When he hit the ground in South Korea, however, he did benefit from prompt and diligent attention from both his Asian business partner and South Korean authorities. Investigations pinpointed a former designer of MTH trains at Samhongsa who had moved on to become chief engineer at a rival company called Korea Brass. The former designer confessed to receiving stolen MTH designs on computer disks from accomplices at Samhongsa. It was a thoroughly modern theft: Before computer design, a single die-cast train engine might have required more than 200 desktop-covering drawings, and copies would have been as easy to sneak out the door as a rolled-up throw rug. Nowadays that amount of digitized information can fit on a USB flash drive, the sort of thing people carry on key chains.
"The irony of trade-secret theft is that your entire company can be stolen over the weekend, and you come in on Monday and everything's still there."
"The irony of trade-secret theft," says R. Mark Halligan, a lawyer with Welsh & Katz in Chicago and a professor in trade-secret law at the John Marshall School of Law, "is that your entire company can be stolen over the weekend, and you come in on Monday morning and everything's still there. Somebody simply downloads your entire hard drive."
Samhongsa's former designer was convicted of trade-secret theft, as was the head of Korea Brass, who was found by a South Korean appellate court to have paid for the stolen designs and used them in the manufacture of trains it sold to Lionel. (A total of four people were convicted. The harshest sentence was a jail term of several months.) The link to Lionel was a U.S.-based Korea Brass sales agent named Yoo Chan Yang, who happened to be in South Korea the day of a February 2000 raid of Korea Brass' office and whose computer Korean agents seized. Yang's hard drive contained e-mail correspondence with a high-level Lionel employee that pointed to Lionel as a knowing recipient of the stolen designs and some of MTH's production schedules as well.
By any reckoning, those were smoking guns. When Wolf tried to interest the U.S. Department of Justice in prosecuting the case under the Economic Espionage Act of 1996, however, he got an ear, but no action. "The act can be a powerful tool, but it's judicial discretion," says Halligan. "I have taken half a dozen trade-secret cases to the FBI. Not one has been to the courtroom." Prosecutions are rare in part because of 9/11-altered priorities and resources and in part because there are bigger corporate fish to fry. Halligan's monitoring of trade-secret cases indicates a bit more than 50 instances of charges being brought in the nine years since the act's inception, generally in cases that tend to be slam dunks. And prosecuting Lionel would not be easy. Not only had the evidence trail begun on the other side of the globe, but it would involve putting an icon on trial -- not quite on the order of prosecuting Santa Claus, as in Miracle on 34th Street, but surely not a case coveted by prosecutors with political ambitions.
Nonetheless, Wolf wanted Lionel brought to justice. In truth, he wanted more. He wanted Lionel brought to its knees. He was fighting for the survival of his company and also for a measure of revenge. He had for a time maintained a partnership with Lionel, had even thought he might one day run the company, and now the competition between MTH and Lionel was bitter in a way that perhaps only relations between former partners can be. In the spring of 2000, Wolf brought a civil action against Lionel, seeking $29 million in damages for misappropriation of trade secrets. The suit also named Korea Brass and Yoo Chan Yang as defendants.
The industry was aghast. "It's the O.J. Simpson case of the model-railroad industry," says Fred Hamilton, executive director of the Model Railroad Industry Association, a trade group. "Everybody's supposed to be doing it for fun -- nobody's supposed to be mad at anyone else, nobody's supposed to sue anybody else. It's a hobby."
"If you want to get Freudian, this is the boy seeking to slay the father."
Ron Hollander, author of All Aboard: The Story of Joshua Lionel Cowen & His Lionel Train Company, offers another metaphor. "If you want to get Freudian," he says, "this is the boy seeking to slay the father. What would be the ultimate train empire for Mike Wolf? To supplant and replace Lionel." Indeed, Wolf has said that he'd like to own or run the company that remains synonymous with what aficionados call the World's Greatest Hobby. Had things played out differently back in the late '80s and early '90s, he might already have accomplished that goal.
Back then, he'd actually hitched his business to Lionel. In the mid-'80s, Lionel decided to resurrect its old tin plate designs. It approached MTH's manufacturer, Samhongsa. "They wanted my supplier to dump me," says Wolf. But Samhongsa stuck by him, alerted him to the incursion, and told Lionel it would deal with the company only through MTH. Lionel eventually came around and welcomed Wolf aboard in 1987. "We started building 100% of what they called at the time Lionel Classics," Wolf says. "They'd never built their reproductions before. We were painting and assembling them here in Maryland at the beginning; then the volume grew too big and we transferred that to Samhongsa."
Wolf wrote to his customers, explaining the new order of business. MTH was now a subcontractor making trains for Lionel and had stopped making trains under its own name. And, as part of the deal, Wolf's company became a Lionel distributor, selling all models of Lionel trains. Wolf traveled frequently to Lionel headquarters in Chesterfield, Mich., and began taking part in product and marketing discussions. He says he felt "almost like an employee" at the company that first put electric trains under the Christmas tree.
For a time Wolf had a close relationship with Lionel's then-owner, a Michigan businessman and train enthusiast named Richard Kughn, who had acquired Lionel in 1986 from General Mills. According to Wolf, Kughn sought his advice on marketing decisions and running the business -- and received Wolf's very straight answers. Kughn, who declined to comment, apparently didn't care for much of Wolf's advice -- as when Wolf told Kughn that Lionel's ranks included a lot of deadwood that needed to be cleared. Subtlety has never been Wolf's strongest suit. "I guess it's one of my downfalls," he says. "I'll tell you what I think and tell you how I feel. If you don't like it, at least we know."
