Plastic Aircraft Model Kits are Going Away

January 31, 2005: For over half a century, kits have been sold that enable military history buffs to assemble scale models of military ships, aircraft and vehicles. But that era is coming to an end, as the manufacturers of the original equipment, especially aircraft, are demanding high royalties (up to $40 per kit) from the kit makers. Since most of these kits sell in small quantities (10-20,000) and are priced at $15-30 (for plastic kits, wooden ones are about twice as much), tacking on the royalty just prices the kit out of the market. Popular land vehicles, which would sell a lot of kits, are missing as well. The new U.S. Army Stryker armored vehicles are not available because of royalty requirements. Even World War II aircraft kits are being hit with royalty demands.

This move grew out of the idea that corporations should maximize "intellectual property" income. Models of a companys products are considered the intellectual property of the owner of a vehicle design. In the past, the model kits were considered free advertising, and good public relations, by the defense firms. The kit manufacturers comprise a small industry, and the aircraft manufacturers will probably not even notice if they put many of the model vendors out of business.

Some model companies will survive by only selling models of older (like World War I), or otherwise "no royalty" items (Nazi German aircraft) and ships. But the aircraft were always the bulk of sales, and their loss will cripple many of the kit makers.

> Will they be forced to pay a roylaty when they paint a P-51?

Oh, yes. P-51 was made by North American Aviation, which became Rockwell, which was bought by Boeing. Boeing is quite up front about wanting royalties.

I apollogize for the giant size of this, but it's relevant....

