Mike’s Train House v. Lionel LLC
Eastern District of Michigan at Detroit J. O’Meara
In this diversity misappropriation of trade secrets action tried to a jury, defendant appeals the judgment for plaintiff and the denial of its post-judgment motions. (20 Minutes for Plaintiff, 20 Minutes for Defendant)
This was the announcement on the court docket that greeted me outside Courtroom 403 in Cincinnati this morning. I took the day off to attend the oral arguments phase of this appeal. Mike Wolf was in attendance, along with 4 or 5 attorneys (they left after the proceeding to caucus in a room outside the courtroom, so I couldn’t get an exact count). Jerry Calabrese was also in attendance with what looked like 10 attorneys.
I am not a lawyer, and the procedure today was for the benefit of the appeals judges, not to help the audience understand what was going on. I took lots of notes, but I’m sure I have some of the terminology wrong and incorrect spelling of some names. This is likely to be the only report you’ll see, so the readers will have to live with it. Perhaps Erol will read this post and correct some of my terminology mistakes.
The appeals panel consisted of 3 judges: Mr. Cole, Ms. Daughtrey and Mr. Graham. Prior to the MTH v. Lionel case, we were treated to a sentencing appeal in a child pornography case from Tennessee and a DUI/threatening a federal officer case from Kentucky. When the MTH v. Lionel case was called, there were 28 people in the courtroom (other than court staff), and as far as I could tell there were only 3 model railroad spectators (including yours truly).
Lionel went first, represented by Mr. Hacker and Mr. Dellenger. Mr. Hacker requested and was granted 5 minutes of rebuttal time to follow the MTH arguments. Mr. Hacker argued that the case was very com
I am a complete laymen in this, but it does not sound like a strong case for MTH, some wacky Korean statement (and this bloke does not even want to testify), e-mails (are e-mails legal proof in the US?, not here), accusations that documents and drawings have been destroyed (how to prove that somebody has destroyed something?, do they have the ash as prove?).
Strange…
Can’t wait for these companies to return their focus on making trains. I am thankful for the report, but when I look at many of the items that MTH has put out, they look just like Lionel trains of yesterday. Hard to see which is the “Bad Guy” in all this.
Dennis
am a complete laymen in this, but it does not sound like a strong case for MTH,
The case itself was very strong for MTH, $40 Million strong in fact. The purpose of the Appeals court is to find legal flaws that would have led to an opposite decision. Lionel is admitting to stealing but bickering over degrees. Claiming they only stole a little bit?
All that nonsense aside the appeals court will rule on the legal issues. But this report show the true nature of Lionel, far from an Icon IMO
Cases like this one tend to have a polarizing effect, and so I think we need to exercise some caution here and not let our personal opinions of MTH or Lionel or their products or philosophies or hearsay enter into how each of us interprets the merits of this case. The outcome won’t be decided on this forum, so let’s sit back and observe and allow the judicial process take whatever course it will. At this point, predictions are a dice roll, at best.
Like many of us, I have followed this case. I have no bias (I’m a proud S-gauger), and from what I read would hardly describe MTH’s case as “strong.” And I see nowhere where Lionel “admitted to stealing.” And if you we can assume Bob’s report to be reasonably accurate and you read all of it, you’ll see that. Don’t fall into the trap of believing one side’s counsel and dismissing the other based on personal bias.
My guess: MTH will prevail. Just how much they will prevail is still anyone’s guess, but it may be something short of the original award of $40 million. Strictly a guess on my part. I buy products from both firms in pretty much equal amounts, so I don’t have a dog in this fight. But it’s kind of fun to make a guess just to make reading this stuff somewhat worthwhile over the long haul.
X2
I normally try not to do that, but, at this point, who cares anymore?
One thing that escapes ALL of the toy train mfgrs is the one thing that the Auto makers finally discovered.
The secondary market (used cars or trains) can overwhelm to new market.
Thanks Bob, for posting this, even though not too many of us really understand it.
I think your probably right Allan. I always thought that Lionel owed MTH something but personally I think the judgement was a bit off. I hope it wraps up quickly regrdless and we can all move on!
Cases like this one tend to have a polarizing effect, and so I think we need to exercise some caution here and not let our personal opinions of MTH or Lionel or their products or philosophies or hearsay enter into how each of us interprets the merits of this case.
I don’t see it that way, in this appeal Lionel doesn’t claim innocence. They just argue the significance of what they stole. The level of their guilt and how the damges for what they did should be redistributed. Okay so you squeeze it in to tight legal definitions but like the song says:
“You don’t need to be a weatherman to know which way the wind blows”
Why worry about polarizing effects? This company admitted to stealing and using other peoples stuff. What else do you need to say?
I agree with those like Poppa Zit who have pointed out that this case obviously brings out a lot of psychopathology and misunderstanding amongst the participants in the hobby.
One of the reasons for this is that one of the manufacturers has frequently played upon its customers’ sense of superiority and righteousness, despite using the legal system themselves to intimidate and seek unfair advantage over their competitors. The origins of the hostility at the consumer end comes from both passionate support for their manufacturer of choice, and a relentless attempt over the years to demonize the competition, if you get my drift. Bad values amongst the leadership of the hobby lead to bad values amongst the loyal fans. Plus the fact that some members of the hobby are legitimately nuts.
“One of the reasons for this is that one of the manufacturers has frequently played upon its customers’ sense of superiority and righteousness, despite using the legal system themselves to intimidate and seek unfair advantage over their competitors.”
You’re absolutely right about that, Neil! Downright unfair of Lionel to have destroyed K-Line with such tactics! [:)]
Appeals court is not the venue to argue innocence. Appeals court determines the legal soundness of the case. When a conviction or an award is overturned or modified on appeal, the action is a result of legal flaws in the case, not a new determination of guilt or innocence.
This whole thing has been ridiculous from the start. MTH has remade so much of Lionel’s late pre-war and early postwar stuff (like accesories) without repercussion. They obviously had the legal right to do so, but it’s only a step away from what Lionel was convicted of doing. And what about Williams? They blatantly copy Lionel’s postwar stuff – even use its postwar catalog artwork. Legal, I guess, but ethical? I wi***hey all would concentrate on making good products at a fair price and settle this thing before it goes on any longer. Of course, I know they won’t!!
Megalomania hasn’t been restricted to only one company over the last 20 years.