Union Pacific is trying extort money from model train makers

[Anonymous]

with Union Pacific wanted to squeeze every cent from model railroad manufacturers and modelers maybe they could also work for IRS or the mafia.

[Anonymous]

QUOTE: Originally posted by lou1963

with Union Pacific wanted to squeeze every cent from model railroad manufacturers and modelers maybe they could also work for IRS or the mafia.

And maybe the royalty fee would be more than 1/2 of one percent (you have read their royalty agreement, right? It's on their web site.)

[slotracer]

Hey all beware.....take heed of what was just announced in the Model car arena ove on Kalmbach's sister publication forums Scale Auto.

1/24 decal make Slixx has given notice they are going out of business. They cite the high costs of license fees and royalties from Nascar and related motorsports sponsors to be the reason they are closing the doors.

A sheet of slixx decals for a model car kit run 6-8 bucks, considerably more than what I recall Champs or microscale to charge (I have not bought any RR decals in a half decade though) so if the fees make the model car product enecomincal, consider what could happen in model trains.

Again, I would suggest you get your favorite UP or UP owned (DRGW, WP etc) road decals and scan them in case you need to reproduce them at a lattter date. It could be cheap insurance.

Looks like I'll be turning back to the decal underground when I want to build that certain kit to represent a favorite driver as Slixx will be gone. Take a lesson on this guys before it is too late.

[Anonymous]

Hello Dave,

It’s legal for the UP to do it.....but it's not mandatory and nobody forces them to do so.
I believe model railroaders are paying a part of UP's un-direct advertisement.

Andre INGELS
"C&O, the way to go"

[Anonymous]

I have made my own UP decorated freight cars without having to buy UP decals. I simply buy an alphabet set of Railroad letters and one by one line up each letter till i have Union Pacific on sides of the car. a less $$$ for gigantic UP. in long run i think it will get to point that railroad modelers will have to make their own decals or scrounge for ones at flea markets. if more and more railroads demand royalty fees that will happen.

[trainfan1221]

I guess when you`re as big as the UP, it doesn`t matter if your public relations (as in not looking greedy and only out for yourselves) stink. deschane, as to your February 1 post,
it seems that UP is doing what too many people and companies do in these modern times---anything to make a buck. It is a shame.

[AggroJones]

QUOTE: Originally posted by trainfan1221

I guess when you`re as big as the UP, it doesn`t matter if your public relations (as in not looking greedy and only out for yourselves) stink. deschane, as to your February 1 post,
it seems that UP is doing what too many people and companies do in these modern times---anything to make a buck. It is a shame.

I thought UP was losing money on this logo thing.

[Anonymous]

I have no idea where the people who suggested the costs got their figures but it looks like the losing money rumor assumes that the UP would not have protected its trademarks in any case and requires the model railroad licensing revenue to pay for the entire trademark protection effort.
Look at it this way. Even if the UP decided to never charge a license fee they were going to protect the trademarks. If you don't believe that, go back and read the last 20 years of speeches given by the UP upper management. They are full of words like "franchise" and "brand name". This has been coming for years, its just never hit anybody's radar screen. The licensing program is about two years old and this thread popped like it was something new, months after the first threads appeared on these forums.
The UP was going to protect its trademarks as a business decision regardless of the model railroad licensing issue. It has always been very concerned about the use of its logos. That means there is NO payback required, its a cost of doing business for UP.
The UP already has a contracts and leases department. The railroads have been working for years to maximize the leases and licensing of its property. Billboards in the right of way, fiber optic cable, selling un-used property and right of way, auctioning off old equipment, etc. The contracts department is actively seeking new was to bring money to the bottom line (that's what the UP is, a business). So there is no additional cost to manage the logo licensing program. The people and processes are already there.
What the "UP is losing money" arguement it boils down to is the model railroad community trying to convince themselves that this thing won't work and the UP can't afford it. Probably those same people using the same math predicted the UP would be out of business in 6 months back during the SP merger. In reality the costs are relatively minimal.
That's what will doom any shareholder proposal to eliminate the licensing effort. The shareholders only care about the bottom line (if you are in a big pension fund or own a mutual fund that is in blue chip stocks, there is a good chance they have some UP, so its YOUR money too and that makes you one of the "greedy" people) and I doubt they will want to weaken the protection of an asset and eliminate something that is highly profitable just because you have to spend a few dollars more on a hobby.

