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May 30, 2008

Ambrose Bauer Lawsuits

I recently received an email from a reader inquiring about the status of the AmbroseBauer lawsuits against Krause Publications and author David Doyle.  I had completely forgotten about these lawsuits so I headed over to the AmbroseBauer site to find out some information.  It turns out the suits against both parties were settled near the end of 2007.  You can read the press releases about the settlements here and here.  If you're not familiar with the lawsuits check out my post from June of last year here.

March 29, 2008

Court Approves Lionel's Bankruptcy Plan and Settlement with MTH by Erol Gurcan

In what should be one of their last court appearances, lawyers for MTH, Lionel and Sanda Kan (Lionel’s principal manufacturer of trains) appeared in a New York Bankruptcy Court on March 27th.

At the end of the hearing, Judge Burton Lifland approved Lionel’s confirmation plan for reorganization. The court also approved Lionel’s settlement with MTH.

Click the link below to read on

Continue reading "Court Approves Lionel's Bankruptcy Plan and Settlement with MTH by Erol Gurcan" »

February 05, 2008

Neil Young And Lionel To Buy Out Partner Of Creative Trains

Neil Young (actually his family trust) and a partner, Louis Kovach, own a company called Creative Trains.  Creative Trains and Lionel are partners in a venture called Liontech.  Liontech is the brains behind the development of TMCC.  Mr. Kovach has agreed to sell his 50% share of Creative Trains to Neil Young and Lionel for $650,000.  The Bankruptcy court has to grant permission to Lionel to make the purchase and is scheduled to hear the request on 2/21/08.  Read the entire story here.

January 11, 2008

Bankruptcy Court Grants Lionel 7th Extension: MTH Motion to Extend TRO Granted by Erol Gurcan

There was some model train litigation involving Lionel and MTH in two different courts on 1/10/08.

Firstly, in the New York City Bankruptcy Court, Lionel’s motion for a 7th extension of the exclusive period in which to file its reorganization plan, was granted by Judge Lifland. MTH’s lawyer, Alec Ostrow did not oppose the motion. The court’s order gives Lionel the exclusive right until March 31 file its plan with the court. Others including MTH may file alternative plans after that up and until May 30.

Click on the link below to read on

Continue reading "Bankruptcy Court Grants Lionel 7th Extension: MTH Motion to Extend TRO Granted by Erol Gurcan" »

January 10, 2008

MTH Attempts To Collect $$$ From Korea Brass by Erol Gurcan

In my last legal article, (written at the request of the Coil Couplers web site), I stated that in MTH’s fraudulent transfer of assets lawsuit against Korea Brass aka Hagye Trading/Model Korea Trading (MKT), the court on November 20, 2007 issued a temporary restraining order (TRO) and entered an order directing all monies paid by Lionel to Korea Brass were to be deposited into a court approved interest bearing escrow account. The practical effect of this was, Lionel, which is not a party in MTH’s lawsuit against Korea Brass, will not be able to take delivery of trains that it paid for and which were manufactured by KB, since the money is going into a court escrow account rather than directly to KB. Ultimately, we hobbyists will not be able to purchase the trains which are affected in these legal proceedings, at least for now.

Click on the link below to read on

Continue reading "MTH Attempts To Collect $$$ From Korea Brass by Erol Gurcan" »

December 20, 2007

AP Report: Lionel Struggles To Exit Bankruptcy

An Associated Press report published yesterday in the Houston Chronicle states that Lionel is having difficulty securing financing for its exit from Chapter 11 bankruptcy.  The reason for the struggle is due to the credit crunch "fueled by the subprime mortgage industry."  Jerry Calebrese, CEO of Lionel is quoted in the article:

"We're not naive, an awful lot of people that would want to make a substantial equity investment in a company like ours want to have a meaningful say in what's going on and we understand that"...

"Whether that means a substantial minority or an effective majority, it doesn't matter as long as they have common vision of what we're trying to do. It matters a lot if they're short-term investors."

Based on Mr. Calabrese's comments it seems Lionel now has to turn to private equity investment as an option which could be very interesting if the investment comes from a company or individual that wants to be actively involved in the operation of the company.

Lionel is not the only company having difficulty trying to exit bankruptcy due to the credit crunch.  The article states auto-parts supplier Delphi as another example.

Read the AP article here.

December 17, 2007

Legal Explanation of Latest Coil Couplers Posts

Hrt1 Over the last two days, there have been a few posts on the Coil Couplers of America website stating that MTH has cut off Lionel’s supply of locomotives, including some of the new Legacy models, from its supplier Model Korea Trading Company (aka MKT, the company named in the Coil Couplers post of the last two days) due to the court ordered stoppage of payments by Lionel.

Click on the link below to read on

Continue reading "Legal Explanation of Latest Coil Couplers Posts" »

October 27, 2007

Current Status Of MTH, Lionel Lawsuits Settlement By Erol Gurcan

My goal is to keep this report short and sweet (a novel concept for a lawyer). Here is the current status of the MTH Lionel settlement as of this morning.

MTH's and Lionel's lawyers were back in bankruptcy court on October 25th. Lionel CEO Jerry Calabrese and Mrs. Martin Davis were present. MTH's Mike Wolf was not. It was not necessary for him to be. I also attended the proceedings.

Click on the link below to read on

Continue reading "Current Status Of MTH, Lionel Lawsuits Settlement By Erol Gurcan" »

October 20, 2007

AP Story About Lionel Bankruptcy

The Associated Press ran a story this week about the Lionel Bankruptcy hearing.  Read the story here.

October 15, 2007

Lionel And MTH Making Progress In Trade Secrets Case By Erol Gurcan

It's been about 2 months since I have written anything substantive about the Lionel MTH Trade secrets case or about the status of Lionel's bankruptcy. That's because there was little going on in the proceedings during this period of time. As you may recall, on August 13, MTH filed an appeal concerning Judge Lifland's August 2 rulings in favor of Lionel. On August 2, Judge Lifland ruled that any future trial (the Bankruptcy Code 502(c) damages estimation hearing) in the trade secrets case would be held before him, instead of in the Federal District Court in Detroit Michigan, and granted a fifth extension of time to Lionel to file an exclusive bankruptcy plan with the court. MTH had opposed Lionel's motion for exclusivity and proposed three alternative plans which were rebuffed by Judge Lifland.

Click on the link below to read on

Continue reading "Lionel And MTH Making Progress In Trade Secrets Case By Erol Gurcan" »

October 01, 2007

Model Train Author Paul V. Ambrose Sues Train Collectors Association by Erol Gurcan

Model train author Paul V. Ambrose has sued the national Train Collector's Association (TCA) and also its Eastern Division, the entity that hosts the yearly York meets in April and October. Although there was a lot of discussion about the lawsuit, little was said about the basis and details of it.

Click the link below to read on

Continue reading "Model Train Author Paul V. Ambrose Sues Train Collectors Association by Erol Gurcan" »

August 04, 2007

Lionel Wins Major Rulings In Bankruptcy Court

Lionel won two major and important rulings from Judge Lifland in the bankruptcy court this morning. The more important of these was the decision that the future trial (in others words,the Bankruptcy Code section 502c "damages estimation hearing') in the trade secrets case would be tried before the judge, instead of a jury trial in the Federal District Court in Detroit, Michigan. The second important ruling was Lionel was granted a fifth extension of time, giving it the exclusive right to file its bankruptcy reorganization plan.

Click on the link below to read on

Continue reading "Lionel Wins Major Rulings In Bankruptcy Court" »

July 25, 2007

Baltimore Sun Runs Article About MTH vs. Lionel

The Baltimore Sun ran an article about the MTH vs. Lionel case.  The article contains quotes from Lionel's CEO, Jerry Calabrese, the lead attorney for MTH and Tom McComas of TM Books & Video.  Read it here.

July 10, 2007

MTH Proposes Alternative Reorganization Plans To Bankruptcy Court by Erol Gurcan

In my last article, I summarized that Lionel and MTH were in court on June 27th, with Lionel’s attorneys were attempting to convince Bankruptcy Judge Burton Lifland that he should try the trade secrets and separate $17.5 million dollar patent infringement case to expedite their exit from bankruptcy. MTH’s attorneys had cross-moved to send the trade secrets case back for trial to the Federal District Court in Michigan, the court where a jury awarded them $40.7 million dollars in June 2004.

