Since it is now gone, it's a good thing I copied it...
Excerpt from an editorial by John Sipple....
".............It has been sent around to a large number of model rolling stock manufacturers, and it’s from BNSF. Just when we were starting to smile after the Union Pacific debacle, here we go again.
BNSF wants money, so now they’re going to try to milk our tiny industry. They end up the letter by saying, “BNSF requires entities that use our intellectual property to be licensed with us.”
That “intellectual property” is actually not only BNSF but also Santa Fe, Burlington Northern, Frisco, Northern Pacific, Great Northern, CB&Q, SP&S, and others. They state: “Our standard royalty for use of our logos and associated images is five percent of the total sales of items bearing the logos and related images of BNSF and its predecessors, with a $1,000 advance royalty payment due upon issuance of the licensing agreement.”
Later in the letter, it says, “Our goal is to participate in the value derived from the use of our logos, paint schemes, and associated images but not to keep anything bearing those logos, paint schemes, and associated images from being made or sold.”
Got the picture? There are a lot of angles on this, but let’s approach this from the angle of reality. We have a very small industry. Even the “big players” in model railroading are really not very large companies. Many companies are little more than Mom & Pop operations while others are huge with thirty employees or so. I know several companies that really just meet the needs of their employees, pay modest salaries for the management, and have little to show beyond a lease agreement and various kinds of equipment.
A thousand bucks up front? I don’t think so. Five percent of the total sales? There goes the profit margin. For many companies, they will just stop putting BNSF brands on their products, the letter’s assertion notwithstanding. We live in a very unstable economy, and the others who go along with BNSF may find themselves out of business.
What BNSF is doing is not illegal, but it does have the joyful property of the biggest kid in school shaking down the kindergartners for their milk money. It is a prime example of corporate arrogance, where one division or department in a company sets a course of action that seems perfectly reasonable to them, even if they have no idea what impact they are having at the other end.
Of course, we’ve been here before. In 2002, Union Pacific went on the warpath with the whole business of trademarks and other intellectual property, that last being an oxymoron if ever there was one. By 2005, it had become clear that UP had dug themselves into a hole where their licensing program was costing far more than it was taking in or was ever likely to take in. Not to take anything away from Mike Wolf’s masterful victory over them on the legal stage, but they already had some serious doubts and legal reversals fueling the desire to settle. Don’t be surprised if BNSF doesn’t find itself down that same road.
What did UP learn that BNSF hasn’t so far? Union Pacific was trying to get its brand up in the pantheon of big-time trademarks such as “GAP” and “Tommy Hilfiger.” I don’t know many kids were burning to spend $125 for a T-shirt with the “Union Pacific” brand just to make their friends jealous, but some folks at UP seemed to think this was plausible. However, the Intellectual Property people told them they’d have to plug the leaks, which is how they described the railroad hobbies. Where they are now makes a lot more sense. They only have to control their trademarks; they don’t have to be paid, which is good because they weren’t going to get much, anyway.
And that brings us back to BNSF. Guess what? BNSF is lining up to be a corporate sponsor of the Super Bowl in 2011. Along with high-power advertising, they get a bunch of tickets to scalp, and a skybox in the stadium. What’s the catch? I’m guessing the Intellectual Property people have told BNSF they need to plug their leaks. Their net profit will be a ton of bad press and very little cash inflow. They could save themselves a lot of grief if they’d just give out free licenses in return for an application that proves they have control of their brands. BNSF needs to realize there simply isn’t enough pie for them to get any unless they expand the pie first."
