Has the AMA become aware of the copyright implications that are cropping up lately. One model manufacturer has ceased production of a P-38 Kit because lockheed is now charging higher fees for the copyright royality. My fear is that if Boeing, Lockheed, Northrop Grumman, Piper, Cessna, Beechcraft all get into this game and make producing scale kits for radio control not profitable we may see a day where there are very few scale kits. Not sure what the solution is.

Read this recent newspaper article and we should all be concerned...


Hobby shop supplier fights Lockheed, Boeing over airplane-model royalties
Philadelphia Inquirer 02/17/05
author: Tony Gnoffo

Feb. 17--Michael Bass fought this battle before -- and lost.

In 1990, Bass, who imports and distributes products for hobby shops, took on the Big 3 U.S. automakers.

Now the South Jersey businessman is taking on a chunk of the military industrial complex -- including Lockheed Martin Corp. and the Boeing Co.

The issue is similar: Should companies that make models of military aircraft pay royalties to defense contractors for the use of their creations?

Or, should the model aircraft be exempt from such royalties because U.S. taxpayers funded the development of the real things?

Bass' 1990 effort to stop automakers from claiming such royalties fizzled, largely by default. Fearing lawsuits from the likes of General Motors Corp. and Ford Motor Co., the model-makers gave in, and started coughing up fees of 5 percent to 10 percent of their wholesale prices.

That opened a floodgate of successful royalty claims, according to Bass and other members of the International Model Manufacturers Association. Now, makers of almost all model trains, planes and automobiles pay royalties to the makers of the actual vehicles.

But the model-makers still didn't pay royalties on their replicas of U.S. military aircraft. Those models weren't specifically excluded; the aircraft manufacturers just didn't ask for the royalties.

Now, they are.

Bass' company, Stevens International in Magnolia, is not a manufacturer, so it would not pay the royalties directly. But manufacturers would likely pass their costs on to Bass, and he would pass them on to his retail customers. And the retailers would pass them on to consumers.

That's an ugly chain of events for an industry that has suffered from an abundance of competition for Americans' leisure-time activities.

"The industry is under a lot of pressure," said Ed Sexton, vice president of product development for model manufacturer Revell-Monogram of Northbrook, Ill. "We compete ... with video games, TV, the Internet -- however people can spend their leisure time."

With each new generation, he said, there seems to be less interest among young people in activities that require sustained attention. The average model builder these days is a 45-year-old male, said Bob Hayden executive director of the model manufacturers association.

"There are very few kids I know out there who ... can really do intricate detail work," Hayden said. "It doesn't come naturally; it takes practice and it takes time."

The royalty demands don't always come from defense manufacturers, he said. Often, the claims are pressed by third-party licensing agencies that take a cut of the fees they collect on the behalf of trademark owners.

Among the more aggressive of them, people in the model business said, is a San Diego firm called Equity Management Inc. Company executives declined to be interviewed.

Inside his jam-packed, 40,000-square-foot warehouse on the White Horse Pike last week, Bass said the model industry has been on the wrong end of a power shift.

"When my father started in this business 40 years ago, these companies were saying, 'Please, make a model of my airplane.' Now things are a little tougher for them, and they're going after these little companies."

A Boeing spokesman said the company is merely trying to protect its interests, and consumers.

"We want to ensure that accurate, high-quality representations are provided to the public so that Boeing's reputation for precision and quality are maintained," said spokesman David J. Phillips. "While we do charge a small royalty fee, it is only to offset the administrative costs of these licensing activities, not to make a profit."

No lawsuits have been filed, but the model-makers fear that if they don't pay, they will be crushed by the defense contractors' legal horsepower.

So instead of going to court, Bass, a member of the manufacturers association's board, has taken the case to the public and to his congressman, Rep. Robert E. Andrews (D., N.J.).

"We hope to get Congress to make a law or regulation, or that by letting the sunshine in ... the Department of Defense and the manufacturers would see the light," Hayden said.

A spokesman said Andrews promised to ask Secretary of Defense Donald Rumsfeld for a clarification on the question of who owns the rights to the images of the planes -- the manufacturers or the government.

But according to several legal scholars and Boeing, it won't be necessary to distract Rumsfeld from more pressing matters to answer that question.

Courts and statutes clearly establish that contractors can retain intellectual property rights to the ideas and products they develop for the government, said Doris Long, a professor of intellectual property and Internet law at the John Marshall Law School in Chicago.

Still, said Long and other legal scholars, the claims must adhere to trademark laws that apply to everyone else. And while anything can happen in a court of law, they said, the model manufacturers might have a stronger argument at their disposal than the one they're using.

Claims of trademark protection on product design come under an area of law called "trade dress," Long explained.

To prove it had trade dress protection on the design of its aircraft, a manufacturer such as Boeing would have to show that there is some distinctive and non-functional element of the design that makes it clear it is Boeing's product.

"A good example of that is the grille of a Rolls Royce," said Roger Schechter, a law professor at George Washington University.

Because there is no Boeing grille on military aircraft, it would be hard for the company to establish trade dress rights, the professors said.

The model-makers generally don't put the aircraft manufacturer's name or logo on their products, or on the packaging, Bass said. That's largely because those names and logos aren't present or prominent on the real aircraft, he said.

Long said Boeing would be in an awkward position if it had to prove trade dress, because the aircraft are supposed to be purely functional. The company would have to "prove that the design has some nonfunctional element that says, 'This is my brand,'"

Even then, said Schechter, aircraft manufacturers might have their work cut out for them.

"Assuming I have trade dress protection," he said, "I'd have to prove ... that people who buy the models think that they are buying models made by Boeing or Lockheed.

"I don't think people are likely to think that a big company like that is branching out into the model-making business."