Exclusive Licences to Manufacture Prototypes

jpendle · February 09, 2019, 04:22:10 PM

Hi All,

This came up in the thread talking about Kato maybe entering the UK market.

Dapol have an 'exclusive' licence from DRS or Stadler to produce the CL68 loco for the UK market.
Hornby have an 'exclusive' licence to produce the CL800 (and derivatives) for the UK market.

How does this work?

Let's assume that Hornby have no intention of producing a CL800 in any other scale than OO. Does this mean that another manufacturer could argue that as there is no intent to use the licence for any other scale they should be allowed to do one in N, or O, or Gauge 1 for that matter?

If the Dapol licence includes the CL88 but they choose not to make one, again does this allow other manufacturers to step in to fill the gap.

I'm not well up on this but it would seem to me that a time unlimited licence would violate competition law in some way.

It concerns me that with an 'exclusive' licence a manufacturer could bring out any old 'tat' safe in the knowledge that there can be no competition.

There have been a number of unfavourable reviews of the Dapol Pacer, but if there is sufficient demand a different manufacturer could bring out a better version.

What if the CL68 had been equally disliked? It's Dapol or nothing for the CL68.

Discuss.

John P

Richard G Dallimore · February 09, 2019, 04:53:14 PM

Companies today are aware of the promotional value or damage that any reproduction of their property can bring. Cl.68 has cost DRS a fortune to develop and deliver on to the UK network and their brand is well guarded, hence issues with the Cl.20 variants in model form. Any official reproduction of a modern copyrighted livery will need consent and as such a licence, when that company has also developed a whole vehicle or variant obviously that will be protected. Not least in that if you want to measure one and photography it you will need access which leads to an agreement. Some seem to be more corporate savvy than others but some are buying off the shelf and changing branding more regular. These companies are sometimes involved in parts of development of the model and may not allow production of "toy train" if it is poor quality as it will damage there brand.

woodbury22uk · February 09, 2019, 05:16:31 PM

I would be surprised if Hornby have an all-scales and all-markets licence for the Class 800. Hitachi are probably savvy enough not to grant one.

I have pointed out elsewhere that licences are often scale specific, so in the model vehicle world the New Routemaster bus is licensed in 1/76 by Corgi, 1/148 by Oxford Diecast, 1/110 by Tiny HK.

njee20 · February 09, 2019, 06:20:07 PM

I was equally surprised, but apparently it's the case. Was discussed in some length on Facebook recently.

PLD · February 09, 2019, 06:49:37 PM

Very often it's about much more than giving a model manufacturer a monopoly on production of a model.

As eluded to above, it usually includes a degree of input and cooperation from the prototype manufacturer and/or operator such as access to official works drawings, permission to replicate trademarked livery elements etc and sometimes a veto to block release of a sub-standard product. This has advantages for the operator wanting to protect their image, the model manufacturer who is assured of opportunity to recoup investment in the highest quality and not rushed to market to beat the competition and the model purchaser who is more likely to get the most accurate possible model.
It would in fact be very difficult (and unlikely) to stop AN Other manufacturer producing a similarly shaped Blue Box and sticking the number 68001 on the side (based on whatever drawings they could cobble together for themselves from information in the public domain and snapshots taken from a public place), but this would obviously be at a disadvantage to the model with official input and couldn't reproduce the trademarked livery without the TM owners permission...

Quote from: jpendle on February 09, 2019, 04:22:10 PM
Dapol have an 'exclusive' licence from DRS or Stadler to produce the CL68 loco for the UK market.
Hornby have an 'exclusive' licence to produce the CL800 (and derivatives) for the UK market.

It is reasonably common knowledge that Dapol's agreement for the 68 gives exclusive access to the official drawings and rights to reproduce DRS and other specified liveries on it in any scale up to IIRC 0-gauge. But does anyone know for certain the terms and scope of Hornby's deal for the IEPs?? (I don't recall it ever being publicly confirmed)

Quote from: woodbury22uk on February 09, 2019, 05:16:31 PMI have pointed out elsewhere that licences are often scale specific, so in the model vehicle world the New Routemaster bus is licensed in 1/76 by Corgi, 1/148 by Oxford Diecast, 1/110 by Tiny HK.

