I received a response to my letter (posted in this news group). Here is there response (typed in my yours truly). There was no request by UP to keep the letter confidential and I don't see any private material inside, so I'm posting it to keep the r.m.r community informed. I just typed in it and spell checked. Punctuation and formatting different from the original letter and those errors are mine, notUnion Pacific's. (formatting is necessarily changed because I'm using plain text, not HTML or other formatting. The content should be identical)
I give UP credit for taking the time to read and respond to my letter. The letter below is NOT a form letter, but a thoughtful response, even if I don't agree with their position entirely. They did think about it before hand. I would be interested in hearing from model railroad manufacturers, especially small ones, regarding their experiences with the licensing program. ________________
September 30, 2003
Dear Mr. Oates,
Mr. Davidson received your letter regarding Union Pacific's licensing program and has asked me to respond. I would like to give you some history on this program to help explain our perspective.
In 2002, Union Pacific launched a nationwide campaign to re-energize the Union Pacific brand. Our "Building America" campaign has been tremendously successful and a variety of measures tell us that Union Pacific is significantly more recognizable today than it was two years ago.
By actively taking the Union Pacific brand to the public we have increased the company's value while also increasing its exposure to trademark infringement. When we launched the Building America campaign, we knew it would require much more rigid enforcement of our trademark rights. From a legal perspective, we are obligated to protect our trademarks in all areas or risk losing the right to protect them. This includes the trademarks of our historic and constituent railroads, most of which we still use as transportation marks.
We know that model railroaders are the most prolific users of our brand and generally are friends of the rail industry. Recognizing this, we spent six months crafting a licensing program specifically for the model railroad industry. I spoke with several model manufacturers and met with representatives of the Model Railroad Industry Association (MRIA) before finalizing the current program.
The royalty rates for model railroaders are extremely low, far lower than any normal rates in the licensing business, and we have established a minimum gross annual sales level to protect the smallest operations from royalty expenses. We have also waived the royalty advance for these small companies and have created an annual reporting structure to minimize their paperwork. We have made a focused effort to treat model railroad businesses according to the size of their operation so that small businesses do not pay a disproportionate fee compared to the largest users. Finally, for users who have annual gross sales of more than $1 million, we work individually to create a licensing contract that meets their needs.
We do not expect to have significant income from model railroad licensees, but we do believe it is fair to ask the model railroad industry to share some of the costs we incur to protect our trademarks. It is our hope that we will be able to work with the industry to strengthen the Union Pacific brand, an achievement that will benefit us all.
Brenda Mainwaring Director, Corporate Marketing
cc: Richard K. Davidson