Press Release from M.T.H. Electric Trains

From Andy Edleman, M.T.H. Electric Trains

At M.T.H.'s and Samhongsa's request, Korean authorities have conducted a months-long investigation of the theft of engineering designs and drawings for the manufacture of model trains. So far, the investigation has revealed that confidential M.T.H. designs were stolen from the Samhongsa production facility. Korean authorities seized computer records from Korea Brass, indicating that Korea Brass was in possession of several of the stolen M.T.H.-Samhongsa designs, including those for the Scale C&O Allegheny, the Scale Union Pacific Big Boy, the N&W Class A and Auxiliary Water Tender, and the Pennsylvania T-1 Duplex. Korea Brass is a supplier of Lionel, LLC(r).

In addition, a court in Korea ordered the seizure of all 2,200 scale N&W Class A locomotives that Korea Brass produced for Lionel based on the confidential M.T.H. designs. Korean authorities discovered and seized 1,440 of these engines packed into a 40' container ready to be shipped to the U.S. The whereabouts of the remaining Class A locomotives is unknown, but it is thought that they have already been shipped. If these engines have been shipped, they may also be subject to seizure under Korean law. Other engines manufactured by Korea Brass that appear to be based on the confidential M.T.H. designs mentioned above are also under investigation. Some of these engines may have already been shipped to the U.S. We understand that two engineers were jailed and the president of Korea Brass is under investigation by Korean authorities. This remains an ongoing criminal and civil investigation in Korea.

M.T.H. Electric Trains(r) intends to pursue this matter through the appropriate civil and criminal venues internationally and, if necessary, in the U.S. We intend to ensure that third parties do not benefit from misappropriation of confidential M.T.H.-Samhongsa designs. We anticipate that Lionel(r) will cooperate fully with this investigation.

Lionel statement regarding Korean news reports, March 6, 2000

From Richard N. Maddox, President & Chief Operating Officer

It has been reported to Lionel LLC that a designer, who is an independent contractor for a Lionel supplier, is being detained in Korea due to accusations of copyright infringements. We have received information that the supplier in
Korea has been questioned, released and is presently returning to production. We are told it has not been alleged that Lionel LLC violated any copyrights, trademarks or patents in the United States or Korea. We are told the only Lionel model train involved in this matter is the Norfolk & WesternClass A #1218, which has completed production and is being detained by Korean authorities. It is our understanding that this item will be released shortly.

We are unable to comment further since we are in the process of a complete investigation of this matter.

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