FEBRUARY UPDATE> MIKE'S TRAIN HOUSE DCC LAWSUIT

[Big_Boy_4005]

QUOTE: Originally posted by dharmon

Oh yeah I almost forgot....I wonder if MTH is going to threaten to stop advertising in MR if they don't pull the plug on this thread?

I don't think MTH advertises in MR, they advertise in CTT, and I don't think either one cares a lick about this thread. This thread is "ants vs elephants". By the way, I work in 3 rail O, and I won't buy MTH electronics, so I guess that sort of puts me on your side, and I'm doing all I can to help, which for me is EXACTLY NOTHING. Actually, I do buy Lionel's version of command, TMCC, and have no desire to add DCS to or switch from that position. Good luck on this one, you're going to need it.

[dharmon]

Well folks it looks like the ugly side of business is now starting to rear it's head in the model railroading world.....We got rising prices......and like lawsuits don't help cutting the overhead, we got takeovers, buyouts and exclusive distrubution going, poor customer service and product quality, official licensing agreements, good old American model trains coming from China now.....and now manufacturers sueing each other over patents.....all we need now is Microsoft to enter the model business to make this complete.....

Oh yeah I almost forgot....I wonder if MTH is going to threaten to stop advertising in MR if they don't pull the plug on this thread?

It business...we were just isolated from it for awhile...I think that's why it was called a hobby.....

[Anonymous]

As a self proclaimed "collector" of Broadway Limited locomotives, this situation concerns me greatly, but what bothers me most about this situation is how it seems MTH waited patiently to see what exactly the response would be to the BLI (and other manufacturers) offerings.

It seems that they have let the other companies go forward with these products to do a little market test for themselves (who would have guessed I would have paid $300+ for a plastic HO steam engine!). Then when it looked as if BLI was getting a hold on the market, MTH slaps them with this lawsuit. Personally I feel that this was all dirty pull! This can't be good business practice (IMHO), seems to me that MTH is just shooting themseves in thier own foot and biting the hand that feeds them (US! The modelers).

Anyway thats my .02 Thanks for letting me vent!
Wes

[amedleman]

The above subject is very misleading and inflamatory in regard to the actual situation referenced in the original posters letter. Below follows the response any consumer, including Mr. Petracra, has received when they have contacted M.T.H. Electric Trains regarding this issue.

Thank you for your email message expressing your concern about M.T.H. Electric Trains' patents. We certainly appreciate your feedback for without consumer input we would be hard pressed to continue producing a product line you find appealing.

Please accept our apology for any confusion you may have regarding M.T.H.'s patents. We would like to take this opportunity to explain our position regarding the patents we have received for our digital sound system, Proto-Sound 2.0 and its digital command control system, DCS. In addition, we'd like to clarify exactly what actions the firm has taken regarding the protection of these patents to offset any confusion resulting from online posts made by others in the past few weeks.

First and foremost, with the exception of a counter suit against QS Industries (QSI), M.T.H. has not sued any DCC manufacturer for violations against any M.T.H. patents. There are many rumors floating around in cyberspace that M.T.H. is threatening or is suing all DCC manufacturers. That is simply not true.

Secondly, M.T.H. is not claiming any patents on the concept of Back EMF as has been reported recently. Back EMF has been in existence for years and is not applicable to our technology. It was simply referenced as an existing form of speed control in our patents and some folks misread these patents and assumed we are claiming it as our own invention.

Third, M.T.H. did recently send out letters to DCC manufacturers in the model railroading community who are developing or utilizing technology that may violate our U.S. Patents. These letters were meant to advise them of possible conflicts with our patents that cover 2-way communications and speed control in 1 scale mile per hour increments. These are the only issues we have alerted the DCC community about.

Fourth, not one of the DCC firms has yet to respond to our letters or has inquired about the possibilities of a potential licensing arrangement. Frankly, any DCC firm that has informed consumers that M.T.H. has filed suit against them is not revealing all of the facts and one should at least question their motives if they have indeed told you this was the case.

To help inform others, M.T.H. posted its patents online for all to review and would encourage you to do so as well. They can be found at www.protosound2.com. A review of the patents’ language will enlighten those who feel our claims are baseless and indicate the level of prior art we provided to the U.S. Patent Office to substantiate the claims in the first place. Beyond that, M.T.H. encourages each DCC firm (or any individual for that matter) to bring forth evidence now that our claims are in fact invalid. In patent cases, invalidating a U.S. Patent can occur when prior art has been documented to exist. Prior art is deemed to be published works on the technology in question. These can be in the form of published articles or operator’s manuals that specifically describe how the technology works. Conversations between individuals, online or at train shows is not considered prior art. Should prior art be found to exist, then our claims will be modified or amended. If, as we believe, no prior art is shown to exist then our patents and our concepts are as unique as we claim.