Click on the link below to read on

Continue reading "MTH Proposes Alternative Reorganization Plans To Bankruptcy Court by Erol Gurcan" »

June 28, 2007

Bankruptcy Court Judge Begins Hearing Motions on Future Trial Venue by Erol Gurcan

Lionel and MTH’s attorneys were back in a New York bankruptcy court on June 27th before Judge Burton Lifland. Interestingly, the courtroom was crowded since a lot was potentially riding on the hearing. Lionel’s CEO and President Jerry Calabrese, and Chief Financial Officer Scott Turkington were present in court. They were scheduled to testify and later did. More about that later. Mrs. Martin Davis was present as well. MTH’s Mike Wolf was not.

Click on the link below to read on

Continue reading "Bankruptcy Court Judge Begins Hearing Motions on Future Trial Venue by Erol Gurcan" »

June 23, 2007

Another Lawsuit...

News of another O Gauge related lawsuit is spreading through the O Gauge community.  The good news is that this one doesn't involve manufacturers.  The bad news is that if the allegations are true, an author's reputation could be forever damaged.

The lawsuit has been filed by Paul V. Ambrose against David Doyle and Wisconsin based Krause Publications.  O Gauge collectors will recognize Mr. Ambrose as a prominent Lionel Post War trains collector and one of the partners of Ambrose/Bauer Trains, an auction house specializing in the sale of model trains and accessories.  More importantly, Mr. Ambrose has also authored or co-authored many Greenberg Guides to Post War Lionel trains (trains manufactured by Lionel between 1945 and 1969).  Many O Gauge collectors consider Greenberg's Guides to be the preeminent source of information pertaining to O Gauge Trains, especially those produced by Lionel.

The defendant in the case, David Doyle, has also authored many books including some on Lionel's post war trains. His latest book dealing with post war Lionel trains is entitled the Standard Catalog of Lionel Train Sets 1945-1969.  Can you see where this is headed?  Mr. Ambrose is alleging that Mr. Doyle violated copyright laws by publishing Mr. Ambrose's work in the Standard Catalog of Lionel Train Sets 1945-1969 without prior permission.

Before you roll you eyes on this one, read the following paragraph from the Complaint: 

Continue reading "Another Lawsuit..." »

June 19, 2007

Lionel and MTH Motions Adjourned to June 27:Lionel Looses $1.25 million in May by Erol Gurcan

In my last article, I stated that Lionel's motion for the damages estimation hearing (which would actually be a trial on this issues of potential liability and damages in the trade secrets case) and MTH's cross-motion to have the trial take place in the Federal District Court in Michigan (the court where the jury awarded MTH $40.7 million dollars on June 7, 2004) were scheduled to be heard in the New York Bankruptcy Court today. However, both motions were adjourned to June 27, 2007. Thus, nothing occurred in court today on this matter.

Click on the link below to read on

Continue reading "Lionel and MTH Motions Adjourned to June 27:Lionel Looses $1.25 million in May by Erol Gurcan" »

June 11, 2007

MTH Lionel Trade Secrets Case: MTH Withdraws Supreme Court Appeal. What's Next? by Erol Gurcan

MTH has abandoned its plans to seek redress in the United States Supreme Court concerning the trade secrets case. On May 30, 2007, MTH filed a motion (an application for a court order) with the Sixth Circuit Court of Appeals to vacate the 90 day stay that was previously granted by it so they could file a write of certiorari with the US Supreme Court. The Sixth Circuit has not decided the motion yet, but there is no reason to think that they will not grant it. Certainly, Lionel is not going to oppose it, and it will make less work for the US Supreme Court.

So the question becomes, Where do we go from here, or what happens next?

Click on the link below to read on

Continue reading "MTH Lionel Trade Secrets Case: MTH Withdraws Supreme Court Appeal. What's Next? by Erol Gurcan" »

May 30, 2007

A Review Of Lionel's Bankruptcy Reorganization Plan by Erol Gurcan

Lionel filed its bankruptcy reorganization plan with the court on May 21. This was an important and necessary step in moving the trade secrets and patent infringement litigation forward, and in beginning the process to exit from bankruptcy.

I recently reviewed Lionel’s bankruptcy reorganization plan filed with the court. It contains some surprising and interesting legal, financial and hobby related information. Is Lionel opening a new office, now much does Lionel spend a year on new tooling, how much does it earn a year in royalties based on its trademark, and what are MTH’s annual sales based on Lionel’s estimates? If you would like to know the answers to these questions and more, then read on. The information for this post was obtained from Lionel’s reorganization plan filed with the bankruptcy court.

Continue reading "A Review Of Lionel's Bankruptcy Reorganization Plan by Erol Gurcan" »

May 24, 2007

Lionel Files Reorganization Plan: Parties Unable To Settle Legal Disputes by Erol Gurcan

Lionel and MTH's attorneys were back in a New York bankruptcy court 5/22/07. Lionel CEO Jerry Calabrese was present in court. MTH's Mike Wolf was not.

Lionel's lawyer, Adam Harris quickly informed Judge Lifland that Lionel filed their bankruptcy reorganization plan with the court yesterday. Among the items in the plan is payment in full of all unsecured claims with interest. The plan is necessary in order for Lionel to begin their exit from bankruptcy. Lionel has been in bankruptcy since November 15, 2004, a period of over 2 1/2
years.

Click on the link below to read on

Continue reading "Lionel Files Reorganization Plan: Parties Unable To Settle Legal Disputes by Erol Gurcan" »

May 02, 2007

MTH Lionel trade secrets case: Headed to US Supreme Court? by Erol Gurcan

As you may recall, on April 19, 2007, the Sixth Circuit Court of Appeals denied MTH's petition for a rehearing of its December 14, 2006 decision in the trade secrets case. That earlier decision vacated the jury's $40.8 million dollar judgment against Lionel and codefendant Korea Brass, and remanded the case to the District Court in Detroit, Michigan for another trial. Bankruptcy Judge Burton Lifland in New York has stated in the past he will hold a damages estimation hearing in the trade secrets case rather than let another trial take place in Detroit. The two model train rivals were recently holding mediation talks in New York in both the trade secrets case and patent infringement case. The next court date in the bankruptcy court is May 22.

Click on the link below to read on

Continue reading "MTH Lionel trade secrets case: Headed to US Supreme Court? by Erol Gurcan" »

April 24, 2007

Appeal's Court Denies MTH's Petition For Rehearing by Erol Gurcan

On April 19, The Sixth Circuit Court of Appeals denied MTH's petition for a rehearing of its December 14, 2006 decision. That earlier decision vacated the jury's $40.8 million verdict in favor of MTH in the trade secrets case, and remanded it to the Eastern District of Michigan for another trial. While the above news is certainly important, it is not unexpected. I stated in a post in January that MTH's chances of prevailing on the petition were small. Additionally, MTH's Attorney Alec Ostrow stated at least twice at the bankruptpcy court conference on January 9, 2007 that is was unlikely MTH would prevail on the petition.

The more important question now becomes, what is going to happen now that the appeals process is over. Where do we go from here?

Click on the link below to read on

Continue reading "Appeal's Court Denies MTH's Petition For Rehearing by Erol Gurcan" »

April 12, 2007

Associated Press Article About Lionel's Bankruptcy

The Detroit news is running an Associated Press article concerning Lionel's bankruptcy.  Read it here.

UPDATE:  Check out Erol Gurcan's report here.

February 23, 2007

Court Grants Lionel's Motion; Mediation Begins by Erol Gurcan

Lionel and MTH's attorneys were back in bankruptcy court the morning of February 22nd for both a motion and status conference. Lionel CEO/President Jerry Calabrese and MTH owner Mike Wolf were not in court today. It was not necessary for them to be present. Both attended the last bankruptcy court conference on January 9 when both sides agreed to mediation. I attended today's court proceedings.