Smith

[Anonymous]

Ok guys... quick devil's advocate here.

First, UP does have the same right as beer companies and Nascar to make a profit anytime thier logo is used. It is the same as if you worked hard to create a name as a professional modeler, and someone came along and began putting your name on kits that bear striking resemblance to your layout designs.

We buy UP for a different reason in our mind, we are trying to artistically emulate real life. However, I also know that NASCAR fans are crazy about almost any product with NASCAR emblazened on it, and have started a huge focus on other companies "branding" their image as well.

Second, to say that Model Railroaders do not have a voice in UP because we don't directly ship via UP, is underestimating the background and jobs that many here may have. For all you know on these forums, some people posting could own major shipping companies.

It is a fine line here. UP waited too long, and in my opinion is late to the table and will only cause ill will. However, they can jeapordize other branding attempts by not at least addressing the model train world. They need our support, but they also would like to see that their logo is controlled. They are probably one of the last holdouts in this whole image mess. Look at some of the other industries cited here in this post. Millions of dollars pass hands with images of other companies, and those famous companies share in the profit.

Why would any one company who created a desirable image not want to see royalties if they felt that products were selling BECAUSE of their image. UP just doesn't see us as artists and historians. They see us as "fans," or collectors, just like Pepsi, Miller, NASCAR, CAT, John Deere, Etc...

It is a shame they see it differently, but it does not appear to be greed.

[Anonymous]

As I've said before and speaking from a business mans point of view, I think UP is acting stupidly! What has changed from the days when Sanat Fe paid Lionel to use their hearld and paint schemes? Again and again and again, why is this an issue now, after all the years of a somewhat symbiotic relationship between real RRs and toy/model RRs.

As interesting as this thread is, I read in Model Railroading News that Athearn and Kato are bitting the bullet and will be paying the licensing fees to use U.P.'s trademark and why shouldn't they, as they will be passing the cost on to us (well, not me, I don't model U.P. or it's merged RRs). There are no benefits to litigiously battle this issue for the manufacturers as it would take large sums of money to fight!

[Anonymous]

QUOTE: Originally posted by deschane

What has changed from the days when Sanat Fe paid Lionel to use their hearld and paint schemes?

What has changed is that UP (And others) no longer run passenger trains. When ATSF promoted themselves with model trains in the 50's, consumers could remember that and take ATSF trains when they travelled. That is no longer the case.

Nowadays, the only use that having UP logos running around your basement serves is if you're an on-line shipper and you might use their services. If that's the case, you already know of UP as an option and you either use them or you don't. Having their logo in basements around the country serves no useful purpose. It is not "advertising," as some people here have suggested.

UP's business wil be the same whether model railroaders buy products with their logos or not.

[dharmon]

As I have said before, they are well within thier rights as a corporation to license thier logo and those of the companies that they own. But as a UP shareholder by way of mutual fund holdings I would rather they focus their attention on real issues .....infrastructure and truck competition. And while we can compare it to NASCAR, NFL, NBA et al..., those industries thrive and depend on merchandising and logo licensing... UP does not.......they are in the transportation business not the fan business. I don't expect to see a big profit windfall coming my way because of this move. The impact that it will have on them profitwise is next to none......which is why I feel this move is kind of silly. The amount of money that will be generated ain't gonna be enough to pay the folks responsble for enforcing the licensing agreements. Unless some high powered CEO of a big customer happens to be a model railroader..then they might change, but not likely.

But as a sort of shareholder what does concern me is that at a time when the RRs are not in the public favor....because of noise, wrecks, accidents, and rampant NIMBYism.....why go to the trouble of creating negative publicity? It only hurts in the long run. I'm not talking about the feelings of model railroaders, but when they show up on CBS as the "grinch that stole christmas", it doesn't help the cause. The American public doesn't like bullies....so why do it?

