M.T.H. Response To Lionel Statement On Patent Infringement Lawsuit
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.
Make no mistake, Lionel initiated this process in 2002 that
ultimately led up to our patent infringement claim that we did not
intend to act on at this time. Rather than rebut Lionel's slickly
worded press release of June 13, 2006 with fancy words of our own, 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, could have ended two years ago and
can still end or at the very least be postponed if so desired by
Lionel today. 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.
M.T.H. made clear to Lionel before the patent infringement case was
filed that we had no interest in acting on this case, if at all, until
learning how the Sixth Circuit Appeals Court will rule on Lionel's
appeal in the theft of trade secrets case between the two firms. That
case resulted in a finding of libel against Lionel, its Korean
subcontractor Korea Brass and Korea Brass' U.S. Agent, Yoo Chan Yang
in 2004. The jury in the federal case awarded M.T.H. a judgment of
nearly $41 million resulting in Lionel's bankruptcy filing in late
2004 to avoid posting a bond while appealing the case to the Sixth
Circuit Court of Appeals. On June 7, 2006, the Sixth Circuit held oral
hearings on the case during which both parties presented and responded
to questions from the three circuit court judges presiding over the
appeal. Their opinion is expected within the next six to eight months.
When reviewing the online timeline, consumers will learn that
Lionel started this fight up again on May 31, 2006 by filing a motion
for discovery under Bankruptcy Rule 2004. Their motion contains 63
categories requesting but not limited to all documents pertaining to
M.T.H.'s sound and train control intellectual property stemming from
the technology's birth to the present including all documents related
to the design, manufacture and marketing of the technology. In
addition, because of the lax standards of Bankruptcy Rule 2004, often
characterized as a "fishing expedition", the document request is not
constrained by any confidentiality agreements and can be distributed
amongst Lionel's engineers and marketing executives providing those
individuals with an in-depth look at M.T.H.'s technology and future
promotional plans. Such details are not necessary to determine whether
Lionel should object or not to M.T.H.'s claim of patent infringement
and instead provide Lionel with an in-depth peek into M.T.H.'s
intellectual property and marketing plans. As many know, M.T.H. has
been in this position before when Lionel had access to M.T.H.'s
production schedules and designs and again fear what they will do with
this kind of information if obtained in this manner.
By filing suit, M.T.H.'s confidential documents will be protected
under the Federal discovery rules and prevent Lionel from again
obtaining some of the most sensitive information we own via their
preferred method of discovery.