Click on the link below to read on

Continue reading "Court Grants Lionel's Motion; Mediation Begins by Erol Gurcan" »

February 14, 2007

Lionel Files Request to Extend Deadline for Chapter 11 Reorg Plan by Erol Gurcan

On February 9, 2007, Lionel filed a motion (an application for a court order) with the bankruptcy court seeking an extension to file a chapter 11 reorganization plan. The motion seeks an exclusive 75 day period in which it be allowed a to file a plan after the appeals court either denies, or issues a final decision regarding MTH's petition for a rehearing of the trade secrets case appeal. On December 14, 2006, the Sixth Circuit Court of Appeals reversed the trial court jury's $40.7 million dollar verdict ($38.6 million directly against Lionel) rendered in June 2004, and remanded the case to the trial court for another trial.

Click on the link below to read on

Continue reading "Lionel Files Request to Extend Deadline for Chapter 11 Reorg Plan by Erol Gurcan" »

February 13, 2007

Lionel Seeks Extension for Chapter 11 Plan

Lionel has asked the bankruptcy court to extend the deadline for filing a reorganinzaion plan.  Read the story here.

February 06, 2007

Lionel and MTH Sign Agreement for Mediation by Erol Gurcan

On January 30, 2007, the attorneys for both Lionel and MTH signed a stipulation (legalese for agreement) agreeing to mediate MTH's separate trade secrets and patent infringement claims against Lionel. Bankruptcy Judge Burton Lifland "so-ordered" (approved) the stipulation on February 1, 2007. When the parties were last in the bankruptcy court on January 9, 2007, Lionel's attorney suggested mediation, MTH's lawyer agreed, and Judge Lifland directed the parties to do it.

Click on the link below to read on

Continue reading "Lionel and MTH Sign Agreement for Mediation by Erol Gurcan" »

January 22, 2007

Appeals Court Orders Lionel To Respond To MTH's Petition by Erol Gurcan

On January 18, 2007, the Sixth Circuit Court of Appeals posted on its PACER web site that a letter was sent to Lionel's lawyer, Walter Dellinger, notifying him to respond MTH's petition (filed with the court on December 28, 2006)for an en banc hearing. Lionel's response is due by February 1, 2007. An en banc hearing means that the full court will consider it, which could be a group of anywhere from 15-20 judges (in other words all the judges of the court), instead of the 3 that orginally heard the appeal on June 7, 2006.

Click on the link below to read on

Continue reading "Appeals Court Orders Lionel To Respond To MTH's Petition by Erol Gurcan" »

January 10, 2007

MTH and Lionel Appear in Bankruptcy Court by Erol Gurcan

January 9, 2006-For the first time since December 14, 2006, when an appeals court vacated MTH’s $40.7 million dollar trade secrets verdict against Lionel, and remanded the case for another trial, attorneys for the two rival model train makers appeared in the Bankruptcy Court for the Southern District of New York today.

Click on the link below to read on

Continue reading "MTH and Lionel Appear in Bankruptcy Court by Erol Gurcan" »

January 04, 2007

MTH Files Petition For Rehearing with Appeals Court by Erol Gurcan

Those of us following the legal proceedings in the MTH Lionel trade secrets case know that on December 14, 2006, a three judge panel of the Sixth Circuit Court of Appeals unanimously reversed the district court jury’s $40.7 million dollar verdict, and granted Lionel’s motion for a new trial, and remanded the case to the district court for that purpose.

Click on the link below to read on

Continue reading "MTH Files Petition For Rehearing with Appeals Court by Erol Gurcan" »

December 19, 2006

Lionel Earns $2.8 Million Profit in November 2006 by Erol Gurcan

On December 14, 2006, Lionel filed its monthly operating report for November 2006, with the bankruptcy court. For the month of November, Lionel posted a profit, or net income of $2,868,000. Its monthly disbursements were $6,818,000. The report was affirmed to by its Chief  Financial officer, Scott Turkington. Lionel is required to file a monthly operating report since it is in bankruptcy. November’s numbers were obtained directly from its profit and loss summary filed with the court.

Click on the link below to read on

Continue reading "Lionel Earns $2.8 Million Profit in November 2006 by Erol Gurcan" »

December 14, 2006

More Press Coverage of MTH v Lionel Court Ruling

Lionel Awarded New Trial In Model Trains Trade Secrets Case, Associated Press
Appeals Court Sends Lionel-MTH Back To Square One, Classic Toy Trains

UPDATE:
Lionel's Press Release

Related Posts
Summary of Appeals Court Ruling in MTH v Lionel Trade Secrets Case

Summary of Appeals Court Ruling in MTH v Lionel Trade Secrets Case by Erol Gurcan

On June 7, 2004, the jury in the trade secrets case ruled in favor of MTH and awarded them $40.7 million dollars as follows; $11,978,887 for PAST lost profits, $13,794,518 for FUTURE lost profits, and $12,834,820 against Lionel, and $2,167,440, against codefendants Korea Brass and Yoo Chan Yang for UNJUST ENRICHMENT. Lionel filed for bankruptcy in November, 2004, and filed a notice of appeal, in January 2005. Korea Brass did not appeal.

In a nutshell, overall, today's appeals court's decision is favorable to Lionel, and not to MTH.

Click on the link below to read on

Continue reading "Summary of Appeals Court Ruling in MTH v Lionel Trade Secrets Case by Erol Gurcan" »

Court Rules on Lionel's Appeal

Just heard from my friend Erol Gurcan and he stated that the court (Sixth Circuit Court of Appeals in Cincinnati Ohio) has ruled on Lionel's appeal of the $40.7 million dollar judgment obtained against it by MTH.  Erol's reading through the court documents now and expects to have a summary of the decision out soon.  Stay tuned.  Thanks for the tip Erol!

   

Related Posts
A Status On Lionel's Bankruptcy; How Long Will It Last? by Erol Gurcan (7/21/06)

November 16, 2006

An Example of the Impact of the MTH - Union Pacific Settlement

I found the following in a periodic newsletter I receive from Athearn, maker of N and HO scale products.

"There's big news on the Union Pacific license. The terms have been changed, and we no longer have to pay the railroad in order to make models with their marks. We'll be rolling our prices back on all existing inventory and on all items announced but not yet shipped to match the pricing of all the other road names in each category."

A great example of the impact the new agreement is having on the model railroad industry.

November 09, 2006

Insights Into The MTH Union Pacific Settlement by Erol Gurcan

November 8, 2006 - As some of you know by now, MTH and Union Pacific issued a joint press release late this afternoon stating UP’s trademark infringement case against MTH  has been amicably resolved.   However, the settlement has broader beneficial implications for both the other model train manufacturers and hobbyists alike. First, the agreement  means that UP’s case against MTH has been resolved and will be discontinued in the near future without anymore money being spent on lawyers. Thus, more money for research and development, new tooling and electronics.  Secondly, the agreement is significant in that it  means all model train manufacturers will be allowed to use UP logos and trademarks forever without having to pay a royalty. Mike Wolf confirmed to me today that this agreement also applies to Lionel despite its  settlement and licensing agreement entered into almost two months ago. More about that later.

Click on the link below to read on

Continue reading "Insights Into The MTH Union Pacific Settlement by Erol Gurcan" »

November 08, 2006

MTH Settles with Union Pacific

I received this from MTH:

FOR IMMEDIATE RELEASE

Union Pacific, M.T.H. Electric Trains Settle Trademark Dispute

November 8, 2006 - M.T.H. Electric Trains and Union Pacific Railroad are pleased to announce that they have amicably settled the trademark infringement case that U.P. filed against M.T.H in Omaha, Nebraska federal court.  The settlement benefits both parties, as well the entire model railroad industry.  It allows Union Pacific to continue to protect its intellectual property, and authorizes M.T.H.’s use of Union Pacific’s trademarks and paint designs on model train products and accessories.  Union Pacific has also decided to change its trademark-licensing program so that model railroad manufacturers will no longer have to pay a royalty, and will enjoy a perpetual license to use Union Pacific trademarks and paint designs on model railroad products.

Click on the link below to read on

Continue reading "MTH Settles with Union Pacific" »

November 02, 2006

Coil Couplers Continues To Distort The Legal Facts by Erol Gurcan

November 1, 2006-O gauge hobbyists who regularly read the Coil Couplers Of America web site, know it is  pro-Lionel, and funded by rock singer Neil Young, who is also a 20% owner of the company. The web site is also independent of Lionel LLC and does not speak for them on an official level, but does occasionally cite un-named sources within the company for its information.   