[AggroJones]

UP has the right to do this bull s[censored]t with their logos, but they shouldn't have say over all the lettering and imagedry of roads they absorbed.

Anything Espee, WP, CNW, Mopac, and D&RGW should be free and not carry an additional fee! [:(!][:(!][:(!][:(!][:(!]

[Anonymous]

I don't see this as a "proctecting our image" issue. That can be done in any number of ways. Quite a ligimate process also. Now GM has a licensing system which encourages small producers by simply requiring a letter asking permission with a statemement of the nature of the product and no fee if the run is 1000 units or less. The licensing fees scale up from there but are never excessive nor do they claim the rights to the tooling. This industry exists for the most part on small, backroom producers who are truely artists. To lean on them in this way is certainly giving the appearance of a bully if not actually fact. This attitude can be interpreted as indicative of their attitude to other business partners (ie shippers) as well.

Now, I don't know about the rest of the people reading this list but I know that I talk with people who are decision makers at some good sized businesses. And they base business decisions on many non-business items they hear. Plus I talk with many people in my local government. UP goes through my town. When consideration for business needs of a company relating to government action comes up, the folks I talk to remember whether they have heard good or bad things about the company in question. This can smooth the way for many projects.

As has been mentioned before, the railroads are not viewed well by many people and they do need public support in their dealings with political entities. While I have some problems with management styles right now (and not just RR) I do support the fact that we really need a strong RR network in the country. But the strength of that network is being eroded by restrictive actions being taken by political bodies. (Look at how long it has taken to get the Alameda Corridor developed in LA and this has a major economic effect on teh entire nation.)

Sure, I could live without any UP logos on my layout. And I could live without some of the UP management stupidity. But I sure wouldn't want to deal with the results of losing the RR. And, unfortunately, this kind of shortsighted action can affect the bottom line negatively by creating a negative image outside of MRR circles. This is the reason Chessie pulled back 20 years ago. And its the reason other roads have begun liberal, but even more thorough, licensing efforts.

[FJ and G]

Mark Deschane hit the nail on the head. UP and model trains with UP logos has been around a long time but not fuss has ever been raised before. Why now charge fees?

In a simple word: Greed.

It was predictable that sychophants of business would chime into this thread throwing their full support to UP and rolling over and crying: "Beat me; beat me!"

[88gta350]

I always assumed the companies got a royalty for having their logo on models. That's the way it works in any other industry, you use someone's trademark you pay them for it. So, I'm not really surprised it's happening. I am however dissapointed that UP would insist on it after so many years of NOT collecting it.

[dharmon]

QUOTE: Originally posted by FJ and G

Mark Deschane hit the nail on the head. UP and model trains with UP logos has been around a long time but not fuss has ever been raised before. Why now charge fees?

In a simple word: Greed.

It was predictable that sychophants of business would chime into this thread throwing their full support to UP and rolling over and crying: "Beat me; beat me!"

I do not support UP actions, nor do I like them , but they are well within their rights to take action on this for thier logo or any which they own at any time they so choose. As Michael Douglas said in Wall Street...Greed for lack of a better word in good. Greed is what built the American economy not good wishes.

Do I think that UP is barking up the wrong tree.....yes
Do I think that this is stupid...yes
Do I think that they are going to get less money in return than they spend administering it .....yes
Do I think it was a poorly timed and poorly thought out action...yes
Do I think they are making a PR faux pas at a time when RRs need public support more than ever........yes
Do I think they are wrong to do this......yes
Do I think that they are within their rights though........yes, as unpleasant as that is....


But what I think isn't going to change the way they do business. And they are in business to make money. I don't think that this is Beat Me, Beat Me....

The simple fact is that most of us have no direct dealings with UP. Two things that business listen to are.....customers and shareholders......so unless one of those groups chimes up and says this is stupid knock it off, they are going to continue unless it becomes unprofitable to do so. And since this is free money to them, so as long as the income from licensing is greater than the cost of administering it.........it's free money.

