MIKE'S TRAIN HOUSE, INC.,
Plaintiff,
vs.
LIONEL L.L.C.,
KOREA BRASS, and
YOO CHAN YANG,
Defendants.

Case No. 00-CV-71729
Judge John Corbett O'Meara
Magistrate Judge Donald A. Scheer

GUREWITZ & RABEN, P.C.
Harold Gurewitz (P14468)
Margaret M. Raben (P39243)
Attorneys for Plaintiff
333 West Fort Street, Suite 1100
Detroit, Michigan 48226
(313) 628-4740

STEVENS & LEE, P.C.
Jeffrey D. Bukowski
Attorneys for Plaintiff
111 North Sixth Street
Reading, PA 19603-0679
(610) 478-2215

KOHN, SWIFT & GRAF, P.C.
Robert A. Swift
Robert J. LaRocca
Joanne Zack
Attorneys for Plaintiff
One South Broad Street, Suite 2100
Philadelphia, Pennsylvania 19107
(215) 238-1700

DYKEMA GOSSETT PLLC
Joseph H. Hickey (P41664)
Patrick F. Hickey (P36648)
Dante A. Stella (P60443)
Attorneys for Defendant Lionel L.L.C.
39577 Woodward Avenue, Suite 300
Bloomfield Hills, MI 48304-5086
(248) 203-0555

HOWARD & HOWARD ATTORNEYS, P.C.
C. Douglas Moran (P46405)
Attorneys for Defendants Korea Brass Co. and
Yoo Chan Yang
39400 Woodward Avenue, Suite 101
Bloomfield Hills, MI 48304-5151
(248) 723-0330

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JUDGMENT ON JURY VERDICT
AND NOW, this 3rd day of November, 2004, following the jury’s verdict and the
Court’s Opinion and Order of November 1, 2004 denying defendants’ motions for new trial and for judgment as a matter of law, judgment is hereby entered on the jury verdict rendered June 7, 2004 in the above matter as follows:

Judgment is entered in favor of plaintiff Mike’s Train House, Inc. (“MTH”) and against
defendants Lionel L.L.C. (“Lionel”), Korea Brass Co., Inc. (“Korea Brass”) and Yoo Chan Yang (“Yang”), jointly and severally, in the amount of $25,773,485.00, which amount represents MTH’s lost past and lost future profits resulting from defendants’ misappropriation of MTH’s trade secrets.

Judgment is entered in favor of plaintiff MTH and against defendant Lionel in an
additional amount of $12,834,820.00, which amount represents Lionel’s unjust enrichment from its misappropriation of MTH’s trade secrets. Thus, the total judgment entered in favor of plaintiff MTH and against defendant Lionel is $38,608,305.00.
Judgment is entered in favor of plaintiff MTH and against defendants Korea Brass and
Yang in an additional amount of $2,167,440.00, which amount represents Korea Brass’s and Yang’s unjust enrichment from their misappropriation of MTH’s trade secrets. Thus, the total judgment entered in favor of plaintiff MTH and against defendants Korea Brass and Yang is $27,940,925.00.

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MTH shall not be permitted to collect from any defendant more than the total amount of
the judgment entered against that defendant – $38,608,305.00 against Lionel and $27,940,925.00 against defendants Korea Brass and Yang. Furthermore, MTH shall not be permitted to collect more than an aggregate amount of $40,775,745.00 from all of defendants combined.

Interest shall accrue on the above judgment amounts at the legal rate from the date of
entry of this judgment.

INJUNCTION AND ORDER DENYING PLAINTIFF’S MOTION FOR TEMPORARY RESTRAINING ORDER

This matter comes before the court on the July 21, 2004 motion for final injunction filed
by plaintiff Mike’s Train House (“MTH”). Defendants filed responses August 11, 2004; and Plaintiff filed a reply August 27, 2004. Plaintiff subsequently filed a motion for temporary restraining order and preliminary injunction September 2, 2004. Defendant Lionel filed a response September 23, 2004; and defendants Korea Brass and Yoo Chan Yang filed a response September 27, 2004. Plaintiff filed reply briefs October 4 and 6, 2004; and oral argument was heard October 19, 2004.

In cases in which both legal and equitable issues are presented in a single case, the jury
should determine the issues common to both claims; and the jury’s verdict operates as a finding of fact binding on the trial court in its determination of the equitable claims. Molton Co. v. Eagle-Picher Indus., Inc., 55 F.3d 1171, 1175 (6th Cir. 1995). This includes all determinations both explicit and implicit in the jury verdict. See Los Angeles Police Protective League v. Gates, 995 F.2d 1469, 1473 (9th Cir. 1993).

Following an 18-day trial in this case, the jury rendered a verdict after determining that
Defendants had misappropriated trade secret design drawings for a number of trains which Defendants had manufactured and sold in the United States. Consistent with the evidence presented at trial and the jury’s verdict and award of damages, the court finds that Defendants misappropriated trade secrets for the following O gauge, zinc die cast engines:

1. Baby Hudson, Baby Pacific, Starter Set Hudson, Jr.
2. Scale C & O Allegheny
3. Scale Union Pacific Big Boy
4. Scale N & W Class A
5. Baby PRR K-4
6. Scale Lumber Shay
7. Scale PRR T-1
8. Scale Challenger
9. O Gauge Tinplate Hiawatha
10. Scale NYC Hudson
11. N & W Auxiliary Tender
12. UP Auxiliary Tender
13. Baby Challenger
14. Scale Dryfuss Hudson
15. Scale PRR S-2 Turbine
16. Scale PRR K-4
17. Baby 0-8-0
18. Scale Empire State Express
19. Baby Blue Comet
20. Tinplate 392E

In addition, the court finds that Defendants misappropriated trade secrets regarding
MTH’s speed ratio formula and lost wax castings.

Accordingly, it is hereby ORDERED that Defendants are PERMANENTLY
ENJOINED from:
(A) USING existing design drawings and/or existing tooling to manufacture the above
engines;
(B) USING existing design drawings or tooling for the above engines to manufacture any
other engine or engine part; and
(C) USING existing design drawings or molds for lost wax castings.
Defendants are not enjoined from re-manufacturing the above models of engines
provided that Defendants use independent means or legitimate reverse-engineering to determine the dimensions, tolerances, and materials for the design drawings and tooling.

It is further ORDERED that Defendants RETAIN all records of the independent means or reverseengineering used if they re-manufacture the above models.
It is further ORDERED that Defendants are PERMANENTLY ENJOINED from
USING the misappropriated speed ratio formula currently used in their trains in further
production of their trains. Defendants may use another formula which they discover or invent, but they may not use Plaintiff’s speed ratio formula.

It is further ORDERED that Plaintiff’s September 2, 2004 motion for temporary restraining order and preliminary injunction is DENIED as moot.

ORDER DENYING DEFENDANTS’ MOTIONS FOR DIRECTED VERDICT
This matter comes before the court on defendant Lionel’s June 10, 2004 motion to
dismiss or for directed verdict and defendants Korea Brass and Yoo Chan Yang’s June 17, 2004 motion for directed verdict. No response was filed, and no oral argument was heard.

This case was tried before a jury for approximately four weeks. Defendants moved for
directed verdict at the close of proofs, and the court took those motions under advisement.

Defendants filed briefs in support of their motions after the verdict was rendered.
Rule 50(a)(1) of the Federal Rules of Civil Procedure provides that “[i]f during a trial by
jury a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue, the court may determine the issue against that party and may grant a motion for judgment as a matter of law against that party with respect to a claim or defense that cannot under controlling law be maintained or defeated without a favorable finding on that issue.”

Defendant Lionel argues the court lacks subject matter jurisdiction over Plaintiff’s claims
brought under the Michigan Uniform Trade Secrets Act because Plaintiff failed to present any evidence to establish that any misappropriation of trade secrets occurred in the United States.

Lionel further argues that it is entitled to a directed verdict because Plaintiff failed to present a legally sufficient evidentiary basis for a reasonable jury to conclude that Plaintiff established the following essential elements of its claim against Lionel: 1) trade secret status and ownership of the trade secrets, 2) misappropriation of the trade secrets, 3) that the information it seeks to protect is anything other than readily ascertainable information and industry knowledge, 4) any trade secret protection was not lost when MTH publicly disclosed its finished products, 5) MTH took reasonable security measures to protect the secrecy of the information at issue, and 6) that Lionel knowingly acquired or used any of the trade secrets.