The parallels to model buses are a good example - While those listed are the official licenced version of the nRM, there have been other 'look alikes' in assorted sizes from the far east (some more alike than others) but in plain Red or with fictional fleetnames.
There was also a long period when no models appeared in the (then) current livery of one of the big groups - this was because they were demanding a royalty on every model sold (allegedly around 10% of what a typical 1:76 scale model retailed for at the time) and the manufacturers all boycotted them and concentrated on other operators who saw the marketing value in models in their livery rather than thinking it a cash cow.

geoffc · February 09, 2019, 07:22:26 PM

Quote from: woodbury22uk on February 09, 2019, 05:16:31 PM
I would be surprised if Hornby have an all-scales and all-markets licence for the Class 800. Hitachi are probably savvy enough not to grant one.

Talking to Dapol, they stated that the licence that Hornby has prevents them making a N version, that came from top management.

Geoff

exmouthcraig · February 09, 2019, 07:33:01 PM

Presumably as Hornby can make an N gauge model under the Arnold name?

?

njee20 · February 09, 2019, 08:22:49 PM

They can make it under any brand they want, but yes, one presumes it'd be Arnold branded.

I do wonder if the condition of the full exclusivity was that they would do an N gauge one. Otherwise I don't see why Hitachi would grant it. The fact it doesn't seem forthcoming may mean there's more flexibility in the contract.

Newportnobby · February 09, 2019, 08:57:37 PM

So how does this work with, for example, the Class 92 being developed by both DJ Models and RevolutioN Trains or are there no livery clashes and each has the necessary licence where applicable?

PLD · February 09, 2019, 09:28:24 PM

Quote from: Newportnobby on February 09, 2019, 08:57:37 PM
So how does this work with, for example, the Class 92 being developed by both DJ Models and RevolutioN Trains or are there no livery clashes and each has the necessary licence where applicable?

Neither has (nor claims to have) any 'exclusivity' agreement with either WABTEC/Brush Traction or individual operators (though both hint at cooperation) and both will presumably have sought and obtained or expect to obtain (non-exclusive) permission from the relevant rights holders for all the liveries they propose to replicate...

Intercity · February 09, 2019, 09:49:53 PM

I would never expect this to happen, but if Hornby/Arnold hold the license to an N gauge IEP, and they decide the return profit isn't viable can they sub lease the license to another manufacturer?

njee20 · February 09, 2019, 10:13:50 PM

Definitely, I wouldn't be at all surprised if that happened.

Snowwolflair · February 10, 2019, 12:40:47 AM

My guess is that there is a pay or lapse clause, or a first refusal clause in the case of Hornby. By that I mean that each model produced pays a royalty with a minimum return specified that will cost if they don't make a model. The second aspect is if another manufacturer wants to make then Hornby has to pay to stop them but has first refusal.

the other thing to keep in mind is livery. Kato may have already tied up Hitachi for all their trains, preceding any rights Hornby have. They would still need to have permission for the liveries and railway companies would be very unlikely to grant an exclusive right for all scales.

Foster · February 10, 2019, 03:18:07 AM

This sort of broblem with railway companies refusing to allow their loco's colour schemes to be used on models, came up years ago in America. This caused the model industry to just stop producing liveries of the particular companies.
The model makers and enthusiasts pointed out that the models gave the companies free advertising, and that the companies should be paying the model-makers, so eventually the model world was allowed to produce all the liveries.
All this nonsense was caused by the "Accountants & Lawyers" who seldom seem to have any common sense.

TylerB · February 10, 2019, 03:36:37 AM

I sometimes wonder if someone somewhere is holding on to the licence for 'Electrostar' EMUs in all their variants, and refusing to let it be made. It's surely the most popular type of train on the network today, in terms of sheer numbers in use (if not necessarily everyone's cup of tea), yet, to the best of my knowledge, no one has produced any of them, in any scale, at any time. Anyone have any info?