[Anonymous]

I don't think I can agree with the statement "Greed is what built the American economy"! Greed is simply greed and I don't particularly think it is good for either the economy or America. My spin, anyway! Also, the point that it is within UP rights to collect licensing fees is a known fact and been beaten to within an inch of it's poor life!

There may be a legal point to the length of time it has taken UP to decide to persue this. However, unless somebody feels it is worth while to bring this issue to the courts, the point is moot.

Maybe this is now three cents worth!

[dharmon]

QUOTE: Originally posted by deschane

I don't think I can agree with the statement "Greed is what built the American economy"! Greed is simply greed and I don't particularly think it is good for either the economy or America. My spin, anyway! Also, the point that it is within UP rights to collect licensing fees is a known fact and been beaten to within an inch of it's poor life!

There may be a legal point to the length of time it has taken UP to decide to persue this. However, unless somebody feels it is worth while to bring this issue to the courts, the point is moot.

Maybe this is now three cents worth!

I agree that greed is not good, but like the quote..for lack of a better word. Maybe economic ambition is a better term. The American Revolution was as much about economic liberties as much if not more so than civil or religious rights. The framers of the Constitution were businessmen and landowners, not the common man. It was getting a chance to work for oneself and not a lord and making something that brought the big waves of immigration. The railroads didn't link the US together out of a philanthropic desire..it was business. If the American economy was not built by a desire on the part of business and folks wanting more..than what did?

Personally, I think bringing it up at a shareholder meeting has a better chance than the courts. With all the hoopla over Napster and such, the courts have been upholding trademarks and such.

[Anonymous]

Model railroading, corporate America, greed and now the American Revolution, WOW!

[dharmon]

Yup, and it's not even dinner time yet.

[Anonymous]

Why is everyone talking about UP's emblem? I started this thread becuase UP wants to charge model manufactures for ussing emblems and trademarks of defunct companies that have been merged into the present UP system. The issue that I wanted to discuss is whether it is right or wrong to for UP to charge manufactures for decorating models with emblems and trademarks of such roads as: Katy, Chicago Great Western, Western Pacific, M&StL, Chicago and North Western, Texas and Pacific, Southern Pacific, and several others. While I agree that UP has the right to charge a fee for use of their present emblem, I think it is a stretch to believe that they also have the right to charge a fee for the use of emblems of companies that no longer exist (and yes this also includes railroads that still exist on "paper" only). Remember, any trademark or emblem that has not been used for over a year is; by law, considered "abandoned" and hence public property. Yes, UP still has equipment lettered for fallen flags wich include newly painted cars sporting reporting marks of lost carriers. However UP does not use the emblems and slogans of these old carriers to sell it's product or identify their corporate entity so you can't say that UP owns the heralds and slogans of such companies as CNW, Southern Pacific, Katy and others. Let's stay on track here guys (no pun intended).

Scott218 [:)]

[dharmon]

QUOTE: Originally posted by Scott218

Why is everyone talking about UP's emblem? I started this thread becuase UP wants to charge model manufactures for ussing emblems and trademarks of defunct companies that have been merged into the present UP system. The issue that I wanted to discuss is whether it is right or wrong to for UP to charge manufactures for decorating models with emblems and trademarks of such roads as: Katy, Chicago Great Western, Western Pacific, M&StL, Chicago and North Western, Texas and Pacific, Southern Pacific, and several others. While I agree that UP has the right to charge a fee for using their present emblem, I think it is a stretch to believe that they also have the right to charge a fee for the use of emblems of companies that no longer exist (and yes this also includes railroads that still exist on "paper" only). Let's stay on track here guys (no pun intended).

Scott218 [:)]

Because unless UP transferred control of the emblem of say MKT to someone else, like AAR, they own it too. In one of the threads awhile back someone had mentioned that some RRs had given AAR permission control the logos..sort of like football teams allowing the NFL to have some control. If this is the case then the AAR would be allowing its use.....but since the AAR is the RRs, they probably would not go against UPs desires, regardless of the sanity check results. UP still uses the reporting marks for MP, SP and DRGW on equipment today. And I saw CNW and WP marks on cars just last week. MKT, MP, SP, CNW et al.......they are UPs emblems.