All of these issues were presented by Lionel in various pre-trial motions and ruled upon
by the court. A directed verdict is appropriate only when no material question of fact exists upon which reasonable minds could differ. In this case the evidence Plaintiff presented at trial was legally sufficient for a reasonable jury to find for Plaintiff. Therefore, the court will deny defendant Lionel’s motion to dismiss or for directed verdict.

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Defendants Korea Brass and Yang also move for directed verdict based on issues they
brought before the court prior to trial. They argue that the designs and drawings at issue did not constitute trade secrets and that the court lacks jurisdiction to enforce the Michigan Uniform Trade Secrets Act on defendants KB and Yang based on the principle of “extraterritoriality.”

Again, because Plaintiff presented at trial legally sufficient evidence for a reasonable jury
to find for Plaintiff, the court will deny Korea Brass and Yang’s motion for directed verdict.

ORDER

It is hereby ORDERED that defendant Lionel’s June 10, 2004 motion to dismiss or for
directed verdict is DENIED. It is further ORDERED that defendants Korea Brass and Yang’s June 16, 2004 motion for directed verdict is DENIED.

Q: How much education did the suspect receive?

A: I graduated Yoohan College majoring in Mechanical Design in February 1995.

Q: Does the suspect have any job experience?

A: I worked for Sam Hong Sa until July 1999, and in the following month in August, I joined Korea Brass (#B-201 Hagyae TechnoTown, Hagyae-dong, Nowon-ku, Seoul) as a manger and work there still.

Q: Does the suspect have a criminal record?

A: Not relevant.

Q: Does the suspect know Lee, Se Yong, Lee, Chun Sik, Choi, Dae Yul, and Kim, Sun Chul? If so, what is the nature of the relationship?

A: I became acquainted with them upon joining Sam Hong Sa’s Modeling Division in 1990. Lee, Se Yong is president of the company, Lee, Chun Sik is senior executive of Production Team 2, Choi, Dae Yul is senior executive of Planning and Coordination Office, and Kim, Sun Chul is head of the Designing Team. No other relatives.

Q: Does the suspect know suspects Cho, Sung Won, Ahn, Sun Gap, Sim, Heung Bo and Jeung, Bok Dong?

A: Cho, Sung Won is the president of Korea Brass, the company that I work for, and as for the others: Ahn, Sun Gap used to be my direct manager in Sam Hong Sa Modeling Division and someone who I am currently working with at Korea Brass; and Kwak, Byung Ki and Jeung, Bok Dong were my colleagues in Sam Hong Sa Modeling Division.

Q: What was the suspect’s job at Sam Hong Sa?

A: I started to work for Sam Hong Sa in 1990. Sam Hong Sa is divided into 4 divisions: Modeling, Bidet, Motor, and GS. I worked in the Modeling Division; more specifically, my job was to draw plane figures (2D) of locomotive models.

Q: Is it true that the suspect received miniature locomotive drawings from Kwak, Byung Ki?

A: Yes, it is.

Q: Which drawings were transferred at what time, place and for how much?

A: 1) On February 16, 2000, around 14:30, at Ahn, Sun Gap’s Jin Planning Office located in Jangan-dong, Kangbook-ku, Seoul, I received the completed miniature locomotive drawing of A AUX.TENDER (type 025), which was sent to my email address DJ971@chollian.net, via a computer provided by Korea Brass. On that morning, I met Kwak, Byung Ki at an unidentified coffee shop near Ewha University Hostpital in Dongdaemun-ku. I revised the drawing that Kwak, Byung Ki brought and handed him an envelope with 500 thousand won, and later received the final data via email. 2) On the 17th of the same month, at 20:46, in the same office, I received BIG BOY AUX. TENDER (type 026) data via the same email address. On the morning of the 17th at the same coffee shop, I met Kwak, Byung Ki again and went through the same procedure; only this time, the envelope contained 400 thousand won. 3) On the 22nd of the same month, at 23:42, I received SCALE PRR T-1 (4-4-4-4) via the same email address but did not make any payments this time.

Q: Give us the full account of how you came to transfer the drawings.

A: Ahn, Sun Gap ran Jin Planning, which provided miniature locomotive drawings for Korea Brass. Because we worked together at Sam Hong Sa, he asked me to find someone who could design miniature locomotive models and said that compensation would be made accordingly. I thought of Kwak, Byung Ki, a colleague at Sam Hong Sa, and called him up. He accepted and sent the aforementioned drawing. In case 1), I called Kwak, Byung Ki, asked if he could design A AUX.TENDER (type 025) which was outsourced by Lionel, a US company, and said compensation would be made accordingly. Kwak, Byung Ki accepted, so I emailed the general drawing of Sam Hong Sa’s A AUX.TENDER right side view and other data including 015 tender truck, truck ballstar, and windows. He made the drawings based on these materials and sent them to me. In case 2), I called Kwak, Byung Ki again, this time for Sam Hong Sa BIG BOY AUX.TENDER. I made the request at about the time he finished the previous drawing. He accepted, and I emailed the general drawing data of Sam Hong Sa BIG BOY AUX. TENDER. He made the drawing based on these materials and emailed me back. The same procedure took place for case 3). I called to ask for the general drawing of Sam Hong Sa T-1 design and Kwak, Byung Ki sent it via email.

Q: Do all of the three drawings mentioned above belong to Sam Hong Sa?

A: Regarding cases 1) and 2), I sent Kwak, Byung Ki a computer diskette with the basic drawings and he completed the drawings at home. Kwak, Byung Ki emailed drawing 1) via company computer and emailed drawing 2) from home. Drawing 3) was done by Jeung, Bok Dong, an employee at Sam Hong Sa, which Kwak, Byung Ki secretly emailed to me.

Q: Is this that drawing 3) of Sam Hong Sa’s miniature locomotive designed by Jeung, Bok Dong which the suspect received?

(At this point, the Prosecutor shows to the suspect the copy of the drawing by Jeung, Bok Dong, which was submitted by Choi, Jun Yul on January 18, 2000, and files it in the back of this deposition.)

A: Yes, that is correct.

Q: Is this drawing a slight revision of drawing 3) done at Korea Brass where the suspect works.

(At this point, the Prosecutor shows to the suspect the drawing confiscated from Korea Brass office, and files it in the back of this deposition.

A: Yes, that is the drawing that I did based on the data of Jeung, Bok Dong’s general drawing but with the outline erased.

Q: Sam Hong Sa planned to sell the miniature locomotive drawing 3 to the US. Much damage was done to Sam Hong Sa as this drawing was transferred to the suspect’s company. What do you have to say?

A: I am sorry. However, I only referred to the aforementioned T-1 drawing and production of miniature locomotive never took place.

Q: Drawing 3) is valued higher than drawings 1) and 2), and so a bigger compensation must have been made to Kwak, Byung Ki. What do you think?

A: Except for the 900 thousand won for drawings 1) and 2), further compensation was not made.

Q: How did the suspect know of drawing 3) by Jeung, Bok Dong at Sam Hong Sa and ask Kwak, Byung Ki for it?

A: Ahn, Sun Gap told me that Sam Hong Sa completed its T-1 design and asked to see it. I called Kwak, Byung Ki and asked for the T-1 design. Kwak, Byung Ki said he would and emailed me the data.

Q: Why did the suspect, who was a manager at Korea Brass, go to work at Ahn, Sun Gap’s Jin Planning instead of at Korea Brass?

A: President Cho, Sung Won told me to help Ahn, Sun Gap with designing and dispatched me to Jin Planning.

Q: Tell us about Jin Planning: what kind of business it is in, number of employees, turnover, etc.?

A: Ahn, Sun Gap was the only person working and I was sent to assist him. There was no target or record of a turnover.

Q: Ahn, Sun Gap and the suspect received orders and salaries from President Cho, Sung Won. Is this true?

A: Yes, that is correct.

Q: What did you do with the aforementioned miniature locomotive data (cases 1, 2, and 3)?

A: I received them from Kwak, Byung Ki and gave them to Ahn, Sun Gap, and Ahn, Sun Gap then took them over to Cho, Sung Won’s Korea Brass.

Q: From whom did the suspect receive the money envelopes that were given to Kwak, Byung Ki?

A: I received the money envelopes from Ahn, Sun Gap and gave them to Kwak, Byung Ki. I believe Ahn, Sun Gap originally received them from Cho, Sung Won.

Q: Is there a miniature locomotive design and research team at Korea Brass similar to that at Sam Hong Sa?

A: No.

Q: Tell us about Korea Brass: what are its operations, number of employees, turnover, etc.?

A: Korea Brass runs sales and manufacturing operations with about 60 employees. I am not sure about its monthly turnover.

Q: Are there any other materials disclosed by the suspect?

A: No.

