MTH VS UP. This Madness Must End (Lawyers I want Options)

[TomDiehl]

QUOTE: Originally posted by Daniel Lang

QUOTE: Originally posted by TomDiehl
Athearn SD40 model carries a $90 retail price for all road names, but they’re going to charge an extra $10 for the UP decorated ones. 3% of $90 is $2.70 which is to be paid to the Union Pacific, so where does the other $7.30 go? Plus if you read the licensing agreement (bottom of page 4) the royalty is based on the WHOLESALE price, not retail, so the amount paid to the UP will be even LESS than $2.70.

The extra money is eaten up by UP’s burdensome licensing requirements.

Most manufacturers already collect the basic data as to roadnames and models shipped, if for no other reason to determine what sells. The rest is just a simple math problem.

[TheStationmaster]

The costs for the licensee go beyond the royalty paid to U.P. I’ve heard the actual cost is about 2x-3x the royalty payment.

Aside from the paperwork cost for each product, the agreement requires an an annual independent audit. Maybe not a big deal for big companies that probably do this anyway, but for the garage operations out there, that’s not attractive at all. The potential for delays can also be a big product killer. In retail, holding up a product for even a few days can result in loss of shelf space, distributor orders and wasted advertising expenditures. Worse, a manufacturer has to calculate the risk that the licensor may reject the product entirely after a huge investment in design and tooling.

I think we also have to look at another potential danger to our industry. GM implemented a licensing program for automobile models and toys and later decided that there was a liability risk from models samller than 1:64 scale (choking hazard). A similar move in the railroad licensing field could kill N and Z scale.

My take on the legal issue (not a lawyer, do not even play one on TV):

1. Model are not just “Merchandise”, but are artistic depictions of real world objects and are protected by the First Amendment. There are a number of specific trademark cases that back this (New York Racing ***'n v. Perlmutter Publishing, Roll Hall of Fame and Museum v. Gentile Productions).

2. Union Pacific has acquiesced and even promoted this usage for decades. I believe this invalidates their trademark claims for non-transportation uses.

3. Union Pacific no longer promotes the fallen flag brands, painting a few “Heritage” units would probably not be considered a bonafide use and those marks should be considered abandoned (Exxon Corp. v. Humble Exploration Co.). An interesting case on abandonment is “Major League Baseball Properties, Inc. v. Sed Non Olet Denarius, Ltd” in which the LA Dodgers attempted sue the Brooklyn Dodger Sports Bar and Restauran

[lionelsoni]

Stationmaster’s point is very similar to and supports the one I tried to make much earlier in this topic.

[andregg1]

I love my “LIONEL LINES”
Andre.