[Anonymous]

QUOTE: Originally posted by dharmon

QUOTE: Originally posted by FJ and G

Mark Deschane hit the nail on the head. UP and model trains with UP logos has been around a long time but not fuss has ever been raised before. Why now charge fees?

In a simple word: Greed.

It was predictable that sychophants of business would chime into this thread throwing their full support to UP and rolling over and crying: "Beat me; beat me!"

I do not support UP actions, nor do I like them , but they are well within their rights to take action on this for thier logo or any which they own at any time they so choose. As Michael Douglas said in Wall Street...Greed for lack of a better word in good. Greed is what built the American economy not good wishes.

Do I think that UP is barking up the wrong tree.....yes
Do I think that this is stupid...yes
Do I think that they are going to get less money in return than they spend administering it .....yes
Do I think it was a poorly timed and poorly thought out action...yes
Do I think they are making a PR faux pas at a time when RRs need public support more than ever........yes
Do I think they are wrong to do this......yes
Do I think that they are within their rights though........yes, as unpleasant as that is....


But what I think isn't going to change the way they do business. And they are in business to make money. I don't think that this is Beat Me, Beat Me....

The simple fact is that most of us have no direct dealings with UP. Two things that business listen to are.....customers and shareholders......so unless one of those groups chimes up and says this is stupid knock it off, they are going to continue unless it becomes unprofitable to do so. And since this is free money to them, so as long as the income from licensing is greater than the cost of administering it.........it's free money.

I think I agree with Both posters here. This is nothing but corporate greed and there is no other name for it. I've been around for a lotta years and this isn't the first time I've seen this sort of thing. Ya, they have a right to protect their logo and branding, but at what expence. If everyone in corporate America protected their brandings at the model train hobbies expence, I really don't we would have a hobby to enjoy, at least not in the form we do today. It would be way too expensive. So where does it stop[V][V][V][banghead][censored][censored][sigh]

[Anonymous]

Yes, UP has every right in the world to charge for the use of their logo. The also have every right in the world to charge for the use of the logos of companies that they bought/merged with, assuming they have the rights to the trademark. If you have the time you could probably look up the owners of any logo of any railway or any company for that matter at the website of the US Patent and Trademark Office - http://www.uspto.gov/

As to what UP is doing, I don't forsee many negative affects from this move. Model railroaders will either have to pay more for UP stuff, or just not buy it. The only thing UP is doing is setting themselves up to be written out of model railroading.

[Anonymous]

QUOTE: Originally posted by deschane

Model railroading, corporate America, greed and now the American Revolution, WOW!

LOL...[:D]

deschane.... you are so entertaining some days...

On a serious note.... Greed is and Corporate America are the two greatest evils that ever existed... AND, they are the entire reason that we have railroads, coal, and oil. The history of how railroad companies STOLE land (the birth of immenent domain,) brought in foreign (near slavery,) labor, and created some of the richest men on the planet.... is kinda why we are all here on this forum.... (Oh, they did this to help the huge businesses of the Cattlemen who stole land and overran others.... the Coal companies...more stealing, greed, and backbreaking laborers... and the OIL companies... STILL stealing, STILL: greedy... just so they could get their products moving in BULK at a time when bulk meant wagon load...)

[Anonymous]

Scott218, you are absolutely right to be amazed by the bizarre directions many of the posts to this thread have taken.

Direct to your point: like it or not, UP has every right to ownership of the trademarks of all their purchased companies. Also, you should know that if a company knowingly ignores an unlicensed use of its trademarks, that can cause serious trouble down the road in the world of "real" business.

It must also be said that UP is not going to lose a single customer, now or in future, because of this issue.

Having said that, it is stupid of them to do what they are doing. Their costs of overseeing the modeling licenses will exceed - probably greatly exceed - any revenues. They should instead insist on written license agreements but make them free of charge for the modeling community.

[Anonymous]

QUOTE: Originally posted by rails5

Scott218, you are absolutely right to be amazed by the bizarre directions many of the posts to this thread have taken.