Q: The suspect should not have taken out business secrets of Sam Hong Sa, a competition of Korea Brass, and misused them. What do you have to say?

A: I am sorry.

Q: Did the suspect seek approval from Lee, Se Yong before or after receiving the aforementioned miniature locomotive design data of Sam Hong Sa?

A: No.

Q: Do you have anything else to say?

Statement:
About 2/3 of the 1.44 M diskette had data saved in it, but I do not know the contents of the data.

I handed it over on my way home from work, in a coffee shop on the second floor of a store near the subway station in Kayang-dong. That was around nine in the evening. I handed it over to Manager Ahn (Ahn, Sun Gap) without thinking twice.

I did not know Ahn was designing for other companies. I desperately wanted to outsource Sam Hong Sa drawings, and ended up making this mistake.

I found out that Ahn was doing other drawings near the end of October. I now know that I should have consulted my boss beforehand.

This data (LOT-56) is two-cylinder type – the first type that I worked on.

February 21, 2000
Jeung, Bok Dong

Q: How much education did the suspect receive?

A: I graduated Shingu College majoring in Computerization in 1993.

Q: Does the suspect have any job experience?

A: After graduation in 1993, I worked for my uncle at Jinyang Electrical Locomotiveering and was in charge of designing metal molds for audio case. In 1994, I went to work for another uncle at Shinil Metal, which makes metal cast molds, and was put in charge of mold designing. In July 1996, I joined Sam Hong Sa export industrial complex 3 in Kasan-dong, Kumchun-ku, Seoul, and designed miniature locomotives in the Modeling Division. I made assistant manager in March 1999 and work there still.

Q: Does the suspect know Lee, Se Yong, Lee, Chun Sik, Choi, Dae Yul, and Kim, Sun Chul? If so, what is the nature of the relationship?

A: I became acquainted with them upon joining Sam Hong Sa’s Modeling Division in 1996. Lee, Se Yong is president of the company, Lee, Chun Sik is senior executive of Production Team 2, Choi, Dae Yul is senior executive of Planning and Coordination Office, and Kim, Sun Chul is head of the Designing Team. No other relatives.

Q: Does the suspect know suspects Cho, Sung Won and Ahn, Sun Gap?

A: I have no idea who Cho, Sung Won is. Regarding Ahn, Sun Gap, he was a my direct manager when I was working for Sam Hong Sa’s Modeling Division until he resigned in October 1998.

Q: What was the suspect’s job at Sam Hong Sa?

A: Sam Hong Sa is divided into 4 divisions: Modeling, Bidets, Motor, and GS. I worked in the Modeling Division. I worked in the Modeling Division and my job was to design miniature locomotives.

Q: Is it true that the suspect transferred miniature locomotive drawings to Ahn, Sun Gap?

A: Yes, it is.

Q: When and where?

A: On September 14, 1999 at 21:00 in a coffee shop on the second floor of near the unidentified subway station in Kayang-dong, Kangsuh-ku, Seoul.

Q: Which of the drawings were transferred?

A: In the afternoon of September 14, 1999, inside the designing office of Sam Hong Sa Modeling Division, I copied STEAM LOCOMOTIVE OGUAGE TRAIN-56, the drawings of miniature locomotives designed on a computer, to a diskette received from our outsourcing molder. That evening, I handed a CAD DATA diskette with those drawings to Ahn, Sun Gap.

Q: Is this the drawing that the suspect transferred to Ahn, Sun Gap?

(At this point, the Prosecutor shows the drawings attached to pages 84 and 93 of the deposition.)

A: Thank you. Yes, those are the drawings handed over to Ahn, Sun Gap, except that the ones that you have just shown me are fully-completed drawings and the ones that I gave to Ahn, Sun Gap were only half-completed.

(At this point, the Prosecutor shows the drawing filed as page 9 of the deposition.)

Q: Is this the drawing that the suspect transferred to Ahn, Sun Gap?

A: Yes, it is the drawing that was handed over to Ahn, Sun Gap, but this one has been worked on by about 30% more compared to the one I gave to Ahn, Sun Gap.

Q: Give us the full account of how you came to transfer the drawings.

A: There are two types of miniature locomotives: two-cylinder and one-cylinder. Ahn, Sun Gap asked for the harder design, which is of two-cylinder, and I gave him a diskette with the half-completed drawing of STEAM LOCOMOTIVE OGUAGE toy. In return, Ahn, Sun Gap was to outsource its miniature locomotives to Sam Hong Sa.

Q: Did you seek approval from Sam Hong Sa President Lee, Se Yong when sending the miniature locomotive drawing to Ahn, Sun Gap?

A: No, I transferred it without the knowledge of the President or senior executives.

Q: Why did you hand over the drawings without seeking approval from President Lee, Se Yong or other executives?

A: I know I should have reported it to the President, but I made the transfer without his approval nevertheless.

Q: When the suspect handed over the CAD DATA with these drawings to Ahn, Sun Gap, who at that time was working for Korea Brass, the suspect had disclosed company drawings to Sam Hong Sa’s competition which he should not have done, what do you have to say?

A: I thought Korea Brass was a Sam Hong Sa’s subcontractor, not its competition.

Q: It seems that the suspect was to receive other pecuniary compensation for handing over the CAD diskette to Ahn, Sun Gap. Is this true?

A: No, I gave Ahn, Sun Gap the diskette in return for securing subcontracts.

(At this point, the Prosecutor shows the suspect a copy of his wife Lee, Jae Ok’s bankbook at Choheung Bank and files it in the back of the deposition.)

Q: On October 5, which is a month after the suspect handed over the diskette to Ahn, Sun Gap, Ahn, Sun Gap remitted 2 million won to this bankbook of the suspect’s wife. Is this compensation received by the suspect for handing over the diskette with the drawings to Ahn, Sun Gap?

A: That was a repayment of the money I lent to Ahn, Sun Gap when we were working together at Sam Hong Sa.

Q: When was the loan made?

A: Around July or August of 1998.

Q: Was an IOU received for it?

A: No, there is no IOU.

Q: Can you explain why the loan, which was made when the suspect and Ahn, Sun Gap were working together, was paid back after Ahn, Sun Gap resigned and a month after the suspect transferred the drawing diskette to Ahn, Sun Gap?

A: Ahn, Sun Gap had not received his severance pay and so could not pay me back until a month later.

Q: In return for handing over the drawing diskette and other business secrets to Ahn, Sun Gap, the suspect was to receive a huge compensation and a certain percentage of profit accrued in the future. Is this true?

A: I did not receive or expect to receive any money.

Q: Did the suspect seek approval from President Lee, Se Yong after handing over the CAD DATA to Ahn, Sun Gap?

A: No. Executive Director Seong, Ki Ho, Team Manager Kim, Sun Chul, and Manager Kim, In Suk were focusing development on STEAM LOCOMOTIVE OGUAGE toy and so was Korea Brass. Upon learning this fact, Sam Hong Sa executed an internal investigation and found out that I had transferred CAD DATA of that drawing to Ahn, Sun Gap at Korea Brass. I was pressed to tell the truth and so wrote a confession explaining what had taken place.

Q: Is this the confession written by the suspect in the presence of Executive Director Seong, Ki Ho?

(At this point, the Prosecutor shows a copy of the confession written by the suspect and files it in the back of the deposition.)

A: Yes, it is.

Q: The suspect just stated that the CAD diskette was transferred in return for securing subcontracts with Ahn, Sun Gap. However, the suspect’s confession states that the transfer was made because Ahn, Sun Gap needed to study the drawings on the CAD diskette. Why are the reasons different?

A: The reason was for Ahn, Sun Gap to study the drawings on the CAD diskette so that I could outsource designs.

Q: It does not make sense to hand over company drawings to Ahn, Sun Gap without being compensated. What do you think?

A: Yes, I agree, but I did make the transfer without compensation.

Q: Aside from this case, the suspect took home other confidential files. Is this true?

A: Yes. On February 14, 2000 around 19:00, I did take the above mentioned miniature locomotive LOT-19 and –20 CAD DATA to my home in # 203-1902 Dongmun 2-cha Apt., Ilsan-dong, Ilsan-ku, Kyunggi Province.

Q: What was the reason for copying LOT-19 and –20 to a diskette and taking it home?

A: I took the work home to finish it.

Q: Did you seek approval from the company president when taking the CAD DATA home?

A: No, I did so at my own discretion. The diskette was confiscated at home.

Q: The suspect wrongfully handed over the miniature locomotive design data, Sam Hong Sa’s core technology, to its competition and also took it home. What do you have to say?

A: I am sorry.

Q: Have any other material been disclosed besides the drawing transferred to Ahn, Sun Gap on September 14, 1999?

