Model train company sues Lionel over designs

Local man says stolen plans used to make engines

Litigation

April 20, 2000|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

A 20-year-old Columbia-based company has accused the world's largest model train producer of using stolen designs to develop and sell model steam engines.

In a lawsuit filed this month in U.S. District Court here, Mike's Train House Inc. of Columbia claims that Michigan-based Lionel LLC sold trains made from designs stolen from Mike's Train House's manufacturer in South Korea. The lawsuit also says Lionel used production schedules stolen from the South Korean manufacturer.

"We are not claiming that Lionel stole those designs," said Charles J. Bloom, the attorney representing Mike's Train House. "What we claim in the lawsuit is that Lionel either knew or should have known that there were trade secrets stolen" to make the designs.

Attorneys for Lionel would not comment on the case, which has been transferred to U.S. District Court in Michigan. But Julie Laird, a spokeswoman for the company, said Lionel is innocent.

"We are a 100-year-old company and our name stands for quality, honesty and family tradition," she said. "And we're going to fight this until we win, and we're not going to be intimidated by Mike Wolf," who is president of Mike's Train House.

Lionel is the only train manufacturer that produces trains in the United States, Laird said. The company, which has about 400 employees, uses manufacturers in South Korea and other countries.

Mike's Train House, one of the nation's top producers of O-gauge classic electric toy train sets, was founded about two decades ago by Wolf, 40.

Wolf said he has been working with model trains since he was 12. He started the company from his parents' Howard County home, assembling trains in their basement. The company now has more than 100 employees.

"I feel like someone broke into my house and robbed my house," he said. According to the lawsuit, an investigation last year by South Korean authorities found that designs belonging to Samhongsa Co. Inc., a South Korean company that manufactures trains for Mike's Train House, had been stolen by a competitor, Korea Brass Co. Ltd.

In that case, three former Samhongsa employees and one Korea Brass employee were charged with stealing trade secrets. All four pleaded guilty last month, the lawsuit said.

The lawsuit also says that in February, South Korean authorities seized 1,440 steam engines manufactured by Korea Brass that were about to be shipped to Lionel. The engines were seized on the grounds that they were the product of Mike's Train House's stolen trade secrets, according to the lawsuit.

Following South Korean procedure, Korea Brass paid the authorities about $900,000 to get the trains released. The company then shipped them to Lionel, which shipped them to its customers, the lawsuit alleges.

"We're going to ask the court in Detroit to ask Lionel to recall those engines from their distributors," said Bloom.

Bloom said Mike's Train House will ask the court to prevent Lionel from making more engines that could have come from the allegedly stolen information, and to award Mike's Train House damages for the amount it could have earned by selling the models itself.

The damages are estimated at $3 million, Bloom said.

Laird said Korea Brass is one of Lionel's suppliers, but she would not comment on specifics of the case.

"We prefer to fight this battle in the courtroom," she said.

Bloom said Lionel should have known the designs for the model trains were stolen because it typically takes about a year to make an engine from concept to production.

The models in question were produced in four to five months from the date ordered, Bloom said.

"What we are trying to do with this lawsuit," Bloom said, "is prevent Lionel from distributing those engines in this country."

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