Direct to your point: like it or not, UP has every right to ownership of the trademarks of all their purchased companies. Also, you should know that if a company knowingly ignores an unlicensed use of its trademarks, that can cause serious trouble down the road in the world of "real" business.

It must also be said that UP is not going to lose a single customer, now or in future, because of this issue.

Having said that, it is stupid of them to do what they are doing. Their costs of overseeing the modeling licenses will exceed - probably greatly exceed - any revenues. They should instead insist on written license agreements but make them free of charge for the modeling community.

Dear Rails5

I’m afraid I disagree with your legal analysis of this situation; I have mentioned several times in this thread that UP has no right to charge for use of logos of constituent fallen flag railroads. Since many people seem resistant to this interpretation of the law I will defer to Mr. Robert L. Hundman, Editor and Publisher of Mainline Modeler. In the August 2003 issue of Mainline Modeler Mr. Hundman wrote an editorial about Union Pacific’s gambit to extort money from model train manufactures. Considering the fact that Mr. Hundman is a model railroad industry insider I consider him a well informed individual about the facts of this case. Mr. Hundman writes:

“Can the Union Pacific Railroad Destroy the Model Railroad Industry? It’s possible because of the demands they have made on model railroad manufacturers. We have tried to separate fact from analysis…here, but all are relevant. First the Facts:

…The Union Pacific has, over the years, acquired a number of railroads. Whenever and wherever they have done so, they replaced the emblems of the acquired lines with their “shield” emblem, obliterating traces of the former owner as best they could. In most cases this was done immediately and speedily. Customers were notified that they were now dealing with the Union Pacific.
Our lawyers tell us that, according to the law, a trademark shall be deemed to have been abandoned when its use has been discontinued with no intent to resume such use. Non-use for three consecutive years shall be evidence of abandonment. Use of a logo or marque means the bona fide use of that marque in the ordinary course of trade; that is in this case, providing transportation. They have offered transportation services only under the name “Union Pacific”, they have not used the names of the former lines. That would make it clear that, while the “shield” is a valid continuing trademark, all of the fallen flag trademarks have been abandoned…
“Analysis:
….what rights can the Union Pacific enforce? That they own the “shield” logo is not in question. But the “fallen flag” logos appear to have been abandoned under the law, and their belated attempt to re-instate the trademarks is ludicrous on its face, given the alacrity with which the UP erased the old names and replaced them with its own. Their intent was clear. The old heralds have nothing to do with their current business.”

Hundman, Robert L. “Mainline Commentary”
Mainline Modeler August 2003: Volume 24 Number 8

Now I know someone is going to say; “But Scott, I just saw (such and such) railroad’s reporting marks on a repainted piece of equipment just the other day; that means that UP still own (such and such) railroad’s emblem”. To this I will emphatically say NO!!! Reporting marks for car identification are just that; identification markings, not logos (much less copy righted logos). Also, while it is true that UP has many pieces of equipment that are still painted and lettered in predecessor paint schemes, the existence of such equipment does not mean that UP owns the emblems painted on these old cars and engines. It takes time and money to repaint rolling stock and it simply is not cost effective to repaint every car within a couple years after a corporate acquisition.

Until next time…

Scott218 [:)]

[Anonymous]

1. Extortion is illegal. What U.P is doing is not. A public false accusation of extortion is ...?
2. The processing of registering the trademarks was started, for the ones I looked at, on the last day of 2002 (You did check this out, right?), so the clock is still ticking on abandonment.

[Anonymous]

QUOTE: Originally posted by billkamery

1. Extortion is illegal. What U.P is doing is not. A public false accusation of extortion is ...?
2. The processing of registering the trademarks was started, for the ones I looked at, on the last day of 2002 (You did check this out, right?), so the clock is still ticking on abandonment.

Dear billkamery,

First of all, why do you think what UP is doing is not illegal. Second, what "ones" did you look at? Where did you look at what ever it was that you checked? If we are going to debate this issue you have to make a case for your point of view by providing details.

Scott [:)]