money and there's little humor to be found in any of this.

Does anyone remember what I like to refer to as "Maury's Manifesto" where K-Line stated their intentions to dominate the world within 5 years - well the 3-rail train world. At the time, the statement was duly slammed over on the OGR forum. Does anyone remember K-Line's RealSounds? It was a dud, didn't last long and was soon forgotten. Anyone remember the hulabaloo when it was announced that Lionel's Silvestri and Grubba were "changing trains?" And what did happen to Ken Silvestri? Never heard too much after the initial announcement. How many CEO's has Lionel had in the past 10 years? Anyone recall the sackings and staff reductions at MTH, Lionel and K-Line? How many millions did MTH put into the development of DCS? Ugly as it all is, it's not as much about the joy of trains as it is the so-called joy of money.

At one time years ago this kind of stuff happened I suppose and no one knew about. Lionel bought out Ives and American Flyer to put them out of commission. And didn't Lionel take legal action against Colber? The big difference is now the dirty laundry is all over the internet. But we as train consumers shouldn't read it... but we should do our shopping from discount internet train dealers (or even facotry direct) since local ones get no support and are closing left and right. Why offer dealers blowouts on product when they can be sold manufacturer direct on the internet?

I don't think the many of the companies really have a clue? They don't take chances, save for MTH with their many product introductions and their DCS system. They don't try to really grow the market as much as they scheme on ways to take others sales and technology. They don't work outside the box... they operate "inside the box," clinging to the myth that everything left in the box will be worth more money tomorrow. Their so-called innovations and ideas begin with listening to an aging minority who at one time had money to burn and bought more than they could ever possibly run or even had room to store. But then again, if you are running a business and you don't have a clue, then you look anywhere to actually find one. And in this case, the clues are all at YORK, which ought to be a real load of laughs this year. Everyone will be under court order to not even smile at each other. Well I might assume Mike Wolf will still be smiling (unless the business of trains has started getting to him) because he at least has always loved trains.

It's written in the Bible that times will come where pride, foolishness and the love of money will replace love for one's fellow man. It's so ironic that a hobby that is suppose to be a wholesome family hobby is becomming anything but wholesome and has been long out of reach for many families.

As time goes on I'm beginning to believe that MARX Trains is the company that should hold the place of esteem and honor. I always read and hear comments how "my first train set was a MARX." Look at the history of the orignal MARX company... sure they may have borrowed concepts, but they came up with their own ideas and product development. And while you could see the cost cutting techniques used, the stuff still worked. Even now, when I find beat up MARX stuff I can usually fix it and get it working again. And some of those ideas were pretty darn clever in their simplicity and cleverness.

Well, I'm going back to running my trains. The big companies can all close shop as far I am concerned anymore. Their move overseas is just one more little sign of what's wrong with the American corporate mentality. The companies eliminate decent American jobs, then wonder why sales of their foreign made goods are sluggish at best? There was just a report today on Christian radio saying the US economy is not nearly in the good shape it is being reported to be in on other media sources. There's scant little being made today that is in my budget, and what little there is are in roadnames that I have long grown sick and tired of. I've repainted much of my PRR and NYC stuff out of sheer frustration. I've learned to design, kitbash and build my own locomotives. A quick look at real trains today shows me there are lots of other roads. A quick look at the beginner products in the catalogs shows they were the only 2 railroads that ever existed.

I'm done with the big 3 companies. There are plenty of smaller companies who appear to operate on more ethical levels that I as a Christian can choose to support. And I'm done posting on this thread. Fortunately, they can't take away my lifelong love of trains - or I'm sure they would if they could make a dollar at it.

I think all the big companies owe all of us an apology for the negativity and lousy ethical behavior they've brought upon the industry. More than likely there will be nothing of the sort and just more legal actions.

[Anonymous]

Statement released by the President of Lionel, on their web site:

http://www.lionel.com/CentralStation/NewsStand/viewrelease.cfm?newsID=117

"Jerry Calabrese statement concerning K-Line lawsuit
07/29/2005

As many of you already know, Lionel has filed a lawsuit, asking the court to stop one of our competitors, K-Line, from selling products that we believe contain Lionel's technology that was obtained illegally. We recently discovered the situation when we examined the computer records of our former chief engineer and confronted him. Faced with our findings, he admitted that, while under exclusive contract as a Lionel employee, he had also been working with another former Lionel employee, and K-Line, to develop for them a number of tech innovations, all of which were based on proprietary Lionel innovations and patents.