However, the Hi-Rail Times section of the Coil Couplers web site continues to distort the truth regarding the legal proceedings between MTH and Lionel, thereby possibly confusing O gauge hobbyists interested in the various legal proceedings. It has once again become necessary to set the record straight regarding their latest post.

UPDATE 11/3 - Hi-Rail Times responds to Erol's article.

Click on the link below to read on

Continue reading "Coil Couplers Continues To Distort The Legal Facts by Erol Gurcan" »

September 17, 2006

Jerry Calabrese Comments on Union Pacific Trademark Infringement Settlement and Lionel’s Recent Sales By Erol Gurcan

September 16, 2006-On September 13, 2006, I wrote an article stating Lionel had settled the trademark infringement lawsuit brought against it by Union Pacific and had entered into a licensing agreement with them. The next day, Lionel CEO Jerry Calabrese posted a statement on its web site confirming the licensing agreement and thanking UP for working with Lionel to resolve the situation.
Earlier today, I talked with Mr. Calabrese and discussed the trademark infringement settlement and Lionel’s recent sales. He wanted me to pass along a few comments about our conversation.

Click on the link below to read on

Continue reading "Jerry Calabrese Comments on Union Pacific Trademark Infringement Settlement and Lionel’s Recent Sales By Erol Gurcan" »

September 15, 2006

Lionel Releases Statement About Union Pacifc Lawsuit

Lionel Lionel's CEO, Jerry Calabrese, released a statement about Lionel's settlement with Union Pacific concerning trademark infringement.  Read it here.

 
 
 

Related Posts
Union Pacific and Lionel Settle Trademark Infringement...
A Summary Of The Union Pacific MTH Trademark Infringement...

September 13, 2006

Union Pacific and Lionel Settle Trademark Infringement And Enter Into Trademark Licensing Agreement

September 13, 2006-Lionel has settled the trademark infringement lawsuit brought against it by UP. Additionally, the two have also entered into a trademark licensing agreement. However, the court where Lionel’s bankruptcy has been pending since November 15, 2004, must approve the deal since they are in bankruptcy. To that end, Lionel’s attorney’s filed two motions (an application for a court order) in the United States Bankruptcy Court for the Southern District of New York on September 13, 2006, requesting, 1) the court approve the agreement entered into by the two parties, and 2) requesting the court make some of the terms of the agreement confidential. The motions are currently scheduled to be heard on October 11, 2006. The information for this article was obtained from the two motions.

It is expected the motion requesting the court to approve the lawsuit settlement and

Click on the link below to read on

Continue reading "Union Pacific and Lionel Settle Trademark Infringement And Enter Into Trademark Licensing Agreement " »

August 11, 2006

A Summary Of The Union Pacific MTH Trademark Infringement Case by Erol Gurcan

August 11, 2006-Over the last several months, there has been a lot of discussion on the OGR on line forum about the validity (or lack thereof) of Union Pacific’s three trademark infringement lawsuits (against Lionel, MTH and train photographer Nils Huxtable), but little information concerning the specifics in each lawsuit. There was also plenty of discussion last week because of a UP press release on its web site regarding its trademark licensing program. That memo stated in part;  Click on the link below to read on

Continue reading "A Summary Of The Union Pacific MTH Trademark Infringement Case by Erol Gurcan" »

July 26, 2006

Bankruptcy Court Approves Lionel’s Motion to Extend its Time to File For Reorganization by Erol Gurcan

July 25, 2006-In my article dated July 21, 2006, I stated Lionel’s attorneys had recently filed a motion (an application for a court order)  with the bankruptcy court seeking to extend its time to file a plan of reorganization. The motion specifically requested that Lionel be given 120 days to file a plan of reorganization with the court once there is a decision in the MTH-Lionel trade secrets appeal heard on June 7, 2006. A decision in that case is expected late this year or early next year. Lionel’s motion also sought an additional 60 days to allow other interested parties, such as Lionel’s creditors (like MTH) to file their own plan with the court, once Lionel’s plan was filed. In my July 21 article, I stated I expected the motion to be granted.  Click on the link below to read on.

Continue reading "Bankruptcy Court Approves Lionel’s Motion to Extend its Time to File For Reorganization by Erol Gurcan" »

July 21, 2006

A Status On Lionel's Bankruptcy; How Long Will It Last? By Erol B. Gurcan

Those of us following the various legal proceedings in the 3 rail world know that Lionel has been in bankruptcy since November 15, 2004, now a period of 20 months. While that may not sound like a long time to some, by comparison,  K-Line’s bankruptcy was over and done with in 8 months, and they did not emerge from it. (K-Line’s tooling and assets were purchased by its principal manufacturer Sanda Kan in April 2006, who in turn, licensed them to Lionel as part of a licensing and marketing agreement).   Click on the link below to read on.

Continue reading "A Status On Lionel's Bankruptcy; How Long Will It Last? By Erol B. Gurcan" »

June 20, 2006

MTH Dropping Patent Infringement Lawsuit Against Lionel

Here's the press release received by OGaugeWatch today from MTH's Andy Edleman, VP of Marketing, announcing that MTH has dropped the patent infringement lawsuit with Lionel.

June 20, 2006 – M.T.H. Electric Trains announced today that it is dropping its patent infringement lawsuit with Lionel after both Lionel and M.T.H. agreed to wait on the Sixth Circuit Court of Appeals ruling in the theft of trade secrets case between the two firms. That ruling is expected in six to eight months at which point the patent infringement case could be revisited should Lionel need to resolve it in order to exit from bankruptcy. 

The patent infringement suit was filed by M.T.H. in response to Lionel’s motion for discovery of M.T.H.’s patent infringement claim using Bankruptcy Rule 2004, a particularly invasive form of discovery that afforded M.T.H. no confidentiality protection for information uncovered during the discovery process.  Consequently, information obtained during the discovery could have been shared with Lionel’s engineering and marketing teams and provide the company with an inside look at M.T.H.’s plans for its technology.

Related Posts

MTH Files Patent Infringement Case Against Lionel by Erol B. Gurcan

Lionel's CEO, Jerry Calabrese, Comments On Latest MTH Lawsuit

MTH Responds To Lionel's Statements On New Patent Infringement Lawsuit

MTH Releases A Time Line Of Developments That Led MTH Into Latest Lawsuit With Lionel

June 14, 2006

MTH Releases A Timeline Of Developments That Led MTH Into Latest Lawsuit With Lionel

Mr. Andy Edleman, MTH's VP of Marketing, in his response to Lionel's statement about the new patent infringement lawsuit filed by MTH against Lionel, stated he would produce a timeline of events supporting MTH's decision to move forth with the patent infringement lawsuit.  In his initial response Mr. Edleman commented:

"...we believe consumers who desire to understand the nature of this dispute would be best served by reviewing an assortment of documents that lays out how this entire dispute began...  Beginning Wednesday, June 14, 2006, a timeline of events complete with a series of downloadable documents will be available via various online forums that illustrates Lionel’s actions and M.T.H.’s counter actions in the brightest of light.

Mr. Edleman has graciously supplied OGaugeWatch.com with the timeline which includes links to  several documents.  Here is the timeline document in it's entirety:

"The following timeline illustrates the developments of patent infringement issues between M.T.H. Electric Trains and Lionel over the past four years. Under each date we have included a link to a PDF document that contains either actual correspondence between M.T.H. and Lionel counsel or court documents pertaining to the actual issue.

Consumers interested in understanding in more detail the actual events between the two firms, as they occurred, will find this information far more helpful than a press release designed to put the firm's best foot forward. With this information, consumers will be able to see both company's tactics and concerns so that one can draw a more balanced impression of what has been occurring in our industry.

It is our hope that when such information is digested, M.T.H.'s actions will be better understood.

Continue reading "MTH Releases A Timeline Of Developments That Led MTH Into Latest Lawsuit With Lionel" »

MTH Responds to Lionel's Statement On New Patent Infringement Lawsuit

MTH's Mr. Andy Edleman, Vice President of Marketing, responded to Jerry Calabrese's statements concerning MTH's latest lawsuit.   In his response, Mr. Edleman explains why MTH made the decision to file the patent infringement lawsuit.  Below is Mr. Edleman's statement in it's entirety.

"June 13, 2006 – Regretfully M.T.H. Electric Trains feels compelled to respond to Lionel’s statement regarding our recently filed lawsuit in the Southern District of New York Bankruptcy Court. The action was filed against Lionel LLC for patent infringement pertaining to Lionel’s inclusion of certain patented features found in M.T.H.’s sound and train control technology.