A: No.

Q: Do you have anything else to say?

Q: Does the suspect have any job experience?

A: Before graduation, I worked for Sam Hong Sa at its third export industrial complex in Kasan-dong, Kumchun-ku, Seoul starting from December 22, 1997. I was in charge of designing miniature locomotives in the Modeling Division, along with about 13 other employees.

Q: Does the suspect have a criminal record?

A: Not relevant.

Q: Does the suspect know Lee, Se Yong, Lee, Chun Sik, Choi, Dae Yul, and Kim, Sun Chul? If so, what is the nature of the relationship?

A: I became acquainted with them upon joining Sam Hong Sa’s Modeling Division on December 22, 1997. Lee, Se Yong is president of the company, Lee, Chun Sik is senior executive of Production Team 2, Choi, Dae Yul is senior executive of Planning and Coordination Office, and Kim, Sun Chul is head of the Designing Team. No other relatives.

Q: Does the suspect know suspects Cho, Sung Won, Ahn, Sun Gap, Sim, Heung Bo and Jeung, Bok Dong?

A: I have no idea who Cho, Sung Won is, and as for the others: Ahn, Sun Gap was a manager in Sam Hong Sa Modeling Division until sometime in early 1998 when he resigned; Sim, Heung Bo worked in the same division until July 1999 when he also resigned; and Jeung, Bok Dong is currently an assistant manager in the same division.

Q: What was the suspect’s job at Sam Hong Sa?

A: Sam Hong Sa is divided into 4 divisions: Modeling, [not translated], Motor, and GS. I worked in the Modeling Division; more specifically, my job was to transform miniature locomotive data to three-dimensional configurations with the use of computers and make plastic molds for sample production before making metal molds.

Q: Is it true that the suspect transferred miniature locomotive drawings to Sim, Heung Bo?

A: Yes, it is.

Q: Which drawings were transferred at what time, place and for how much?

A: 1) On January 20, 2000 morning inside the Modeling Division office of Sam Hong Sa export industrial complex 3 in Kasan-dong, Kumchun-ku, Seoul, with the use of office computers, I transferred via email the drawing of miniature locomotive ‘A AUX TENDER (type 025)’ to DJ@Chollian.net (Sim, Heung Bo’s email address), of which afterwards, I revised and printed the drawing, and handed it over around 15:00 in a coffee shop near Ewha University Hospital in Dongdaemun-ku, Seoul, for 500 thousand won. 2) On February 7 of the same year, I sent by email the drawing of miniature locomotive ‘BIG BOY AUX TENDER (type 026)’ to the same address at my house, of which afterwards, I revised and handed it over around 15:00 at the same coffee house for 400 thousand won. 3) On the 16th of the same month, around 19:00, I emailed the drawing of miniature locomotive SCALE PRR T-1(4-4-4-4) to the same address via Outlook Express, but was not compensated this time.

Q: Give us the full account of how you came to transfer the drawings.

A: Regarding case 1), after I left Sam Hong Sa Sim, Heung Bo who became a manager at KKorea Brass called me to ask if I could design A AUX. TENDER(type 025) for Lionel Corporation, a US company which outsourced its designs. He said compensation would be made accordingly and I accepted. Sim, Heung Bo then emailed me the general drawing of Sam Hong Sa A AUX. TENDER right side view and other data including 015 tender truck, truck ballstar, and windows. I made the drawings based on these materials and sent them to Sim, Heung Bo. The same for case 2). Sim, Heung Bo called me to draw BIG BOY AUX. TENDER as I was finishing drawing 1) and I accepted. Sim, Heung Bo then emailed me data of the general drawing of Sam Hong Sa BIG BOY AUX.TENDER, I made the drawing and emailed them to Sim, Heung Bo. Likewise for case 3). As in the previous two cases, Sim, Heung Bo called me for the general drawing of Sam Hong Sa T-1 design and I sent it via email.

Q: Do all of the three drawings mentioned above belong to Sam Hong Sa?

A: Regarding cases 1) and 2), Sim, Heung Bo gave me a computer diskette with the basic drawings and I completed the drawings at home. I emailed drawing 1) via company computer and emailed drawing 2) from home. Drawing 3) was done by Jeung, Bok Dong, a colleague in the same office, which I secretly sent by email.

Q: Is this that drawing 3) of Sam Hong Sa’s miniature locomotive designed by Jeung, Bok Dong that you sent to Sim, Heung Bo?

(At this point, the Prosecutor shows to the suspect the copy of the drawing by Jeung, Bok Dong, which was submitted by Choi, Jun Yul on January 18, 2000, and files it in the back of this deposition.)

A: Yes, that is correct.

Q: Is this drawing a slight revision of the drawing 3) done at Korea Brass where Sim, Heung Bo works?

(At this point, the Prosecutor shows to the suspect the drawing confiscated from Korea Brass office, and files it in the back of this deposition.

A: Yes, that is the drawing done at Korea Brass based on the data of the general drawing that I sent via email.

Q: Sam Hong Sa planned to sell the miniature locomotive drawing 3) to the US. By handing over this particular drawing to Korea Brass, Sam Hong Sa’s competition, the suspect incurred much damage to Sam Hong Sa. What do you have to say?

A: I am sorry,

Q: Drawing 3) is valued higher than drawings 1) and 2), and so a bigger compensation must have been received. What do you think?

A: Except for the 900 thousand won received for drawings 1) and 2), I was not compensated for sending drawing 3).

Q: The suspect claims that Sim, Heung Bo knew of drawing 3) data when he asked for it. How did Sim, Heung Bo know of this fact?

A: I have no knowledge of that.

Q: It seems that the suspect sent drawing 3) data to Sim, Heung Bo and then asked to be compensated. Is this true?

A: No.

Q: When the suspect started to work for Sam Hong Sa, he probably promised in writing not to divulge or disclose business secrets. Is this true?

A: Yes, upon joining the company, I promised in writing not to divulge or disclose business secrets. I recall signing the written promise once more afterwards.

Q: Is this the written promise prepared by the suspect?

(At this point, the Prosecutor shows two copies of the written promise to the suspect, and files them in the back of the deposition.)

A: Yes, that is correct.

Q: Did you seek approval from Sam Hong Sa President Lee, Se Yong before or after sending the miniature locomotive drawings to Sim, Heung Bo?

A: No, I should have sought his approval but I secretly sent the drawings because I needed the money for hospital expenses.

Q: As an employee of Sam Hong Sa, the suspect should not have transferred the drawings to Sim, Heung Bo who was working for Korea Brass, Sam Hong Sa’s competition. What do you think?

A: I am sorry.

Q: The suspect transferred confidential drawings and a diskette with business secrets to Sim, Heung Bo in return for a huge compensation and a fixed percentage of profits accrued in the future. Is this true?

A: Except for the already received 900 thousand won, no other compensation was promised or has been received.

Q: Are there any other materials disclosed by the suspect?

A: No.

Q: Do you have anything else to say?

A: I am sorry. I made a grave mistake because I could not cover the hospital expenses.

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Q: Have your ever been punished for a criminal case?

A: No.

Q: Please state your educational and occupational background.

A: I studied metal mold designing at Seoul Industrial University. After graduation, I worked for Sam Hong Sa Co., Ltd., designing miniature locomotives for ten years and nine months. Then I have continued the design work as a freelancer for about one year, on a contract basis, with Korea Brass.

Q: Have you ever worked for Sam Hong Sa?

A: I'd worked for the company located at Kochuck-dong, Kuro-ku, Seoul since December 8, 1987. I was in charge of miniature locomotive design in the Modeling Division and was promoted to manager in 1996, and then resigned on September 25, 1998. The company did not move when I was working, but its address is now 327-32, Kasang-dong, Kumchon-ku, Seoul due to the city's cadastral change.

Q: Is there any particular reason you left the company?

A: I felt that I'd not been recognized appropriately for what I was doing there, for which I was stressed out. So, I decided to quit to start my own Aloe sales business with one of my friends. But it was only after I resigned from the company that I found that my friend had already went out of business. I had researched the item on my own and finally decided that it would not be profitable. That is why I did not start my own business. Then in October 1998, I was offered to design a miniature locomotive from Sochon, an injection molding company (which casts products using metal molding) on a contract basis and in early November 1998, I was offered by Cho, Sung Won, the president of Korea Brass, to design a miniature locomotive on a contract basis which I accepted.

Q: So, you were not recruited by Korea Brass as a full timer, is that right?

A: Yes. I did design drawing as a freelancer, strictly on a contract basis.

Q: Please explain more about Korea Brass.