Please be assured that we did not take these actions lightly. Like many of you, we are weary of legal battles and the time and money it takes to wage them. At the same time, though, we are fully resolved to do whatever must be done to protect our valuable intellectual property that is essential for our survival as a company. I also want to assure you, our loyal customers, that none of these legal distractions will keep us from our primary responsibility of building and offering the highest quality and most affordable products we can possibly make. 2005 has been a great year for Lionel, with near record sales and, more important, predictable and steady delivery of promised products, for which we thank you."

[Anonymous]

QUOTE: Originally posted by Reading and PA RR

Maybe Lionel was not being tough enouh with Bob Grubba when he left to go to K-Line. Apparently, Microsoft does not want a repeat of the Lionel -> K-Line technology transfer and they are suing Google to prevent a former Microsoft exec from working for Google. http://news.yahoo.com/s/ap/20050729/ap_on_hi_te/google_microsoft

Actually, I am not really thinking that Lionel should have sued Grubba to keep him from ever going to work at K-Line. I am not really suggersting that, and the hobbyists would have howled if they had done that, but i bet that Lionel execs wi***hey had though of this a few years ago !!!

Grubba had to go. Remember, he is also in the eye of the Lionel/MTH mess.

[Anonymous]

Maybe Lionel was not being tough enouh with Bob Grubba when he left to go to K-Line. Apparently, Microsoft does not want a repeat of the Lionel -> K-Line technology transfer and they are suing Google to prevent a former Microsoft exec from working for Google. http://news.yahoo.com/s/ap/20050729/ap_on_hi_te/google_microsoft

Actually, I am not really thinking that Lionel should have sued Grubba to keep him from ever going to work at K-Line. I am not really suggersting that, and the hobbyists would have howled if they had done that, but i bet that Lionel execs wi***hey had though of this a few years ago !!!

[siberianmo]

Well, I wasn't going to chime in on this, but ..........

I concur with all of you who feel that this sorry situation has really put a damper on the fun many of us recollect with Lionel Trains. Of course, being somewhat of a realist - that was then and this is now. Time marches on and so do the changes associated with it. Not trying to be profound about any of this, but to me it's just unrealistic to expect that anything will remain the same - pristine or otherwise - the longer it's around.

Lionel is just a name - that's all. It has different meanings and mental images for many of us. Mine begain in the late 1940's ....... wonderful memories of the hours spent playing with those trains. Fast forward to today and my Lionel O-gauge Polar Express set - constructed on a shelf system in my basement train room. Some of you may recall seeing the photo's I posted .... Anyway, back to my thoughts. Are these the same Lionel trains [?] Heck no. But there really is one thing linking them - and that is profit. The boys in the 1940's were just as interested in making a buck as the one's today. It's just a matter of how to go about it. Personally, I think the old fashioned way of putting it to the public was far less aggravating than these days.

See ya!

[prewardude]

I can't believe this is happening! Just when I thought the soap opera couldn't have any more plot twists... [:O]

[Anonymous]

"Had MTH not sued Lionel, Lionel would not be sueing K-Line. Sort of like a computer virus that spreads through email, MTH has caused all the ill will."
-----------------------------

Now there's a real piece of flawed logic for you! Ya gotta love it!

[Anonymous]

I think I will stay off the train boards for a while. This is not my cup of tea.

[Anonymous]

I share the shock about this that many people are feeling. I don't share the disgust. I like O gauge trains. I like them a lot. I like the layout I am building and I have some neat operating accessories to put on the layout. I am going to have fun for decades with this layout. O gauge trains are the highlight of my life. When work gets boring and tedious, I think about which engine I will pair with which cars and which "tasks" I will carry out on the layout. Beer cars that need to be loaded up at the brewery and then "delivered" to the sidings near the taverns. The Lionel boxcar will need to be loaded with toy trains at the Lionel factory, and then those trains need to be delivered to the Lionel hobby shop. Oops, the hobby shop owner isn't there right now, because he's over getting a haircut at the Lionel barber shop. Etc, etc, etc, and I have not even begun to talk about the coal that needs loading and then delivered to the Power Plant on the hill overlooking the town... So, no, I don't share the disgust that some have for the whole world of O gauge trains. Sounds like one guy who is not so honorable has screwed up the business affairs of a few companies, and now it is finally hitting him in the backside. So I for one am not giving up on O gauge. I would not give up something that is enjoyable to me just because some ying-yang in North Carolina or florida or wherever he lives created some corporate bad feelings. Keep your head up, and "don't let the turkeys get you down". Stay with 3 rail O gauge, you will love it for another 50 years. You have my word on it.

