I thought that rumor had been put to bed years ago. There was a post on this board about this many years ago (wish I could find it). detailing that there is no record of any litigation over this matter.
I remember that Reggie Karnes showed a a copy of the Gilbert memo in his AF VHS video years, where it was explained that due to maintenance problems the item was being discontinued.
Marshall Frisbie, Gilbert's chief engineer told me over lunch at the time that he had no recollection of any problems with Lionel about the whistle.
Also according to Mr. Karnes Mr.Gilbert was upset because they were going into DC and that whistle would blow constantly on a DC powered layout. Gilbert's plans for expansion of DC were interrupted by the Korean War which made Alnico 5 unavailable and put end to the venture .
Herb Wasserman