A: It was founded by Cho, Sung Won who previously worked for Sam Hong Sa. Korea Brass designs and manufactures miniature locomotives to export them to the United States. Its main office and factory are located in #B-201, TechnoTown, 250-3, Hagye-dong, Nowon-ku, Seoul.

Q: Under what conditions did you work for the company?

A: Cho, Sung Won tells me which type of model locomotives he wants and gives me samples, copies of the miniature locomotives carried in the book entitled STEAM LOCOMOTIVE, and photographs and other materials from a museum, based on which I design a locomotive. I also used some of the materials from the days I worked for Sam Hong Sa. I finish the design and give it to him. That is the end of my work. Then, he makes model parts into finished locomotives based on my design and exports them to LIONEL of America. I agreed to receive 10 million won for the design of one type of locomotive and received the money from him. Those were the conditions.

Q: Did Cho, Sung Won offer to give you 10 million won for each design?

A: He asked me how much money I want when he first made the offer and I told him 10 million, to which he agreed. That was how we decided on the amount.

Q: When did you start working for Korea Brass?

A: I've been working for the company up until now since early January 1999 in a half-underground office at 288-14, Jangahn-dong 4, Dongdaemun-ku, Seoul. It was late November 1998 when I received the locomotive related materials he asked me to design.

Q: Did you work with anybody else?

A: I worked primarily on the design and Sim, Heung Bo and Jeung, In Sun, both employees of Korea Brass, assisted me under my direction.

Q: Where did you work at first?

A: From early January 1999 till late July 1999, I worked alone at home, in Banghwa Apartment Complex 5. During the period from early August 1999 to November 1999, I worked in the office of Korea Brass at TechnoTown in Hagye-dong, along with Sim, Heung Bo and Jeung, In Sun. From November 1999, I've been working in the half-underground office in Jangan-dong.

Q: Is there any reason why you moved to Jangan-dong?

A: In November 1999, Jeung, Bok Dong called me up to say that the diskette he gave to me contained Sam Hong Sa's plan, that the plan was the same type of the locomotive I was then working on, that Sam Hong Sa had Jeung, Bok Dong admit that the plan leaked, and that people at Sam Hong Sa threatened to barge into the office we were working in and notify the police of such facts. I thought that I would not be able to continue working if the material was confiscated. That is why I moved to another place of work.

Q: How many types of locomotives have you designed?

A: Nine. ALLEGHENY (type 008), BIG BOY (type 009), STARTER SET HUDSON(type 010), K4(type 011), SHAY (type 012), SCALE HUDSON J(type 014), CLASS A (type 015), HIAWATHA(type 016), T1(type 017). Out of these, I was working on type 016 while the remaining eight plans were completed and delivered to Cho, Sung Won.

Q: Were the eight designs given to Cho, Sung Won and exported?

A: I understand that 008 and 009 were made into finished goods and exported to LIONEL, Korea Brass's American customer, while others were being molded or in the assembly line to be exported. But I can't say for certain. My work ended when I delivered the designs. I'm not sure what happened afterwards.

Q: How can we find out whether the goods were exported or are in the assembly line?

A: Ask Cho, Sung Won. You can probably find out more.

Q: Do you know where Cho, Sung Won is now?

A: I understand that he continues to work in the company's office.

Showing record no. 52-53 of the deposition compiled and filed to the suspect, the prosecutor asked:

Q: This plan is for miniature locomotive C&O ALLEGHENY 2-6-6-6 that Sam Hong Sa designed. Do you recognize this?

A: Yes, I do. I designed it while I was working for the company.

Q: Is it true that you utilized this design to do another work, which was eventually delivered to Cho, Sung Won?

A: Yes. I based my design on Sam Hong Sa's drawing when I worked on 008 in early January 1999 and gave it to Cho, Sung Won who made products based on it to export to LIONEL of America.

Showing the picture of record no. 53-58 compiled and filed in the deposition, the prosecutor asked:

Q: This picture shows the model of Sam Hong Sa and that of Korea Brass which is the 008 type exported to the United States after being designed based on Sam Hong Sa's C&O ALLEGHENY 2-6-6-6 (type 008) to compare the two models. Do you accept that you used Sam Hong Sa's drawing?

A: Yes, I do.

Q: How much of Sam Hong Sa's type 008 drawing did you base your design on?

A: I used about 30-40%.

Showing the miniature locomotive of 'U P BIG BOY (type 009)' seized as Evidence no. 1, the prosecutor asked:

Q: Do you know who designed this locomotive?

A: I did while working for Sam Hong Sa. Sam Hong Sa made the locomotive based on my design.

Showing the miniature locomotive of 'U P BIG BOY' confiscated as Evidence no. 2, the prosecutor asked:

Q: Do you know who designed this locomotive?

A: I did while working for Sam Hong Sa. Sam Hong Sa made the locomotive based on my design.

Q: Is it true that you handed the design of Evidence 2 using the design of Evidence 1 over to Cho, Sung Won ?

A: Yes. In mid-March 1999 I used the design of Evidence 1 when I was working on 009. Then, I gave the finished design to Cho, Sung Won based on which he made and exported the product to LIONEL of America. That is my understanding.

Q: How much did you use Sam Hong Sa's plan for 009?

A: I used it about 50 to 60%.

Q: How did you have in your possession Sam Hong Sa's plan for 008 and 009 ?

A: I copied the plans on the diskette and took them out when I resigned from the company.

Q: What was the purpose your copying the plans?

A: It was said within the Design Department of Sam Hong Sa that, to meet the schedule, a designer could work at home on a plan whose deadline is rather away. Besides we had some problems with the computer crashing. That is why I took the copies home to work on them.

Q: Did you work as a sideline with Sam Hong Sa?

A: I intended to do so only for the plans on which we had some time to work till deadline. However, I did not because other departments of Sam Hong Sa disagreed on the idea.

Showing the plan compiled and bound together in the 84-93 record of the deposition, the prosecutor asked;

Q: Do you know which type of locomotive this drawing is for?

A: It is N&W A CLASS type 015.

Q: Is it true that you received this drawing from Jeung, Bok Dong of Sam Hong Sa?

A: Yes.

Q: Can you tell me when, where?

A: I received a CAD data diskette from Jeung, Bok Dong at a coffee shop on the second floor of the subway station in Kayang-dong, Kangseo-ku, Seoul around 9:00 p.m. on September 14, 1999.

Q: What was in it?

A: It contained the drawing of N&W A CLASS type 015.

Q: According to Jeung, Bok Dong, it was the plan of Steam Locomotive Oguage Train-56. Is this true?

A: Type 56 of Sam Hong Sa refers to type 015 of CLASS A. The two are the same.

Q: Was it the completed version that you received from Jeung, Bok Dong?

A: I don't know how much work was done on it.

Q: Did you base your design on what you received from Jeung, Bok Dong?

A: It is true that I saved the design I received from Jeung, Bok Dong onto my computer. However I didn't use it to design 015.

Q: Then why did you receive the diskette containing the drawing from Jeung, Bok Dong?

A: I asked him whether he could give me some material, misinforming him that I was planning to work with LIONEL in order to hide the fact that I was working for Korea Brass.

Q: Is it not true that you received the drawing from Jeung, Bok Dong to design 015?

A: No.

Q: Did you inform Jeung, Bok Dong that you were working for Korea Brass on a contract basis when you received the plan from him?

A: He asked me what kind of work I was doing and I told him that I was planning to work with LIONEL of America on a contract basis.

Q: Then you didn't inform him that you were working for Korea Brass on a contract basis?

A: No, I didn't.

Q: Jeung, Bok Dong said that he handed over the diskette containing the drawing of Steam Locomotive Oguage Train which was half completed because you asked for a design of two cylinders which is rather difficult to design. Is this true?

A: It is true that I met with Jeung, Bok Dong while I was working for Korea Brass. He repeatedly asked me what kind of work I was doing. But I couldn't tell him that I was working for Korea Brass. Instead I said that I was preparing a design ordered by LIONEL of America on a contract basis and I had many difficulties in doing that. I might have asked him to give me some related materials. However, I don't remember anything specific regarding that.

Q: Then you did not receive the drawing from Jeung, Bok Dong to design type 015?

A: At the time, I was working on the design of 015. I think that I asked him to give me some other material, not those of 015. But I don't remember exactly what I said.

Q: Did you give him anything in return for the drawing?

A: I have never promised to give him anything. And I didn't pay him a cent.

Q: Have you used Sam Hong Sa's drawing to design any other types of locomotives other than 008 and 009?

A: I used Sam Hong Sa's drawings to design 0101, 011, 012, 014, and 017. I had the design of Sam Hong Sa for 016 but did not use it.

