Lockheed demands royalties payments for F-16 models



Publication Date: 11/28/99

DALLAS (AP) - Lockheed Martin doesn't want just anybody marketing toy models of its F-16.

So for the first time, the company is licensing the name and likeness of its Fort Worth-made fighter jet and other products.

And the Bethesda, Md.-based defense titan is demanding royalties from the toy companies authorized to make and sell the products, The Dallas Morning News reports in its Saturday editions.

"The company has a lot invested in the shape of the aircraft, and there are a lot of F-16s out there," said Eric Hehs, editor of Lockheed Martin's Code One magazine in Fort Worth. "Lots of products and quality products is what they're shooting for. We don't want shabby games or toys, because that could reflect on the company."

Toy manufacturers said Lockheed Martin's licensing restrictions are now the toughest among defense manufacturers.

"To the best of my knowledge, no other contractor has done it like this," said Dan Bennett, spokesman for NovaLogic Inc., a Calabasas, Calif., company that makes online computer games. "With defense spending down, they have to find creative new avenues."

No figures were available for the number of companies that have taken out the licenses, The News reported.

Lockheed Martin officials said they have no idea how many toymakers had been turning out miniature or computerized F-16s or other products before the company began licensing.

Lockheed Martin felt it had to act because so many computer simulator games were using its jet fighters, The News reported.

"NovaLogic was already working on an F-22 simulation game, and Lockheed Martin started to make rules about trying to enforce exclusive rights to the machines they make," Bennett said. "The feeling here was that it would put the game in jeopardy."

Lockheed Martin did not enforce exclusive rights with NovaLogic, but worked with the computer game company to brand a licensed fighter simulator series.

John Harbison, an aerospace analyst with Booz-Allen & Hamilton, finds it unlikely that toy royalties will be that important to a $28 billion-a-year company like Lockheed Martin. "But every dollar helps," he said.

Lockheed Martin officials said the toy companies' royalties are modest, although they refused to discuss specifics.

Royalty contracts usually require companies to pay 1 percent to 10 percent of profits from the product being licensed.

Company officials say the licensing also will benefit toy buyers, who will get more accurate representations of the airplanes.

Critics of the defense industry view the move differently.

"It's my feeling that in addition to making a sizable profit, they want to breed a generation of kids growing up . . . to believe high-priced fighters are cool," said Luke Warren, an analyst with the Pentagon watchdog group Council for a Livable World.

The defense industry began looking at toy licensing about six years ago, when Northrup Grumman became the first to register a military trademark with the B-2 "Spirit," a second-generation Stealth fighter.

Boeing also has licensed many of its products, including the DC-3, which is known as the C-47 for military use, said Chris Ross of Equity Management Inc., the marketing services and intellectual property rights firm that represents Lockheed Martin.

AP-WS-11-27-99 1529EST


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