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Licensee understands and agrees that Licensor will suffer irreparable harm in the event that Licensee fails to comply with any of its obligations pursuant to this Agreement and that monetary damages in such event would be inadequate to compensate Licensor. Consequently, if Licensee breaches this Agreement, Licensor will be entitled, in addition to such monetary relief as may be recoverable by law, to such temporary, preliminary and/or permanent injunctive relief as may be necessary to restrain any continuing or further breach by Licensee, without showing or proving any actual damages sustained by Licensor. h. Construction. The rules of construction to the effect that ambiguities are to be resolved against the drafting party will not be employed in the interpretation of this Agreement or of any amendments or supplements hereto. The section headings are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of any of the provisions of this Agreement. i. No Offer. This Agreement does not constitute an offer by either party, and it will not be effective unless it has been signed by both parties. IN WITNESS WHEREOF, this Agreement is executed in duplicate originals by authorized representatives of the parties hereto. BOEING BUSINESS SERVICES COMPANY Acting on Behalf of Boeing Management Company By: _____________________________ By: ______________________________ Title: ____________________________ Title: _____________________________ Date: ____________________________ Date: _____________________________ MODEL 247 MODEL 294 MODEL 299 MODEL 307 MODEL 314 MODEL 345-2-1 MODEL 367 MODEL 367-80 MODEL 377 707 â 717â MODEL 720, MODEL 720B 727â 737â 747â 757â 767â 777â A-17 A1-H A-1 SKYRAIDER A-2 A-20 A-24 A-26 A-3 A-36 A3D A2J A3J A-4 A-4 SKYHAWK A4D A-5 AD-6 AGM-86 CRUISE MISSILE AH-64 AJ-1 APACHEâ APACHE LONGBOWâ APOLLO SPACECRAFT ARPA Hibex AT-6 AV-8B AV-8B HARRIER II AWACS B & W B-1 Model 6 B-1E B-17 B-18 B-19 B-1B B-25 B-25 MITCHELL B-26 B-29 B-45 B-47 RB-47 XB-47 EB-47 (A, B, E, G, J, K) B-50 B-50A B-50B B-50D B-52 EB-52 RB-52 SB-52 YB-52 (A-H) B-66 B-70 B-9 BANSHEE F2H-1 BANSHEE F2H-2 BBJ BC-1 BC-2 BERLINER-JOYCE BIG HENRY BOEING BOEING BUSINESS JETS B-314 CLIPPER BOLO BOMARC BOSTON BRONCO BT-1 BT-2 BT-9 BT-14 BT-17 BT2D BUCKEYE BURNER II C-118 C-124 GLOBEMASTER II C-133 C-135 C-17 C-17 GLOBEMASTER C-47 C-53 C-54 C-74 GLOBEMASTER C-75 C-9 C-97 CARGOMASTER CAYUSE CH-46 CH-46A CH-46D CH-46E CH-47 CH-47A CH-47B CH-47C CH-47D CH-47E CHINOOK CLOUDSTER CLIPPER COMANCHE COMMUTER CONDOR CORPORATE 77 DAKOTA DARKSTAR DASH 80 DAUNTLESS D-558-2 SKYROCKET D-5581 SKYSTREAK DB-7 DC-1 DC-10â DC-2 DC-3 DC-4 DC-5 DC-6 DC-7 DC-8â DC-9â DELTA DELTA II DELTA III DELTA IV DEMON DESTROYER DEVASTATOR DH-4 DOLPHIN DOODLEBUG DOUGLAS DOUGLAS WORLD CRUISER DRAGON DT-1 DT-2 E-3 E-4 E-6 EAGLE EXECUTIVE EXTENDER F/A-18 F/A-18 C/D ** F/A-18C * F/A-18D * F/A-18 E/F ** F/A-18Eâ * F/A-18F * F/A-18 C/D HORNET ** F/A-18C HORNET * F/A-18D HORNET * F/A-18 E/F SUPER HORNET** F/A-18E SUPER HORNET * F/A-18F SUPER HORNET* F-100 F-100 SUPER SABRE F-101 F-15â F-15E F-15 EAGLE F-15E STRIKE EAGLE F-18 F2H F3B F3D F3H F-4 F4B F4B-4 F4D F5D F-51 F-82 F-86 F-86 SABRE FB FB-5 FH-1 FJ FLYING FORTRESS B-17 FLYING FORTRESS FURY GAM-77 GAMMA 2B GAPA GEMINI SPACE CAPSULE GLOBEMASTER II GLOBEMASTER III GOBLIN GOSHAWK HARPOON HARRIER HARVARD HAVOC HERMES HORNET HOUND DOG HSCT HIGH SPEED CIVIL TRANSPORT IM-99A IM-99B INVADER IUS JUMBO JET KAYDET KC-10 KC-135 L-15 L-17 LANCER LIFTMASTER LITTLE HENRY LUNAR ROVING VEHICLE MARINER 10 MCDONNELL MCDONNELL DOUGLAS MD-10 MD-11 MD-80 MD-81 MD-82 MD-83 MD-87 MD-88 MD-90 MERCURY SPACE CAPSULE MH-47 MINUTEMAN MINUTEMAN 1 MINUTEMAN 11 MINUTEMAN 111 MITCHELL MODEL 15 MODEL 40 MODEL 40A MODEL 40B MODEL 40C MODEL 50 MODEL 75 MODEL 79 MODEL 80 MODEL 95 MODEL 96 MODEL 119 MODEL 120 MODEL 200 MODEL 220 MODEL 221 MODEL 234 MODEL 502 MODEL C MONOMAIL MUSTANG NA-16 NA-21 NA-49 NA-73 NAVAJO NAVION NIGHTINGALE NIKE MISSILE NIKE AJAX NIKE HERCULES NIKE ZEUS NJ-1 NORTH AMERICAN AVIATION NOMAD O-2 O-46A O-47 OH-6 ORBITER I OSPREY OV-10 P-12 P-26 P-26 PEASHOOTER P-51 P-51 MUSTANG P-64 P-82 P-86 PB-1 PBJ PEASHOOTER PHANTOM PHANTOM II POLAR STAR PT-13 PT-17 PW-9 R4D R5D RA-5C RAH-66 RC-135 REDSTONE ROCKETDYNE SABRE SABRELINER SATURN SATURN S-1C SATURN S-11 SATURN S-NB SATURN V SAVAGE SBD SBD DAUNTLESS SCOUT SEA KNIGHT SEA RANGER SENTRY SINBAD SKYHAWK SKYKNIGHT SKYLAB SKYMASTER SKYRAIDER SKYRAY SKYTRAIN SKYTRAIN II SKYTROOPER SKYWARRIOR SNJ SRAM SST SUPER SONIC TRANSPORT STILETTO STRATOCRUISER STRATOFORTRESS STRATOFREIGHTER STRATOJET STRATOLINER STRATOTANKER STEARMAN STRIKE EAGLE SUPER HORNET SUPER SABRE SUPERFORTRESS T-2 T2D-1 T2J T-28 T-39 T-43 T-45 T-6 T-6 TEXAN TACAMO TBD TB-1 TEXAN THOR TORNADO TROJAN TWIN MUSTANG V-22 V-22 OSPREY VALKYRIE VC-25 VC-118 