Somewhere up in roundhouse heaven, the 19th-century railroad barons who fought ruthlessly for coast-to-coast dominance must be shaking their heads over the great modern day courtroom clash of the toy train titans.
The trade-secret fight between Columbia's MTH Electric Trains, formerly known as Mike's Train House Inc., and suburban Detroit model-train icon Lionel LLC, once the world's biggest toy maker but now in bankruptcy, has generated reams of court filings and countless billable hours from lawyers over design drawings for model trains.
The companies are even fighting over tiny puffs of smoke and train sound effects. All of this has dragged on for seven years.
It took 6 1/2 years to finish the transcontinental railroad. When the Union Pacific and Central Pacific tracks met at Promontory Point, Utah, in May 1869, the ceremonial golden spikes were driven and the feat was noted with the telegraphed declaration, "Done."
No one is uttering "done" in the battle for dominance in the world of model trains.
"This litigation could go on for several years," said Robert Swift, the lead attorney representing MTH. "I don't see an end in sight."
Jerry Calabrese, Lionel's chief executive, said, "The MTH guys want their day in court, and so do we."
When that day comes is anyone's guess. This is an outsized legal dispute to gain the commercial affections of an aging North American universe of model train enthusiasts.
Some train collectors describe it as men fighting over toys, but they also note there is big money - estimated worldwide sales of $2 billion annually - at stake in an up-and-down business that holds nostalgic appeal.
Model train collectors hear the rumble of a fatal collision.
"It's a fight for survival. Whoever loses will probably go out of business," said Tom McComas, a film producer and model train enthusiast in Michigan City, Ind. "They're fighting this with the same venom and animosity of the railroad barons, and it's all over toys."
McComas, who produced a documentary for PBS marking the 100th anniversary of Lionel in 2000, said the model train business is "dwindling. The collectors are dying off and they aren't being replaced at the same rate. ... . Kids today don't grow up with Lionel trains."
Still, there is money to be made, especially from men over the age of 50 who had Lionel trains when they were young and now have more disposable income. At the lower age spectrum, last month's recall of 1.5 million Thomas & Friends wooden railway toys because of lead paint served as a reminder that, as McComas said, "There is still some intrinsic fascination with trains."
The Lionel-MTH battle stems from a 2000 complaint filed by Howard County's MTH, which sued the 107-year-old Lionel, accusing the company of selling trains based on designs that had been stolen from a South Korean manufacturer that worked for MTH. In 2004, a federal court jury in Detroit ruled that Lionel should pay $38.6 million to MTH, while another Lionel supplier should pay $2.2 million. That was about 80 percent of Lionel's annual revenue in 2004. Lionel couldn't afford to pay the penalty and it filed for Chapter 11 bankruptcy protection later that year.
Lionel appealed the jury decision and, last December, won a reversal from the 6th U.S. Circuit Court of Appeals, which ordered a new trial. In the meantime, both companies are fighting in U.S. Bankruptcy Court in New York over how and when Lionel will reorganize and emerge from Chapter 11. That court fight includes a battle over technology that synchronizes puffing smoke and sound effects from trains. A resolution of Lionel's financial liability on the stolen designs doesn't appear close.
Calabrese believes that whatever penalty Lionel has to pay, it will be substantially less than the original jury decision because the appeals court criticized the amount of the penalty. Attorney Swift said MTH President Mike Wolf is "the quintessential competitor. He's in this for the long haul."
Lionel has been in bankruptcy before, but the threat to this privately held company, now owned by former Paramount Communications Inc. Chairman Martin Davis and rock musician Neil Young, is greater because there is so much more competition from other forms of entertainment.
John Sipple, editor of Model Railroad News magazine, said the model railroading hobby has changed substantially and that Lionel's allure, described in McComas' documentary as "a dream weaver for 20th-century America," isn't the same in the 21st century.
Sipple said he began playing with trains more than 50 years ago in Geneva, Ill., when "the old guys were railroaders and machinists, and they made the trains from scratch. They made everything that they had."
"Today a guy goes into a hobby shop and buys a car ready to go. He doesn't have time, and that's how the demographic has changed. People have less time and less space for trains."
Sipple, who publishes his magazine in Merlin, Ore., said that if one company goes out of business, collectors will find someplace else to get what they want, "probably on eBay," he said. If MTH prevails and Lionel is liable for a hefty fine, "Mike Wolf will be lucky to cover his legal fees.
"I don't think this is going to end up particularly satisfactorily for anyone," Sipple said.
Tim Jones writes for the Chicago Tribune.
Train clash
Lionel LLC
Headquarters:
Chesterfield, Mich.
Founded:
1900 by Joshua Lionel Cowen
Background:
Manufactured more than 50 million trains since its inception; owned by investment group led by Marvin Davis and rock music legend Neil Young; filed for bankruptcy in 2004.
MTH Electric Trains(formerly Mike's Train House Inc.)
Headquarters:
Columbia
Founded:
1980 by Mike Wolf, the current owner
Background:
In 25 years, MTH has released more new steam and diesel locomotives than competitors, company says.