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June 20, 2006 ﾖ M.T.H. Electric Trains announced today that it is dropping its patent infringement lawsuit with Lionel after both Lionel and M.T.H. agreed to wait on the Sixth Circuit Court of Appeals ruling in the theft of trade secrets case between the two firms. That ruling is expected in six to eight months at which point the patent infringement case could be revisited should Lionel need to resolve it in order to exit from bankruptcy.
The patent infringement suit was filed by M.T.H. in response to Lionelﾒs motion for discovery of M.T.H.ﾒs patent infringement claim using Bankruptcy Rule 2004, a particularly invasive form of discovery that afforded M.T.H. no confidentiality protection for information uncovered during the discovery process. Consequently, information obtained during the discovery could have been shared with Lionelﾒs engineering and marketing teams and provide the company with an inside look at M.T.H.ﾒs plans for its technology.