M.T.H. invested over $3.5 million dollars in the development of our Proto-Sound 2.0 and DCS Digital Command Systems. We developed these products because we felt that the current technology standards at the time (Lionel’s Railsounds and TMCC command control in the O Gauge AC marketplace and DCC in the HO DC marketplace) were no longer innovative enough to attract new hobbyists into model railroading. To stand pat and allow any and all competitors to develop or utilize similar products based on the ground breaking developments we created would be an incredible waste of our efforts. If our efforts are as unique as we believe, they should be protected under patent law. If the concepts lack uniqueness, then no protection should be afforded and others can benefit from them by copying our technology. From a business standpoint, we must treat our patents as insurance against our investment, something technology firms have done for years and years.

Finally, M.T.H. would encourage consumers to stop and consider that there may be a better way to operate and enjoy model trains than what exists today. Such was the goal when our technology was developed. Yet M.T.H. realizes that many model railroading hobbyists may not even be aware of just what types of developments we have created that are worthy of the U.S. Patents we have received. Our experience has been that once a consumer understands just how innovative and exciting this new technology is, then its importance as a tool to expand the hobby becomes much clearer. A complimentary promotional DVD on M.T.H. technology can be obtained by contacting M.T.H. via email at [e-mail].

Sincerely,

Andy Edleman
Vice President - Marketing
M.T.H. Electric Trains

[AntonioFP45]

Guys,

As I stated on another thread.

Modelers from the U.S, Europe, and Austrailia read these threads! It is so easy for all of us to e-mail MTH and let them know how we feel about the negative impact they're making on our hobby.

We also need to strongly suggest to our hobby dealers to consider not supporting MTH until this senseless litigation is resolved.

[dharmon]

So.........World's Greatest Hobby ...........yeah, baby!

Can anyone remember where I put my Atlas block control swtiches???I think I'm gonna need them again..........

[Anonymous]

I hate MTH! They sue everbody over everything!

[AntonioFP45]

February 11, 2004

Hello again, everyone. Below is the letter I received from Bruce Petrarca at Litchfield Station. It's worth reading whether you're into DCC, about to get into DCC, or staying with traditional DC. This is not about promoting LItchfield Station!   Thankfully, Bruce is making the effort to keep all of us informed wheras others in the DCC arena are understandably remaining "tight lipped"- AFP45.

From Bruce Petrarca; Litchfield Station

What follows is from impressions, not specific statements and if you choose to read to the end of this eMail, you'll understand why information is so scarce.

The Tsunami will be a worthy successor to Soundtraxx's flagship DSD 150. While the final features are still a bit cloudy for reasons which should become clear as you read this eMail. The Tsunami offers, amongst other features: better sound, better motor control, and more features than were possible with the hardware available when the DSD 150 was designed. The Tsunami has been in planning for several years. Part of the time was waiting for promised microprocessors to become available. Finally, last September enough technical work was done that Nancy and Steve were willing to announce the product to those of us who attended the DEALER SEMINAR. We dealers were "BLOWN AWAY" at the performance, and orders started flowing in with a prospect of DECEMBER 1st release of the "1 AMP version with the 3 and 5 amp versions promised to follow.

An ATLAS LIGHT BOARD version was suggested by the dealers and taken under consideration by the technical folks. I can tell from orders that it would be a marketing success, if it can be put together technically. (over half of the orders I've received for diesel versions so far would go with an Atlas lightboard if it were available). As anybody who has done any work in technical production will tell you, the last few weeks before release are killers. Long hours working on little "Gotchas". Getting all the diagnostics and documentation correct. Turning on production and finding things that need to be tweaked - they worked fine on a handful of prototype boards, but in quantity they don't meet the criteria.

Well, the folks in Durango were deep into this work when MIKE'S TRAIN HOUSE (http://mth-railking.com/) threw a "monkey wrench" into the works! MTH sent registered letters detailing their patents and claims to EVERY DCC MANUFACTURER I've talked to in the fall of 2003. As I understand these letters, they state that there are "certain intellectual rights" which are covered by these patents and MTH is NOT INTERESTED in licensing the technology. Also, MTH has sued QSI over the patents and issued a "cease and desist order" to QSI (QSI sound is used in Broadway limited locomotives).