VC-137 VERTOL VIGILANTE VOODOO X-15 X-3 X-31 X-32 X-33 X-36 XA-21 XB-15 XB-19 XB-21 XB-28 XB-42 XB-43 XB-70 XC-105 XF6B-1 SF7B-1 XF8B-1 XF-85 XFV-12A XH-17 FLYING CRANE XH-20 XHJD-1WHIRLAWAY XP3D-2 XP-67 XP-9 XV-1 CONVERTIPLANE XV-9A HOT CYCLE YALE YAB-7 YC-15 AMST YC-14 YC-15 Y1B-7 Y1B-9 YF-93 Trademarks in the product configurations for the aircraft identified by the marks listed in this attachment * as applied to aircraft ** as applied to models/depictions of aircraft ATTACHMENT B Approval Log Article Description Approval Date ATTACHMENT C Distribution Channels Please check the appropriate distribution channel(s) below for inclusion in the Agreement: Unrestricted: all retailers and wholesalers. Mass: mass market, meaning high volume stores featuring discounted merchandise (including such retailers as Target, Kmart, Toys R Us, and WalMart), and wholesalers which sell to such retailers. Value-oriented: value-oriented department stores (including such retailers as Sears, Mervyn's, and Montgomery Ward), and wholesalers which sell to such retailers. Value-oriented specialty stores (including such retailers as Kids R Us and Baby Superstores), and wholesalers which sell to such retailers. Mid-tier: mid-tier department stores, meaning intermediate quality, fashion-oriented department stores (including such retailers as JCPenney and Kohl's). Upscale: Upscale retailers, meaning high quality, high fashion department stores (including such retailers as Robinsons-May, Nordstrom's and Bloomingdale's), specialty stores and boutiques, and wholesalers which sell to such retailers. Better specialty stores (such as Bergstrom's), and wholesalers which sell to such retailers). E-commerce: direct retail shopping involving the buying and selling of goods and services on the internet, especially the world wide web. Other: Please indicate distribution restrictions or channels which should be included in the Agreement (e.g. grocery stores, airports, hotel, gift shops, etc.): ______________________________________________________________. No wholesalers: Check here for no wholesalers. ATTACHMENT D Royalty Report Total Due A. Sales to Licensor, any subsidiary of Licensor, and/or the United States government Date of Sale Article /Licensed Mark Quantity Sold Country of Sale Net Sales Price 0 Sales of Articles on which a royalty was paid to Licensor by a licensee prior to Licensee in the distribution chain Name of Previous licensee: ____________________________ Date of Sale Article /Licensed Mark Quantity Sold Country of Sale Net Sales Price 0 Sales to any other customer of Licensee: Date of Sale Article /Licensed Mark Quantity Sold Country of Sale Net Sales Price Total (column 3 times column 5) Royalty Due (column 6 times 4%) License Issuance Fee ($1000), if applicable Promotional Fee ($2500), if applicable Total Check attached Payment by wire transfer, receipt attachedAttachment E Confidentiality Agreement This confidentiality agreement ("Agreement") is entered into between ("Contractor") and _ ("Licensee") and will be effective as of the date set forth below. In connection with Licensee's provision to Contractor of certain Other Intellectual Property, reference is made to License Agreement _________________ dated as of _______ , 20___ between Boeing Management Company ("Boeing"), a wholly-owned subsidiary of The Boeing Company, and Licensee (the "License Agreement"). Capitalized terms used herein without definition will have the same meaning as in the License Agreement. Boeing has agreed to permit Licensee to make certain Other Intellectual Property related to the manufacture of Articles available to Contractor in connection with Licensee's contract with Contractor (the "Contract") to assist Licensee in the manufacture of Articles. In consideration of the Contract, and as a condition of receiving Other Intellectual Property, Contractor agrees as follows: For purposes of this Agreement: "Other Intellectual Property" means any artwork, drawings, technical information, know-how, and advice provided or otherwise made available to Licensee in accordance with section 2 of the License Agreement together with a nonexclusive license under any copyrights and/or designs owned by Licensor therein. "Proprietary Information" means any and all proprietary, confidential and/or trade secret information owned by Boeing or a Third Party which are contained, conveyed or embodied in Other Intellectual Property. "Third Party" means anyone other than Boeing, Licensee and Contractor. 