Q: How did you come to possess the designs of Sam Hong Sa?

A: The drawings for 010, 011,012, and 014 were on the diskette. I took it when I resigned from Sam Hong Sa. The drawing for 016 was also taken as I left, but I didn't use it. For 017, I obtained the general drawing of HOGAUGE of Sam Hong Sa, but I don't know how I got it.

Q: What did you do with Sam Hong Sa's drawings once you had it in your possession?

A: I used Sam Hong Sa's drawings for designing the overall shape of type 010, which I sent to LIONEL of America. I did not use Sam Hong Sa's for the designing of 010. As for 011, there are two parts; one is LOCO (front) and the other, TENDER (rear). I used the rear part design for 010. For 012, I used the metal molding drawing LIONEL sent to me and the existing metal molding drawing of Sam Hong Sa. For 014, I partly used Sam Hong Sa's drawing.

Q: In a nutshell, which locomotive drawings of Sam Hong Sa did you use?

A: They were 009, 009, 010, 011, 012, 014, and 017.

Q: How long does it usually take for you to design one type of locomotive?

A: About two months.

Q: How many types of locomotives did you design over a year and a month?

A: I designed six types and finished them all. I'm currently working on one.

Q: According to D.Y. Choi, an employee of Sam Hong Sa, it usually takes about four to five months to design one type of locomotive. What do you think?

A: It could be one month if it is easy or two months if it's not. For me, it usually takes two months to design one.

Q: Who is Korea Brass' competition?

A: I understand that there are several companies that design miniature locomotives. However, the only competitor in Korea, I think, is Sam Hong Sa.

Q: How long has Sam Hong Sa been in the business?

A: About 30 years to the best of my knowledge.

Q: How long has Korea Brass been in the business?

A: I understand that the company finished the designs of two locomotive types before I joined the company, both of which were exported. However, it was about the time I started working for the company that the company started manufacturing miniature locomotives in earnest. For manufacturing and exporting model locomotives, I guess it started around 1997 or 1998.

Q: Then, it seems that Korea Brass, which has a rather short history, can't possibly compete with Sam Hong Sa. Do you think the company started gaining competitiveness with you working for the company?

A: I recall that Korea Brass's product once made a hit in the market before I worked for the company. I can't possibly say that it has enhanced competitiveness because I worked for it.

Q: What do you think about the fact that you used Sam Hong Sa's drawings, instead of your originality, while working for Korea Brass?

A: I have nothing to say. I shouldn't have done it. I was wrong to do it.

Q: Do you know how much damage was done to Sam Hong Sa due to your actions?

A: I'm not sure.

Q: Did Cho, Sung Won also know that you were using Sam Hong Sa's drawings?

A: I was not in a position to tell Cho, Sung Won that I was using Sam Hong Sa's because I was working on a contract basis with the company. I have not told him anything of that matter. He did not know about it.

Q: Are you absolutely sure that your previous statements are nothing but the truth?

A: Yes, I am.

Q: Do you have any evidence in favor of your case or anything further to say?

A: No.

Q: Is is true that you received a diskette containing a design from Jeung, Bok Dong at an unnamed coffee shop on the second floor of a subway station in Kayang-dong, Kangseo-ku, Seoul around 9:00 p.m. on the day of September 14 1999?

A: Yes. I received the plan of Sam Hong Sa's CLASS A type locomotive from Jeung, Bok Dong and saved it onto my computer.

Q: Sam Hong Sa called the type 'LOT-56. Is that right?

A: Yes, it is.

Q: Have you used the plan for designing the 015 type?

A: I don't remember it.

Showing the '015' design as well as that of 'LOT-56' compiled and bound together in no. 283-302 of the deposition of statements by S.C. Kim, the prosecutor asked:

Q: According to S.C. Kim, you used Sam Hong Sa's 'LOT-56' plan. Proving that, the two plans not highlighted are exactly same. The parts highlighted also correspond. Most part of the two plans are same. Given that, S.C. Kim testified that you used Sam Hong Sa's plan for the 015 design. What do you think?

A: I couldn't recall exactly which part of Sam Hong Sa's I used. Seeing the two plans, however, it is true that I used Sam Hong Sa's.

Q: S.C. Kim said that there could be a similarity in type if two people design. But he added that it is in reality impossible the two designs correspond each other to the point that the numbers on the design are exactly same to one decimal point. What would you say?

A: He's right. It is impossible. The two cannot be this much similar without me using the Sam Hong Sa's plan.

Showing the plan compiled and bound together in no. 356-360 of the suspect's deposition of statements, the prosecutor asked:

Q: This plan is Sam Hong Sa's that Jeung, Bok Dong handed over to you. Do you recognize it?

A: Yes. It is the plan of a miniature locomotive called 'N&W CLASS A'. It is a completed exterior plan, 100% complete.

Q: How did you obtain it?

A: I asked Jeung, Bok Dong to give me Sam Hong Sa's to compare it with mine after I finished the 105 type locomotive design using Sam Hong Sa's 'N&W CLASS A' plan that I obtained from him in October 1999. He gave it to me on diskette.

Q: When and where did you receive it?

A: At the same place I first received a diskette from him in October 1999.

Q: Did you give him any kind of repayment in return for the diskette?

A: Nothing. I received it on no condition. I did not pay him anything.

Q: How did you obtain the printed materials of the plan?

A: I printed out the data contained in JIN/XT file on the D drive of my computer that is in the prosecutors' room no. 803 of the Seoul District Prosecutors' Office.

Showing the notification form of export compiled and bound together in no. 303 of the deposition of statements by C.H. Kim, the prosecutor asked:

Q: This form is what Cho, Sung Won of Korea Brass notified to the customers office saying that 2,103 'N&W CLASS A' miniature locomotives would be shipped to LIONEL of America, the company's customer, on February 26 2000. Are you aware of this?

A: Not to the details. But I did know that the locomotives would be exported to LIONEL of America late February 2000.

Q: S.C. Kim said that Sam Hong Sa finished the plan of the very locomotive and were manufacturing parts, about 80% completed. The company was planning to export them to its customer, M.T.H. of America. If Korea Brass does export its model locomotives to LIONEL, a competitor of M.T.H. in America, it will force Sam Hong Sa into the situation that it cannot sell its products to M.T.H. because the market there is limited. Sam Hong Sa will suffer more than the amount Korea Brass earned from exporting the models because M.T.H., who has a business with Sam Hong Sa on a good faith, will no longer trust Sam Hong Sa if it suffers a loss because of Sam Hong Sa. So, it is quite likely that M.T.H. will reduce its orders to Sam Hong Sa in the future, which amounts to a loss for Sam Hong Sa more than the numbers that appear. Is that right?

A: I recognize that Sam Hong Sa may have reduced orders and, thus, suffer a loss. However, I don't think that the loss will be that much big Sam Hong Sa concerns.

Q: Anyway it is expected that Sam Hong Sa will suffer a loss because of your acts, is that right?

A: Yes.

Q: Sam Hong Sa said that it took one experienced designer for about three months to draw a plan up for the N&W CLASS A and that the designing cost only reached about 9 million won. Regarding that the design was altered and the parts made manually were re-examined (to make sure whether the manually made parts before molding are same with the design), it cost the company about 20 million. Is that right?

A: I don't know.

Q: Supposing that you design the N&W CLASS A as Sam Hong Sa's employee, Sam Hong Sa said that it would take you about 70 to 80 days given your ability you'd shown while working for the company. What do you think about this?

A: I agree on condition only that I work for Sam Hong Sa. However, I guess it will take shorter if I work independently as a freelancer.

Q: Given the fact that you finished designing for 7 types of locomotive for one year and one month with two others under design, it seems that it is impossible for you to do that without using Sam Hong Sa's plans. What do you think about that?

A: I think that I can design seven to eight a year.

Q: If you believe so, why did you use Sam Hong Sa's plans?

A: I did it because I had the materials.

Q: You obtained the plans from Jeung, Bok Dong and Kwak, Byung Ki, both employees of Sam Hong Sa. Then, it doesn't sound reasonable that you used Sam Hong Sa's plans only because you had them already in your possession when you resigned from the company.

A: Before I met with Jeung, Bok Dong, he was quite curious about what I was doing. I didn't want to let him know that I was working in connection with LIONEL and, to do that, I wanted to tell him that the design materials were not in my possession. So I asked him to give me some materials if he has.

Q: Before, you said that you used Sam Hong Sa's CLASS A plan you obtained from Jeung, Bok Dong for the 015 type design. But now you are denying it. Is there any particular reason for that?