The U.S Patent Office, it seems does not research much in the way of prior art when they issue patents. You can read the patents at http://www.protosound2.com/. My reading of them (and many with whom I've talked) feel that the claims are too broad to be new art and include prior art as shipped by LENZ, DIGITRAX, and others prior to the filing of the MTH patent applications. However, possession is 9/10 of the law and MTH has the patents!

Industry response to the "legal roughings" was rapid!

Broadway Limited (QSI equipped) disabled BEMF motor control in their locos. Soundtraxx decided that none of their EXISTING products were potentially infringing, but saw that there was an "area of dispute" in the BEMF motor control in the TSUNAMI and the BI-DIRECTIONAL communication for the Soundtraxx. So, the release date for the 1 amp Tsunami was changed from 12/01/03 to TBA. Our friends in Durango got to spend their time and money working with lawyers trying to decipher what the patents mean, what might be upheld and what impact that would have on Tsunami and Soundtraxx. I'm sure more Midnight Oil went into contengency plans like shipping Tsunami with BEMF disabled,etc,.

REMEMBER: This hit just at the time that folks would normally be working from dawn to exhaustion getting the new Tsunami geared up. I remember leaving my plant at 3a.m and being back to work at 7a.m during times like these. One manufacturing engineer who worked for me at Ampex during a new product release worked parts of ALL 18 SHIFTS every week for 2 weeks! It's a little like being halfway through a marathon and getting an entire swimming pool dumped on you!

Soundtraxx is "mum" on future plans - read why later. There are rumors of technical problems. I believe, but I don't know, that they have worked out a business plan which will keep the DCC world happy and will be releasing the Tsunami SOON, as designed last summer. What is going on now in Durango, IMHO, is restarting that "final tweaking" that was happening last fall before the shoe hit the floor. Technical problems? I don't think so- it worked TOO WELL when I saw it in September. Lots of technical and production details being attended to - absolutely!

Restarting an introduction is much harder than just slugging through the process once - I've done it. Remember, Soundtraxx is a SMALL company and when the time and energy of top management is taken up with legal issues and contingency plans and the production folks are making the current product, that doesn't leave many hours to be working on introducing a product to production.

Regardless of what happens with Tsunami, there are BIGGER ISSUES here. IMHO, if these patents are upheld - or allowed to go unchallenged - there will be an ENORMOUS IMPACT on the model railroading industry - more so than the UNION PACIFIC TRADEMARK FLAP. TELL YOUR FRIENDS! I see the following being delayed, or lost:

1) New BEMF decoders - NCE has already held off based on the patent filings.
2) NMRA Bi-Directional communications standards.
3) Surroundtraxx and any possible competitors.

If interepreted broadly (IMHO unlikely), these patents could impact:

1) Handheld and wireless throttles, whether DCC or NOT.
2) DCC itself.
3) Sound in locomotives.

My opinion, as an engineer who has worked with intellectual property for decades, is that everybody has a right to what they invent and to patent protection for that time and effort. HOWEVER, I SEE THESE PATENTS AS AN ATTEMPT TO COLLECT ON THE EFFORTS AND INTELLECTUAL PROPERTY OF MANY OTHER MODEL RAILROAD MANUFACTURERS WHO HAVE GONE BEFORE MTH!

What can you do:

[1] Do not boycott dealers who sell MTH - they are business folks who didn't create this situation. Suggest that these dealers make thier displeasure and the unhappiness of their customers known to MTH.

[2] Do suggest that your retailer Pledge NOT to place FUTURE orders for MTH or RAIL KING items until this is settled.

[3] Do get the word out to everybody in model railroading - this could impact us all, not just the DCC world.

[4] Even if you model in a smaller scale where MTH or Rail King are not currently making items, let them know your displeasure ([e-mail]) . They may very well be looking at enlarging their market and need to know that they are soiling their reputation amongst their potential customers.

Why no "official word" from Soundtraxx when QSI is being so "open and caring"? I don't know for sure, but if I were part of the decision making team in Durango, I'd vote for mum myself. QSI has been sued and what happens there becomes public record or already public record. Why telegraph to a possible adversary in a lawsuit what your plans, actions, and motives are?

Bruce Petrarca
www.LitchfieldStation.com
Arizona, USA
Authorized dealer for Digitrax, Lenz, Soundtraxx, and TCS
YOUR DCC installed here!
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