[okiechoochoo]

I have to disagree with those who say no one seems upset with Lionel like they were MTH for sueing. I am. I was very upset with MTH and have not bought anything of theirs and won't after they filed suit. It really PO'd me because I thought it was merely a take over attempt of what they really wanted, the Lionel name. I have been a Lionel fan for 50 years but this latest episode does me in I think. Now I am just as upset with Lionel. Lawsuits in this hobby are nuts and it will not benefit any of us. It will hurt our pocket books in the end as the legals fees, etc, will be passed on to the customer. I agree with the previous poster who said the warm fuzzy feeling for Lionel seems to be disappearing. For me is certainly has. This type of stuff doesn't take place in two rail scale. I may turn to HO or N for my future hobby interest and sell off this three rail stuff. The fun seems to be gone. And I don't think it is just the lawsuits but the incompatibility issues between manufacturers and increasing prices for less than good quality control. At least in HO and N, everybodys engines will run on any track and anybodies DCC system will work with any other one. I see a change coming for me.

[Anonymous]

QUOTE: Originally posted by brianel027

It's amazing to me all this talk of destroying hard drives and trying to eliminate evidence of potential wrong doing from computers. What the heck ever happened to ethics? Decency? Honor? Honesty?

I agree, the right thing is not to steal in the first place. However, when you decide to dispose of a hard drive thay may contain your credit card numbers or other sensitive information, one should wipe it with Dban or equivalent (format is NOT sufficient!). If the disk has crashed, one should smash it. This way, someone cannot steal your data.

Daniel Lang

[Anonymous]

Apparently, K-Line is not just going to roll over and play dead. They updated their web site this afternoon with this:
"K-LINE On The Road
Visit with a K-LINE representative at these stores and upcoming events:
August 6-7: Great Train Expo - Ft Washington, PA
August 13-14: Great Train Expo - Edison, NJ
August 13-14: TCA Meet - Denver, CO
August 20: Artcraft Toy Trains - Hamburg, NY
August 27: Village Trains - Perry, OH"

[1688torpedo]

The main problem that I feel causes these lawsuits is the need of the offending toy train companies to copycat each others products. Just exactly how many GG1s, 700E, F3s, can the Market absorb when the older Collectors are dying off and not too many Younger ones are taking part? and the other part of the problem is now the cost of all this litigation when the companies thought they would save money by moving overseas.Maybe we should just stick to collecting older trains.With decreased revenue maybe the Companies will start playing nicely and pay attention to the marketplace. As I said in a previous post Marx Trains has it good. They do not copy other products and nobody copies theirs.This is as it should be

[brianel027]

John, you're right but with a disclaimer. Lionel stuff even during Moreau's time was still overpriced. Back then as now, Wellspring is really calling the shots to some degree, so any CEO of Lionel can only do what the investors allow him to do.

The Construction, Safari and N&W starter steam sets under Moreau were certainly junk - at least for the asking MSRP. Had they been a third of that, then maybe one could possibly justify the quality cutbacks. Lionel would have still done better molding the Construction Set RS-3 diesel in black or brown as long as they didn't want to paint it. And included a DC power pack with the set so it would have run foraward and reverse. The the steamers from the other 2 sets needed the front trailing truck that was left off the sets.... there are times when the cost-cutting actually does more harm then good. Those sets are prime examples where the cost cuts did far more harm then good.

As I've said many times, given the companies position to not be able to advertise nationally in normal media outlets, that the starter set is the business card to the future... it is the front line of advertising to the new customer. Moreau is no less at fault than the others: they've all put starter sets and related products at the bottom of the priority list to court an ever decreasing audience with ever increasing high end expensive trains.

I have little sympathy for the cost cutting on the lower end stuff now, given that it is all made in China for next to nothing. And also given the large sums of money that has been spent on the "no future" adult market. MTH should have had a constantly chaging selection of cars in the Rugged Rails line every year rather than putting out the same old stuff for 6 years. Same for K-Line's Train-19 line, most of which were reissues of formerly released Classic line cars with scant few modern road names.

Thank goodness for Williams and Ready Made Toys. Now if Industrial Rail could come back, I'd have no worry to be concerned about these other companies ever again. RMT is by far the company to keep an eye on because they have the RIGHT idea!!! Williams too.

[3railguy]

QUOTE: I find it interesting that after MTH sued Lionel, many Lionel fans said Mike was causing ill will. Now that Lionel is suing K-Line, not many seem to be saying the same of Lionel.

Had MTH not sued Lionel, Lionel would not be sueing K-Line. Sort of like a computer virus that spreads through email, MTH has caused all the ill will.