A: I told so before because I wanted to finish the interrogation soon. But on second thoughts, I did not use Sam Hong Sa's. That is why I'm denying it now.

Q: It seems that you admitted it in the second interrogation, which you did not in the first one, only after you saw that the two plans shown to you mostly correspond. What do you think?

A: I can't further comment on that.

Q: Did you use Sam Hong Sa's plan when you worked on the 017 type?

A: The 017 type was designed by Hong-bo Shim. I gave him the plan of 'HO GAUGE' I took out when I resigned from Sam Hong Sa. I guess that he used the plan I gave to him.

Q: Did Sim, Heung Bo know that the plan was from Sam Hong Sa?

A: Probably he didn't because I didn't informl him.

Q: Have you received the general drawing of 'HO GAUGE' in CAD data by e-mail from Kwak, Byung Ki of Sam Hong Sa?

A: Yes.

Q: When and how?

A: I received it on my computer while I was working with my computer in Jangan-dong in early February 2000.

Q: How did you receive it?

A: I asked him over the phone to give me the general drawing of T1 Sam Hong Sa designed and received it by e-mail.

Q: Do you mean that Kwak, Byung Ki sent the material with no suspicion?

A: I asked him and he just sent it to me.

Q: When Kwak, Byung Ki asked you for what you needed the plan, you must have told him something. What did you say?

A: When he asked, I probably told him something. But I don't remember it now.

Q: Did you use the T1 design you received from Kwak, Byung Ki to design the 017 type?

A: No, I didn't because I received it to compare it with my design after I finished 017.

Q: Did you receive his design from Kwak, Byung Ki?

A: I received the designs of 'A AUX. TENDER (type 0125) and BIG BOY AUX. TENDER (type 026) by e-mail.

Q: When and where?

A: I received the 025 plan by e-mail on my computer in my office in Jangan-dong sometime between late January and early February 2000. For the 026 plan, I received it the same way around mid February 2000.

Q: How did you receive the two plans?

A: I called him early January 2000 to ask whether he can design A AUX. TENDER, explaining that I was working in connection with LIONEL and told him that I would pay him for that. Then I sent him the general drawing of A AUX. TENDER light side view that belongs to Sam Hong Sa, 015 Tender Truck, Truck Bullstar, and the original plan and others via e-mail, using which he designed A AUX. TENDER. He sent his design via e-mail, too. A few days later I met with him to give 340,000 won. Early February 2000 I called him again to ask whether he could do another plan for 'BIG BOY AUX. TENDER' on a contract basis. At the time he was almost finishing the design I asked first. He said yes and I sent Sam Hong Sa's general drawing of BIG BOY AUX. TENDER A via e-mail based on which he designed. Again, he sent his design via e-mail and I met with him a few days later and gave him 400,000 won.

Q: Did Kwak, Byung Ki finish the work in a short time using Sam Hong Sa's plans and send it to you?

A: Yes. I think that he could finish them quickly because he used Sam Hong Sa's.

Q: What did you do with the two plans you received from him?

A: I reviewed and altered them a little to finish. Then I handed them over to Cho, Sung Won of Korea Brass.

Q: How did you obtain Sam Hong Sa's plans before you gave them to Kwak, Byung Ki?

A: I sent him those I took out from Sam Hong Sa when I resigned.

Q: If you had the materials, you could have done the design yourself. Why did you ask Kwak, Byung Ki to do it?

A: I was planning to do another work called Hiwata. I just had no time to do it. That is why.

Q: Does the plans done by Kwak, Byung Ki actually belong to Sam Hong Sa, doesn't it?

A: They are different materials he made by referencing Sam Hong Sa's designs.

Q: Isn't it wrong to design using Sam Hong Sa's materials?

A: It is wrong.

Q: Kwak, Byung Ki knew that you were working for Korea Brass when he worked on your request. Is that right?

A: I think so.

Q: What makes you think so?

A: I probably have told him about Korea Brass when I said that I was working on a contract basis for LIONEL. Since Kwak, Byung Ki knows that the two companies are business partners, he would have known that I was working for Korea Brass.

Q: Which plans did you take out of Sam Hong Sa and when?

A: LOT-14 in 1993, LOT-23 and LOT-30 in 1997, TST-3A, TOT-4, and TOT-1B in early 1998, and LW design, design materials(speed rations), Sam Hong Sa's other design related materials, and its shipment list in mid 1998.

Q: Did you take them out with Sam Hong Sa's approval?

A: No. I took it without its permission.

Q: Why did you take them out?

A: I made copies of all of the plans above between 1991 and 1998 thinking that they might be of use sometime. I took them out in my briefcase when I resigned. Initially I didn't have any purpose for which I use them. I just thought that they might be useful sometime. Then when I had some offer for work in the design I thought about working at home for Sam Hong Sa. About one month before I resigned it came again into my mind that the copies could be useful if I work on a contract basis not only with Sam Hong Sa but also with other companies.

Q: You are saying that even if you work with other companies, you felt like using the copies?

A: Yes.

Q: You must have known that you were not allowed to take the company's data without its permission when you resigned. Did you know it?

A: I knew that it was against the company's regulations.

Q: What do you think that you did it even if you knew you shouldn't?

A: I admit that I was wrong.

Showing the search list of the suspect's computer data compiled and bound together in no. 270 of the deposition of statements by Soon-sang Wang, the prosecutor asked:

Q: This is the list made by S.S. Wang, an employee of Sam Hong Sa who searched your computer in your presence, after he confirmed that you had Sam Hong Sa's materials on your computer. Is it true?

A: Yes, it is.

Q: Are you saying that you did not use Sam Hong Sa's materials you obtained from Jeung, Bok Dong and Kwak, Byung Ki to do the design work for Korea Brass even though you did?

A: No, I did not use them.

Q: You told in the first interrogation that you used Sam Hong Sa's materials for your design of 008 and 009 but nothing else. Afterwards, you reluctantly admitted that you did it only after there came an evidence, for example, when your computer was searched or Korea Brass' materials were reviewed. Given that, it seems that you used materials of Jeung, Bok Dong and Kwak, Byung Ki for your design. Is that right?

A: Initially I couldn't testify in detail because I couldn't recall everything. Later I began to recall when I saw the computer and other materials.

Q: Do you know Kwak, Byung Ki?

A: He is working for Sam Hong Sa in charge of converting a plane plan into a 3 D. Yes, I do. We worked together when I was with the company.

Q: According to Kwak, Byung Ki, he sent the plan of 'A AUX. TENDER(a.k.a 025) from a computer at Sam Hong Sa's office to DJ@chollian.net, Hong-bo Shim's e-mail address, in the office of the Modeling Division of the company located in the Export Complex 3, Kasang-dong, Kumchon-ku, Seoul in the morning of January 20, 2000 and altered and printed it out to give it to Sim, Heung Bo about 3:00 p.m. on the same day at an unnamed coffee shop near the Ehwa Womens' University Hospital in Dongdaemoon-ku, Seoul in return for 500,000 won. Are you aware of it?

A: Yes. I asked Sim, Heung Bo to approach Kwak, Byung Ki of Sam Hong Sa and receive the above 025 plan via e-mail. I gave 500,000 won to Sim, Heung Bo to give it to Kwak, Byung Ki and receive the printed plan from him. After I received the plan from Sim, Heung Bo, I made a little change to it and give it to Cho, Sung Won.

Q: In your second interrogatory, you testified that you received the plan directly from Kwak, Byung Ki, not through Sim, Heung Bo. Did you actually receive it from Sim, Heung Bo?

A: I lied in order not to involve Sim, Heung Bo in the case.

Q: Is Sim, Heung Bo's e-mail address, [omitted], same with yours?

A: My e-mail address is [different]. He also has the same e-mail address of [different from 2 previous]. So, when Kwak, Byung Ki sent the e-mail, it was delivered both to Shim and me.

Q: According to Kwak, Byung Ki, he sent the plan of 'BIG BOY AUX. TENDER(type 026) to Shim's e-mail address from his home and altered it on February 7 2000. Then he handed it over to Sim, Heung Bo in return for 400,000 won at 3:00 p.m. on the same day at the same place as above.

A: I also asked Sim, Heung Bo to receive the material from Kwak, Byung Ki and gave Shim 400,000 won to give it to Kwak.

Q: You said that you received the design, also, directly from Kwak, Byung Ki in your second interrogatory. Is that right?

A: No. I lied to protect Sim, Heung Bo.

Q: Kwak, Byung Ki said that he sent the plan of 'SCALE PRR T-1(4-4-4-4, type 017) from Sam Hong Sa's computer to Sim, Heung Bo's e-mail address through Microsoft Outlook in the company's office at 7:00 p.m. February 16 2000. Are you aware of it?