Continue reading "MTH Responds to Lionel's Statement On New Patent Infringement Lawsuit" »

June 13, 2006

Lionel's CEO, Jerry Calabrese Comments on Latest MTH Lawsuit

News from the O Gauge legal front has been fast and furious over the past few days.  The most recent news comes from Lionel's CEO, Jerry Calabrese, who released a statement on Lionel's web site concerning the latest MTH lawsuit against Lionel.  In the statement Mr. Calabrese comments:

"Yesterday, despite its prior statements to the contrary, MTH sued Lionel for alleged infringement of its smoke and speed related patents, seeking unspecified damages and injunctive relief.  MTH also asked the court to preemptively rule that its own trains do not violate four of Lionel's patents, or to declare our patents invalid.  Lionel does not believe that it infringes MTH's patents and intends to vigorously contest these claims and defend its patents, which pre-date the MTH patents in question. 

We’re disappointed that MTH has again decided to resort to litigation at this time, especially since the alleged smoke and synchronized speed related patent infringement issue was already filed in the bankruptcy court as a $17 million secondary claim, and would have had to be resolved before Lionel could emerge from bankruptcy, in any case. There are a lot of possible explanations as to why MTH chose to bring this action now, but I’ll refrain from interpretation or speculation."

Mr. Calabrese goes on to speculate the reason for the lawsuit may be in response to the perception that Lionel's June 7 court appeal of a court's $40+ million ruling against Lionel for theft of MTH trade secrets went well in favor of Lionel.

You can read the Mr. Calabrese's entire statement here.

Related Posts
MTH Files Patent Infringement Lawsuit Against Lionel

Jerry Calabrese and Mike Wolf Comment On June 7’s Trade Secrets Appeal by Erol B. Gurcan

June 13, 2006 - Those who have been following the legal proceedings in MTH’s trade secrets case against Lionel, know that each side’s lawyers squared off in the Sixth Circuit Court of Appeals in Cincinnati, Ohio on June 7. OGR forumite BOB (Bob Baritzek) attended the oral argument of the appeal and wrote an article on the OGR on line three rail forum summarizing what took place. Bob’s report noted that Lionel’s CEO Jerry Calabrese, and MTH’s owner, Mike Wolf,  attended the oral argument of the appeal. Since that time, neither side has publicly commented about the appeal on their respective web sites or other media, until now.

Continue reading "Jerry Calabrese and Mike Wolf Comment On June 7’s Trade Secrets Appeal by Erol B. Gurcan" »

June 12, 2006

MTH Files Patent Infringement Lawsuit Against Lionel By Erol B. Gurcan

June 12, 2006-On June 7, 2006,  I reported that Lionel had filed a motion in its bankruptcy court, requesting it be allowed to obtain discovery with respect to MTH’s 17 million dollar patent infringement claim involving synchronized puffing smoke and sounds effects in relation to the speed of the model train. Specifically, the discovery sought involved infringement related documents from both MTH and Train America Studios, and depositions of persons from both companies. (A deposition occurs when a witness, who has first been sworn in, is asked questions by an opposing party’s attorney, and the questions and answers are recorded by a stenographer.  A written record in the form of a booklet is then prepared by the stenographer and can be used at trial to impeach the witness). The depositions of MTH persons would at least involve owner Mike Wolf and David  Kriebiehl, its Vice President of Research and Development, as both are allegedly listed as inventors according to Lionel’s motion. On June 12, 2006, MTH filed opposition papers to Lionel’s motion, and more importantly, has now sued Lionel for patent infringement.

Continue reading "MTH Files Patent Infringement Lawsuit Against Lionel By Erol B. Gurcan" »

June 07, 2006

Erol’s Legal Update on MTH’s Patent Infringement Claim Against Lionel

June 7, 2006-As some of you may recall from my legal articles published in April, the appeal in the Lionel MTH trade secrets case is scheduled to be heard in the Sixth Circuit Court of Appeals today. Some are hoping that once there is a decision by the appeals court, which is expected late this year, that this will end the six years of litigation between the two train companies, and once again allow them to focus on making quality O gauge trains.    

However, unfortunately, there remains another legal issue between the two, which will most likely be around  long after the trade secrets case is decided. Specifically, this involves a patent infringement claim against Lionel, alleging it  infringed an MTH patent involving its “use of a microprocessor controlled system for the synchronization of puffing smoke and sound effects with the speed of the model train.”

Continue reading "Erol’s Legal Update on MTH’s Patent Infringement Claim Against Lionel" »

May 19, 2006

Bankruptcy Court Approves Change In Attorneys Representing Lionel

May 19, 2006 - On May 15, 2006, United States Bankrutpcy  Judge Burton Lifland signed an order granting Lionel's motion to have the law firm of Schulte, Roth and Zabel represent them in future bankruptcy proceedings.  Although the order was approved by the court on May 15, it directed the rentention and compensation of Schulte Roth and Zabel became effective as of April 17, 2006.

By way of background, on April 24, 2006, I reported that Lionel's attorneys filed a motion (an application for a court order)   in the court where

Continue reading "Bankruptcy Court Approves Change In Attorneys Representing Lionel" »

May 03, 2006

Desperate Times Call For Desperate Measures

For fans of Lionel and Mike's Train House (MTH), the #1 and #2 producers of O Gauge model railroad products respectively, it's been a struggle to hold a friendly dispute about which company  makes the best products without uttering the words bankruptcy or lawsuit.  Lionel, the infamous maker of model trains and MTH, the relatively new kid on the block, have been involved in what could be called an epic lawsuit for such a small cottage industry that has lasted over 6 years.  MTH filed suit against Lionel when MTH discovered that new locomotives produced by Lionel were far too similar to those made by MTH.  As it turns out, MTH was right and in 2004 a court ruled that Lionel did in fact steal trade secrets from MTH and awarded MTH $40+ million.  Great for MTH right?  Wrong.  The verdict has had a profound negative impact on the "big 2".  The large verdict in favor of MTH sent Lionel, once the biggest toy manufacturer in the world back in the day, into bankruptcy.  MTH, who has spent millions on legal fees and has yet to collect any money from Lionel, had 57 employees in early 2005, down from 127.  Profits for MTH have dwindled as well from a high of $9.2 million in 1997 to estimated six digit losses in 2005 (according to information in a Inc.com article about the case). Seemingly desperate times for the big "2".  And while the two companies duke it out it the

Continue reading "Desperate Times Call For Desperate Measures" »

April 26, 2006

Lionel and MTH Legal Recap By Erol B. Gurcan

April 26, 2006 - Last  week, I posted several  articles concerning  the current state  of Lionel’s  legal matters. However, last week was also a vacation week since it was right after Easter, and  many kids were off  from school. Thus, many O gauge enthusiasts may have been away with their kids  or grandchildren,  and not read some or any of my legal posts. Many also  went to the York meet and  may not have read the on line forums  in the few days before it. This article will bring you up to speed  as there were several important and interesting legal matters last week that directly affected Lionel and/or MTH. Even if you read my posts last week, I think you will learn something new in this article.    

1)    I reported on April 17  the Sanda Kan K-Line sale of assets agreement  was scheduled to be signed and completed in a couple of days. The deal was completed last

Continue reading "Lionel and MTH Legal Recap By Erol B. Gurcan" »

April 25, 2006

New Press Release From Lionel About K-Line Deal

Lionel's CEO Jerry Calabrese has issued a press release today on Lionel's web site.  If you have been following OGaugeWatch.com over the past week there's not much new news in the statement.  You can read his statement here.