2. Boeing has authorized Licensee to grant to Contractor, and Licensee does hereby grant to Contractor, solely for the purpose of assisting Licensee in the design, manufacture, sale and/or distribution of Articles under the License Agreement, a worldwide, non‑exclusive, personal and nontransferable license to use Other Intellectual Property, owned by Boeing, in connection with performance of the Contract or as may otherwise be authorized by Boeing in writing. Contractor will keep confidential and protect from disclosure to any person, entity or government agency, including any person or entity affiliated with Contractor, all Other Intellectual Property. Individual copies of all Other Intellectual Property are provided to Contractor subject to copyrights therein, and all such copyrights are retained by Boeing or, in some cases, by Third Parties. Contractor is authorized to make copies of Other Intellectual Property (except for Other Intellectual Property bearing the copyright legend of a Third Party) provided, however, Contractor preserves the restrictive legends and proprietary notices on all copies. All copies of Other Intellectual Property will belong to Boeing and be treated as Proprietary Information under this Agreement. 3. Contractor specifically agrees not to use Other Intellectual Property in connection with the manufacture or sale of any model or product not authorized by the License Agreement. Unless otherwise agreed with Boeing in writing, Other Intellectual Property may be used by Contractor only for manufacture of the Articles on behalf of Licensee. Licensee and Contractor recognize and agree that they are responsible for ascertaining and ensuring that all Other Intellectual Property are appropriate for the use to which they are put. 4. If Boeing believes that the Contractor is not complying with the terms of this Agreement, Boeing may request, and Contractor will promptly return to Boeing (or, at Boeing's option, destroy) all Other Intellectual Property, together with all copies thereof and will certify to Boeing that all such Other Intellectual Property and copies have been so returned or destroyed. 5. When and to the extent required by a government regulatory agency having jurisdiction over Contractor or its operations, Contractor is authorized to provide and disclose Other Intellectual Property owned by Boeing to the agency for the agency's use in connection with Contractor's authorized use of such Other Intellectual Property in connection with Contractor's manufacture of Articles. Contractor agrees to take reasonable steps to prevent such agency from making any distribution, disclosure, or additional use of the Other Intellectual Property and/or Proprietary Information so provided or disclosed. Contractor further agrees to promptly notify Boeing upon learning of any (i) distribution, disclosure, or additional use by such agency, (ii) request to such agency for distribution, disclosure, or additional use, or (iii) intention on the part of such agency to distribute, disclose, or make additional use of Other Intellectual Property or Proprietary Information. 6. Boeing is an intended third-party beneficiary with respect to this Agreement, and Boeing may enforce any and all of the provisions of the Agreement directly against Contractor. Contractor hereby submits to the jurisdiction of the Washington state courts and the United States District Court for the Western District of Washington with regard to any Boeing claims under this Agreement. It is agreed that Washington law (excluding Washington's conflict-of-law rules) will apply to this Agreement and with regard to any claim or dispute under this Agreement. 7. No disclosure or physical transfer by Boeing or Licensee to Contractor, of any Other Intellectual Property or Proprietary Information covered by this Agreement will be construed as granting a license, other than as expressly set forth in this Agreement or any ownership right in any patent, patent application, copyright, trademark, or trade secret. 8. The provisions of this Agreement will apply notwithstanding any markings, or legends or the absence thereof, on any Other Intellectual Property. 9. This Agreement is the entire agreement of the Parties regarding the ownership and treatment of Other Intellectual Property and Proprietary Information, and no modification of this Agreement will be effective as against Boeing unless embodied in a writing signed by authorized representatives of Contractor, Licensee and Boeing. 10. Failure by either Party to enforce any of the provisions of this Agreement will not be construed as a waiver of such provisions. If any of the provisions of this Agreement is/are held unlawful or otherwise ineffective by a court of competent jurisdiction, the remainder of the Agreement will remain in full force. 11. This Agreement is coterminus with the Contract, provided that Contractor's confidentiality obligations shall survive Cancellation of this Agreement. ACCEPTED AND AGREED TO this: Date: _____________________ , 20___ CONTRACTOR LICENSEE Signature: Signature: Printed Name: Printed Name: Title: Title:

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