A: I also asked Sim, Heung Bo to receive the material from Kwak, Byung Ki.

Q: What did you give Kwak, Byung Ki in return for it?

A: Nothing particular. For the two previous plans, Kwak, Byung Ki did the design work for which I paid him about 400,000 to 500,000 won. But I didn't pay him anything at the time because he just sent the plan without any further work on it.

Q: Why did you receive the T-1 type?

A: I wanted to compare my then finished 017 design with Sam Hong Sa's T-1. So, I received Sam Hong Sa's from Kwak, Byung Ki through Sim, Heung Bo.

Q: How did you receive the T-1 plan?

A: I received it via e-mail at our e-mail address DJ971@chollian.net.

Q: According to Jeung, Bok Dong, he sent Sam Hong Sa's LOT-56(Locomotive Oguage Train) half finished to you on September 14 1999. Is it true?

A: Yes, it is.

Q: Jeung, Bok Dong testified that you told him that you wold give him 2 million won in return for the plan and you transferred the money to his bank account after you received the it. Is that right?

A: I did not receive it in return for 2 million won. I sent the money to repay the money I borrowed from him when I worked with Sam Hong Sa.

Q: According to Jeung, Bok Dong, you called him up and first exchanged pleasantries and asked him 'what he was doing then'. When he said that 'he was working on a two-cylinder', you asked him to give you the plan, saying 'you were planning to do a design work on a contract basis and need some data for it and offered to pay him about 2 million won, adding that, with the Tanks Giving Day's around, probably he might need some money.' Since he was financially squeezed and needed some money for the holiday, he accepted your offer. Is that right?

A: Yes it is.

Q: Why did you deny it in the previous statement?

A: I lied because I didn't want to harm him. I'm sorry. I'm very sorry.

Q: After you received the plan, did you transfer 2 million won to the bank account of Jae-ok Lee, Jeung, Bok Dong's wife, at Chohung Bank on October 5 1999?

A: Yes. I sent the money in return for the plan.

Q: Previously you said that you repaid the money you borrowed from D.B. Jung. Is that right?

A: Yes.

Q: Why did you lie?

A: In October 1999 D.B. Jung and I agreed that ,if there's any problem occurs over the money, we would lie that I just paid my debt to him. In fact I lied because it was obvious that he would be punished if I told the truth.

Q: Was Jeung, Bok Dong aware that you would draw another plan using Sam Hong Sa's plan when he gave you the plan?

A: Yes. I told him that I was going to work but had no materials and asked him to give me some materials. So, he probably knew that I needed the plan for other works. But since I didn't inform him the fact that I was working for Korea Brass, he wouldn't know it.

Q: After he gave the plan above, Jeung, Bok Dong said that he gave you a diskette containing Sam Hong Sa's LOT-56 GOD (the original plan to be sent to a buyer) at an unnamed coffee shop on the second floor of Kayang subway station in Kayang-dong, Kangseo-ku, Seoul late October 1999. Is that right?

A: Yes, it is.

Q: Why did you receive the plan?

A: I was informed by Jeung, Bok Dong over the phone that there was a problem regarding that he gave me the plan. We met over the matter and he gave me the diskette containing Sam Hong Sa's LOT-56 GOD, saying that train models of Korea Brass and Sam Hong Sa must not be same and asked me to change my design to make mine different from Sam Hong Sa's. I agreed. Then, I asked him not to let on that he gave the plan to me to Sam Hong Sa's management, adding that I would give him several works with each design worth 3 to 4 million worth. He also agreed.

Q: According to Jeung, Bok Dong, he came to know that you were working for Korea Brass using Sam Hong Sa's plan (50% completed) when he met with you at the place above. He said he asked you whether you used the plan he gave and you said that you already finished the work using Sam Hong Sa's and it was in the process of metal molding. So, he knew that Korea Brass was first in metal molding before Sam Hong Sa and asked you to re-work, thinking that the two companies' models should not be same.

A: Yes. he asked me to re-work when I told him that I used the plan he gave to me and the metal molding process was underway.

Q: So, do you mean that you asked Jeung, Bok Dong to give you the design in order to work for Korea Brass using Sam Hong Sa's design?

A: Yes.

Q: Didn't you use the GOD of Sam Hong Sa to work for Korea Brass?

A: No. my plan was already in the metal molding process when Jeung, Bok Dong gave it to me.

Q: Is it true that you called him up on February 14 2000 and offered him to do a work worth 4 million won, saying that it was from Korea Brass and you sent the data to his computer?

A: He refused to do the work, saying that it was too difficult.

Q: Do you think you were wrong when you used Sam Hong Sa's plan you obtained in return for 2 million won.

A: Yes, I do. I was wrong.

Q: Did Cho, Sung Won know that you finished the design work faster than usual because you used Sam Hong Sa's plans?

A: I was working for Cho, Sung Won. I was not in the position that I was using other company's materials to design. I don't think that he knew that I was using Sam Hong Sa's plans.

Q: Anyway you finished the design a lot quicker than others. Then, Cho, Sung Won probably thought that you were using some other company's materials for the work. What do you think?

A: As I said before, I did not inform him that I was using other company's materials.

Q: Cho, Sung Won founded Korea Brass in May 1999, which is a latecomer in the miniature locomotive business. It would be difficult for the company to compete with Sam Hong Sa, which has already consolidated its unrivalled position in the market. He seems to beat Sam Hong Sa by obtaining Sam Hong Sa's technical materials including designs. That is why he recruited you and approached Sam Hong Sa's design staff though you and obtained the plans. What do you think?

A: Cho, Sung Won has never asked me to do such a thing and I did not conspire anything with him. Thus, I don't agree.

Q: Is your statement nothing but the truth?

A: Yes, it is.

Q: Do you have anything further to say?

A lawsuit against model trainmaker Lionel LLC over trade secrets can proceed, after a U.S. District judge in Detroit issued an order denying Lionel's motion to dismiss the suit.The court issued the order and opinion on Wednesday.

Mike's Train House Inc., based in Columbia, Md., claims that Lionel sold trains made from designs stolen from a South Korean manufacturer hired by Mike's. The suit was filed in April 2000.

Mike's is seeking compensatory damages in excess of $29 million, as well as punitive damages and injunctive and other relief.

Mike's Train House was founded in 1980 by Mike Wolf, who started the business assembling trains in the basement of his parent's Maryland home.

According to the lawsuit, an investigation in 1999 by South Korean authorities found that designs belonging to Samhongsa Co Inc., which subcontracts for Wolf, had been stolen by a competitor, Korea Brass Co. Ltd.

In that case, three former Samhongsa employees and one Korea Brass employee were charged with stealing trade secrets. All four pleaded guilty in 2000, the lawsuit said.

PROTECTION OF TRADE SECRETS
Chapter 90 18:1832 & 1834

: 1832 Theft of trade secrets

(a) Whoever, with intent to convert a trade secret, that is related to or included in a product that is produced for or placed in interstate or foreign commerce, to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret, knowingly-
(2) without authorization copies, duplicates, sketches, draws, photographs, downloads, uploads, alters, destroys, photocopies, replicates, transmits, delivers, sends, mails, communicates, or conveys such information;
(5) conspires with one or more other persons to commit any offense described in paragraphs (1) through (3), and one or more of such persons do any act to effect the object of the conspiracy, shall except as provided in subsection (b), be fined under this title or imprisoned not more than 10 years, or both.
(b) Any organization that commits any offense described in subsection (a) shall be fined not more than $5,000,000.

: 1834 Criminal forfeiture

(a) The court, in imposing sentence on a person for a violation of this chapter, shall order, in addition to any other sentence imposed, that the person forfeit to the United States-
(1) any property constituting, or derived from, any proceeds the person obtained, directly or indirectly, as the result of such violation; and
(2) any of the person’s property used, or intended to be used, in any manner of part, to commit or facilitate the commission of such violation.

After reading this I started to think about how this law might apply to model train manufacturing. Could this law be applied to model train manufactory in Korea and the USA? I wonder what would happen if Mike Wolf would present this law to the Maryland Federal Prosecutor for an opinion on weather it would apply in MTH vs. the Korea Bull Dog or MTH vs. the Big Kahuna in the USA?

Other ponderings:

Why was the MTH vs. Lionel case moved from Jan. 2003 to July 2003?

These Premier Line boxcars, item number 20-93155, will only be available at Dixie Union Station in Mason, OH. You can contact them by phone at 513-459-0460 or email them at rockylane@core.com