April 24, 2006

Latest Legal News In Lionel's Bankruptcy Proceedings From Erol B. Gurcan

The latest update on Lionel's bankruptcy proceedings written by Erol B. Gurcan:

I checked the federal judiciaries PACER web site today for the bankruptcy court in the Southern District of New York,  which is  where Lionel's bankruptcy is pending. Today, Lionel's attorneys filed a motion (an application for a court order)  with the court  asking it to allow them to have the law firm of Schulte, Roth and Zabel represent Lionel in future "bankruptcy and general corporate counsel" matters, in place of their current attorneys, O'Melvney and Myers. That office has represented Lionel since they filed for bankruptcy  on November 15, 2004. The main reason for the motion, is the principal attorney representing Lionel in the bankruptcy proceedings, Adam Harris, withdrew as a partner from O'Melvney and Myers on April 17, 2006, and joined the firm of Schulte, Roth  and Zabel.   O'Melvney and Myers will continue to handle litigation, appellate and intellectual property (trade secrets, trademark, copyright and patent law) matters. Thus, O'Melvney's office will  still argue Lionel's appeal in the MTH trade secrets case on June 7 in the Sixth Circuit Court of Appeals in Cincinnati , Ohio.  The motion in the bankruptcy court will be heard on May 8.

The point of the information provided above is to assure all O gauge enthusiasts not to read too much into the change of attorneys on Lionel's behalf. It does not indicate there any problems etc. I want to emphasize that  it is not uncommon for an attorney to leave one law firm and go to another, and take some clients with him. My goal was to post the above information first and let you have all the facts, so as to  avoid any baseless speculation  as to what is really occurring.

Thanks for the update Erol!

Legal Battles May Be Spreading To The World Of DCC

I came across a post on the Overlawyered blog summarizing a case  involving a model railroader, Bob Jacobsen, who developed open source software to interface with Digital Command Control (DCC) systems.  Digital Command Control is widely used by G, HO, and N scale hobbyists to digitally control trains and accessories. 

A company called KAM Industries is at odds with Mr. Jacobsen's software because it is claiming patent infringement.  KAM produces similar software to Mr. Jacobsen's and apparently KAM has been threatening him with letters and an invoice totaling $203,000 for damages related to the estimated 7,000 users of Mr. Jacobsen's software.  Mr. Jacobsen is refuting KAM's claims and has posted the letters received from KAM's legal representation and his responses to them here.

April 18, 2006

Legal Matters Update

Erol Gurcan posted his latest update on several legal matters within the O Gauge industry on the OGR Forum.  Check it out here.

UPDATE: Here is another update from Erol:

Hi,Dave-here is the latest on the K-Line Sanda Kan deal. You can post it on ogaugewatch.com

In my legal article yesterday, I stated the asset purchase agreement between Sanda Kan and K-Line was scheduled to  be signed the same day (April 17). I also stated the closing should occur in a couple of days. I can now confirm based on my two sources closely involved with the deal that both the asset purchase agreement was signed  today (April 18) and the closing also took place today. The closing involved Sanda Kan paying K-Line and Merrill Lynch. Thus, the agreement is now a done deal.  It will be interesting to see when Lionel makes a formal announcement that they have obtained the licensing rights pursuant to its agreement with Sanda Kan now that they own the assets.    

On a related matter, some have asked about the K-Line products which are still in their  possession for repair and have not been returned. I have been informed that beginning last week, a former K-Line employee began making repairs, and the items are being sent back to their owners. However, this will take a little time. It is expected that most or all items will be repaired before they are returned. Concerning parts for K-Line products, I was not able to find out what will happen with this.   

Erol B. Gurcan

Please note that I normally will post Erol's articles on OGaugeWatch.com in their entirety but due to a glich with my email I didn't receive a copy of Erol's original article that he posted on OGR so I linked to the OGR version. Dave

March 14, 2006

The Latest on the newest MTH v. Lionel "Lawsuit" from Erol B. Gurcan

By way of background, on Saturday, March 11, 2006, D. Railer posted on the Hi Rail Times of the Coilcouplers web site,  that according to their inside sources at Lionel, "MTH recently sued Lionel for patent infringement", involving  synchronized smoke, and asking for $15,000,000 in damages.  This information  made its way on to the OGR forum under a thread called "guess what,  another lawsuit."   I posted a response to this thread, stating that no one had seen the lawsuit papers, namely a complaint, which must be filed with the court to start  a legal action. This would need to occur before a defendant is served with the complaint, usually by a process server.  I also stated I asked Charlie of Nassau Hobbies to get a copy of the complaint and that I would publish a summary of it in a few days.

On Sunday, March 12, Charlie forwarded me an e-mail sent to him by MTH president Mike Wolf, stating that a lawsuit had NOT been filed by MTH against Lionel for patent infringement. Charlie posted this information on the AOL message board and I posted it on the OGR forum. Later on Sunday, Mike Wolf,  emailed me directly from China where is presently on business, and again stated MTH had  not sued Lionel, and called the coil couplers post a "lie."      

Thinking there could be a mistake or misinformation  on Coilcouplers end since Mike Wolf was adamant that a lawsuit had not been filed, I emailed them seeking an explanation and asking for proof that a lawsuit had been filed, such as by sending me a copy of the complaint.   I never received a  response.

However, on Monday evening, March 13, 2006,   The Coilcouplers web site posted a "correction" stating "MTH recently filed a 17 million dollar claim against Lionel for patent infringement." It basically altered its earlier "lawsuit"  statement and replaced it with one stating a "claim" had been filed with the court. Specifically, the current statement reads, "There was some confusion caused by our describing the MTH claim as a lawsuit in our previous article which this one replaces. In essence this MTH claim is the same as a lawsuit. Lionel is required to respond and defend against this outrageous MTH claim of 17 million dollars in damages before leaving bankruptcy."    The web site also posted two documents as links which I have reviewed. They are a proof of claim for patent infringement (and not a complaint which starts a lawsuit) filed with the bankruptcy court where Lionel's bankruptcy is pending, on August 3, 2005 (over 7 months ago).

The following is what I have determined from the above facts. Firstly, Mike Wolf was correct that a lawsuit by MTH against Lionel for patent infringement  has not been filed.

Second, the Coilcouplers web site statement that Lionel is "required to defend" the claim in the same way since it is in essence a lawsuit, is not accurate since a defendant must file an answer when a complaint has been filed with the court and served on the defendant.

Moreover, it was Coilcoupers that initiated this whole matter by wrongly stating  MTH had recently sued Lionel, and then having to alter its statement when confronted with the fact it was incorrect. Perhaps it should have better checked it facts before posting its first article, instead of having to later correct it. Tensions in the three rail  run high when lawsuits are involved, and I'm sure Clyde Coil as his associates are well aware of this. MIke Wolf has informed me it is Neil Young, that set up and paid  for the Coilcouplers web site, and  posts some of the material on it. As a 20% owner of Lionel, he should know if a lawsuit has been filed as opposed to a claim being made even though he is not an attorney.    Mike Wolf's proof that Neil Young is involved in the Coilcouplers web site is by way of a copy of a check  he has in his possession, and the web site manager who stated under oath that he gets material to post from Neil via e-mail. Mr. Wolf has offered to send me a copy of the check once he returns from China in two weeks.   

Lastly, the claim is not  that "recent", since it was filed over 7 months ago. If Coilcouplers was so concerned about it, why didn't they mention it earlier? The two documents it linked to its March 13 statement are public documents since they are required to be filed with the court, and have been  for some time.

We will probably  never know if the first Coilcouplers on-line post was an honest mistake or intended to distort the real facts. However, trying to spin  a correction by stating a claim is the same thing as filing a lawsuit or suing, is not accurate.

As a side note, prior to the  Coilcouplers  correction on March 13, Mike Wolf emailed me  the same day  and stated he does not have any plans to file a suit, unless Lionel, who has just threatened to recently sue him for infringing on its patents for TMCC  and speed control, does so. He also claims part of Lionel's goal is to ask the court take DCS (MTH's digital remote control system)  off the market.  If Lionel sues him, MTH plans to counter sue, concerning Lionel allegedly infringing on MTH's patent for  synchronized smoke. Mike's position is MTH  is 100% confident it has all the prior art necessary to defend DCS against Lionel's claim, and they have let Lionel know this.             

Erol Gurcan, ESQ

Thanks for the update, Erol.

March 13, 2006

Rumors of New MTH Lawsuit Not True

Erol B Gurcan confirmed to me in an email yesterday that Mike Wolf is denying a patent infringement lawsuit has been filed against Lionel by MTH.  Mr. Gurcan's email reads:

In yesterday's ogaugewatch.com, you posted Clyde Coil's message  that MTH had filed a patent infringement  lawsuit against Lionel involving synchronized puffing smoke. Since then, Mike Wolf, owner and president of MTH has contacted Charlie of Nassau Hobbies who then emailed me, to report that MTH has NOT filed such a lawsuit. Mike even emailed me directly this evening stating the coilcouplers statement is a "lie." Your readers should know that MTH disputes a patent infringement lawsuit against Lionel has been filed as of this time. 
Feel free to post this on your web site.

Erol Gurcan ESQ.

Thanks for the update Erol.  The report of the alleged lawsuit has yet to be recanted by Hi-Rail Times.

UPDATE 3/13/06:  Hi Rail Times has posted a "correction" that contains links to two documents that seem to prove that MTH filed patent infringment claims (not lawsuits) against Lionel.  One document is dated 2005 and the other seems like it is from 2004.  Given the age of the documents, I'm not sure why the original Hi Rail Times article suggested these claims are new.  More to come.

March 12, 2006

Report of MTH Lawsuit on Hi Rail Times Not True?

 The buzz on the various O Gauge forums is that MTH did not sue Lionel and that the story posted on Hi Rail Times alleging that MTH has file a lawsuit against Lionel is some sort of smear tactic.  Charlienassau of Nassau Hobby posted on the AOL Lionel Model Trains discussion board that Mike Wolf, owner of MTH, is denying that MTH has sued Lionel.  This is interesting because Hi-Rail Times is said to be run by Neil Young, rock star and part owner of Lionel.

March 11, 2006

Hi Rail Times Reporting Another MTH Lawsuit

D. Railer of Hi Rail Times is reporting today that MTH has filed a patent infringement suit against Lionel.  From Hi Rail Times:

MTH's view is that LIONEL's command controlled trains featuring the Odyssey speed control system with synchronized smoke and sound effects infringe MTH patents.

According to D. Railer the lawsuit asks for $15 million.  Stay tuned.

View the entire article on Hi Rail Times

March 10, 2006

Lionel/K-Line Update from Erol B Gurcan

There have been some recent posts on the OGR 3 rail forum stating that the K-Line website has been shut down, possibly due to the host not being paid. Some may also interpret this to mean that the K-Line's sale of assets to Sanda Kan has been completed, since there is no longer a need for a website.

I contacted K-Line's bankruptcy attorney, Terri Gardner, today as I had not heard anything on their pending sale of assets to Sanda Kan since Lionel's motion to allow it to enter into the licensing deal with Sanda Kan had been approved by the bankruptcy court on February 28, 2006, 10 days ago. Ms. Gardner stated K-Line's sale of its assets to Sanda Kan has not been concluded. There still is no closing date. The agreement is still being negotiated and written documents for it being drawn up. The information obtained from Ms. Gardner does not violate any attorney client privileges.

As I recently stated on February 17 and 28 2006, until the sale of K-Lines assets to Sanda Kan is completed, they do not have anything to license to Lionel. Once the K-Line Sanda Kan deal is concluded, it is expected the Sanda Kan Lionel licensing deal will take place shorty thereafter as the two have already signed a tentative agreement concerning it. Continue to stay tuned.

I will update everyone once there is a major development.

Erol Gurcan

February 28, 2006

Lionel Court Proceedings Update from Erol B Gurcan

February 28, 2006 - Lionel’s motion in the United States Bankruptcy Court in the Southern District of New York, seeking court approval to allow it to enter into the licensing agreement of K-Line’s assets with Sanda Kan  was on before Honorable Burton Lifland this morning at 10 am. I called the judge’s chambers shortly before noon today. I was informed that, after a hearing, Lionel’s motion was granted by the court.  The court order allowing Lionel to license K-Line’s assets from Sanda Kan should be entered later today or tomorrow. This clears the way for Lionel to be able to eventually license K-Line’ assets from Sanda Kan. I stated in my article on February 17  this was the most important and difficult of the 3 events that needed to occur before Lionel could obtain the licensing rights.

However, as I also reported yesterday, based on information provided to me from K-Line’s bankruptcy attorney Terri Gardner, the sale of K-Line’s assets to Sanda Kan has not been concluded as of the current time. There is also no closing date for this deal as of yesterday. The information provided to me from Ms Gardner is public information and does not violate any attorney client privilege. Until Sanda Kan purchases K-Lines assets, they have nothing to license to Lionel. It is expected this will definitely occur  in the near future.   Stay tuned.      

Erol B. Gurcan

Senior Trial Attorney

An "Oldie but Goodie"

Yesterday I found a very informative article about the MTH lawsuit on INC magazine's website.  The article is from February 2005 and is entitled "Train Wreck".  It's worth a read if you haven't seen it yet.

February 27, 2006

Current Lionel - K-Line Update from Erol B. Gurcan

February 27, 2006-As of today, the sale of K-Line’s assets to Sanda Kan has not been concluded. Therefore, K-Line’s bankruptcy is still pending. There is no  closing date for the sale as of the current time. The above information was obtained today from K-Line’s bankruptcy attorney, Terri Gardner. The information provided is public information and does not violate any attorney client privileges.

Regarding Lionel’s proceeding to obtain K-Line’s assets, as I stated in my last OGR post on February 17, 2006, Lionel  filed a motion (an application for a court order) on February 16, returnable in the US Bankruptcy Court in Manhattan (where its bankruptcy proceeding is pending) on February 28 (tomorrow), asking the court for permission to allow it to enter into the licensing and marketing agreement with Sanda Kan. This information was obtained from Lionel’s own motion.  As I stated in my previous post, this was the most important and difficult of the three things that had to occur before Lionel could obtain K-Line’s assets from Sanda Kan. As I also stated, I expect this to occur, but it is more than a formality as the judge can grant the motion, deny it, or modify the requested relief on such terms as are reasonable to the court. Even if the motion is granted tomorrow, the licensing deal with Sanda Kan, through a new entity known as Newco,  will not take place yet as they have not concluded their deal with K-Line. Until that occurs, Sanda Kan (through Newco) does not have any assets to license to Lionel.

I will keep everyone updated as necessary.    

Erol B. Gurcan

Senior Trial Attorney

Please note that Mr. Gurcan has graciously offered to add OGaugeWatch to the e-mail distribution of his legal updates concerning the Lionel lawsuits.  His articles will be posted on OGaugeWatch in their entirety with Mr. Gurcan's permission.  Thanks Erol.  

Understanding the Lionel - K-Line Deal - PART 3

In Part 2 of my multi part series to give you a clear understanding of the Lionel – K-Line “deal” I gave you a summary of the K-Line bankruptcy, the principal players involved, and explained what I believed to be the “monkey wrench” that derailed Sanda Kan’s initial attempt to take over the K-Line assets. I also explained the emergence of the deal that Lionel’s CEO, Jerry Calabrese, mentions in his 02/16/06 statement. In this final installment of the series I will review the details of the proposed Lionel/K-Line deal, including the cost to Lionel and Lionel’s option to acquire the K-Line assets.

According to court documents filed with the U.S. Bankruptcy Court for the Southern District of New York on 02/16/06, Lionel is proposing a deal involving Newco (a.k.a. NC Train Acquisition, LLC, a legal entity of Sanda Kan), Sanda Kan and itself that will eventually give Lionel the option to acquire the remaining K-Line assets.

OK, keeping in mind that this deal is predicated on Newco’s purchase of the K-Line assets, here are the terms of the proposed deal:

Continue reading "Understanding the Lionel - K-Line Deal - PART 3" »

February 26, 2006

Understanding the Lionel - K-Line Deal - PART 2

In Part 1 of my multi part series to give you a clear understanding of the Lionel – K-Line “deal” I gave you a summary of the events that lead K-Line and Lionel into bankruptcy. In Part 2, I will summarize the details of the K-Line bankruptcy, the principal players involved, and explain what I believe to be the “monkey wrench” that derailed one principal player’s attempt to take over the K-Line assets.

The material creditors in the K-Line bankruptcy are Merrill Lynch Business Financial Services and Sanda Kan. As material creditors, both have a claim to what is left of K-Line. Merrill Lynch, K-Line’s senior secured lender, has a claim of $1.6 million dollars that is secured by all of K-Line’s assets located in the United States, including accounts receivables, inventory and intellectual property. Sanda Kan, K-Line’s principal inventory

Continue reading "Understanding the Lionel - K-Line Deal - PART 2" »

February 23, 2006

Understanding the Lionel - K-Line "Deal" - PART 1

In Part One of this multi part series of posts I will lay out the necessary background you need to know to get a complete understanding of the Lionel/K-Line “deal” announced by Lionel’s CEO, Jerry Calabrese last week. Over the past week, speculation and opinions surrounding the announcement has dominated the O Gauge Railroading forum and to a lesser extent, been the subject of some discussion in the other forums. Readers of Mr. Calabrese’s statement were lead to believe (by reading between the lines) that Lionel was actually taking over K-Line. That isn’t the whole story.

To get a better understanding of the deal, I obtained a copy of the docket report detailing the motion filed by Lionel in the U.S. Bankruptcy Court for the Southern District of New York. Since Lionel is in bankruptcy, any of its financial dealings need to be reported to and approved by the bankruptcy court and become part of the public record. On February 16th, 2006, lawyers representing Lionel filed a motion with the court to allow it to enter into the agreement Mr. Calabrese alluded to in his statement last week. Upon reading the report, I quickly realized there were several aspects of the proposed “takeover” which need to be presented to paint a complete picture of the Lionel/K-Line deal. Please note that throughout the court documentation K-Line is referenced as MDK, Inc. For the purposes of clarity, I will refer to MDK, Inc as K-Line.

For you to gain a better understanding of the proposal on the table, it is important to be

Continue reading "Understanding the Lionel - K-Line "Deal" - PART 1" »

February 17, 2006

Another Statement from Lionel's CEO

Lionel CEO Jerry Calabrese has issued another statement on the Lionel web site today.  The subject of this statement addresses Lionel's reaction to Sun Model Corporation's attempt to liquidate K-Line locomotives.  In the statement Mr. Calabrese explains that Lionel had asked Sun Models to stop shipping models that were covered by a permanent injunction issued by a Federal court when Lionel brought suit against K-Line for stealing it's technology.  The Lionel CEO goes on to explain that Lionel has decided to allow Sun Models to continue to liquidate the models in question "even though we have no legal or moral obligation to do so" in what could be interpreted as a sign of good will toward K-Line fans.

Mr. Calabrese seems to take a shot at K-Line's current owner when he states:

Lionel intends to make K-Line products as part of a larger plan to expand our own middle line offerings that we believe have a greater role in our catalog and overall business –  offerings intended to give more people a chance to own quality Lionel products at many levels.  This includes engines and rolling stock that are more manageable in size and price, but yet strong on value.  Having said that, selling highly detailed, die cast, steam engines that contain state of the art electronics for not much more, or in some cases, less than they cost to make, is a devil’s bargain and not a good deal for anyone.

Manufacturers and dealers who do that kind of business do not survive in the long term.  In their wake they leave broken companies, broken hobbies and broken promises.  Who takes responsibility for unshipped orders and pre-paid deposits?  Who provides service and repairs trains that don’t work?  Who invests in new tooling for next year’s products and keeps the hobby fresh and alive?  Worst of all, this kind of irresponsible opportunism poisons the market for merchants and manufacturers who are committed and deeply invested in the next 20 years of the model train business, not the next 20 minutes.

Read Mr. Calabrese's entire statement on the Lionel web site

 

An Interesting Take on the Lionel - K-Line Announcement

Today, Charlie of Nassau Hobbies posted Erol B. Gurcan's (a trial attorney that has had his hand on the pulse of the K-Line bankruptcy) take on the state of the Lionel - K-Line announcement made yesterday by Lionel's CEO, Jerry Calabrese.  It's worth a read because Mr. Gurcan makes the case that it may be a bit premature and incorrect to assume that Lionel is actually taking over K-Line.

View Mr. Gurcan's analysis on the OGR forum

February 15, 2006

Union Pacific is at it Again!

Union Pacific, who recently filed a trademark infringement lawsuit against Lionel and MTH, has filed a similar suit against photographer Nils Huxtable for publishing a calendar.  A group has set up a web site and a legal defense fund to assist Mr. Huxtable in his fight against UP.  Here is an excerpt from the site:

Ron Paludan, working on behalf of the Steamscenes Legal Defense Fund, stated recently, "Union Pacific Railroad Company's use of its vast legal resources is harming Steamscenes, a small company that produces publications that ironically enhance U.P.'s public image. In no way could Union Pacific Railroad Company's calendar and the Steamscenes' calendar be confused, as "A Steamscenes Publication" is printed right on the cover of every calendar. In our opinion, the Union Pacific Railroad's case lacks merit and its interference with Steamscenes' business is unwarranted. We seek to ensure that this suit is settled by revelation of facts and fair application of law, rather than won by the company who has the most financial resources.".

UPDATE 2/16/06:  More information on this story can be found in the  2/15/06 edition of the Trains.com newswire.

February 09, 2006

MTH Files Lawsuit Against Korea Brass, Inc UPDATE

Charlienassau of Nassau Hobbies and his lawyer/friend Erol come through yet again with some interesting details about the legal proceedings in the O Gauge industry.  This time, on the OGR forum, Charlie posts Erol's explanation and findings about why MTH filed a new lawsuit against Korea Brass. 

View Charlienassau's post on OGR

February 03, 2006

MTH Files Lawsuit Against Korea Brass, Inc

From the Detroit Free Press:

A Maryland model train maker that won a $40.7-million judgment in 2004 against Macomb County-based Lionel LLC and a Korean supplier has returned to U.S. District Court in Detroit to collect damages from the Korean firm.

Mike's Train House Inc. of Columbia, Md., charges in a lawsuit filed last week that Korea Brass Inc. of Charlottesville, Va., transferred all of its assets to a new company, Hagye Trading Co., to avoid paying the judgment.

In 2004, a federal jury in Detroit awarded $27.7 million to Mike's Train House, which alleged that Lionel of Chesterfield Township and Korea Brass had stolen its design for making zinc die cast O gauge steam engines.

The judgment forced Lionel to file for bankruptcy protection while it appealed the judgment.

Hagye Trading Co. isn't listed in the Charlottesville phone directory and could not be reached for comment.

February 02, 2006

K-Line Update

Charlie, owner of Nassau Hobbies has posted another update on OGR concerning the status of K-Line.  As posted on OGR:

Charlie- here is the latest on the status of K-Lines bankruptcy case. As you may recall, financing was previously put in place to operate the company until January 31 and it was hoped a deal would be completed by that date.

K-Lines lead bankruptcy attorney Terri Gardner informed me today that a lot is happening right now and that negotiations are continuing. In other words, a deal with Sanda Kan (or any other potential buyer) has not been finalized. Ms. Gardner promised to notify me in the near future once she can comment publicly as to what is occurring. I will of course pass on any news to you to post for the OGR Forum readers.

Erol B. Gurcan
Senior Trial Attorney

View Charlie's post on OGR

January 28, 2006

Criticism of UP Lawsuit Against MTH

A reader of the Coshocton Tribune, a small town paper in Ohio, had some poignant criticism of Union Pacific's lawsuit against MTH Electric trains.  UP is suing MTH for unauthorized use of it's company logo.  The reader writes:

As I have been a railroad fan for many years, this action by Monstro (the UP whale) to gobble the few minnows of profit earned by small model makers sickens me to the point of nausea. The modest profits of companies like Lionel, MTH and others probably total a miniscule percent of UP's income. And yet, UP can't muster an atom of goodwill toward an industry which has kept UP's name and logo in the forefront for decades (not to mention all the free advertising).

Read the entire article at the Conshocton Tribune

January 12, 2006

K-Line Rumors Flying Around the Web

Seems like everyone has sources that are revealing who is going to happen to K-Line.  Rumors and speculation I've read to date include the following buyers:

MTH - possible
Lionel - in bankruptcy so probably not true
An Italian HO firm - huh?

January 06, 2006

Union Pacific Sues MTH

From the Sun Sentinel's Business Section today:

Union Pacific Corp., the biggest U.S. railroad by sales, sued to stop the nation's second-largest model-train maker from using logos for the Union Pacific and other rail lines it owns. The lawsuit seeks damages from closely held Mike's Train House Inc., based in Columbia, Md. Mike's Train House, owned by MTH Electric Trains, pushed larger rival Lionel LLC into bankruptcy in 2004 by winning a suit over theft of trade secrets.

Read the entire article in the Sun Sentinel.

Read the thread on OGR Forum.

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