Lotus judge: why sue, if you can race each other for the name?

At last we know who has control over the talismanic name Lotus, much loved in motor racing circles and once symbolic of a fruit eaten by lovers of luxury and self-indulgence.  Our information comes courtesy of a ruling this Friday in Group Lotus Plc and another v 1Malaysia Racing Team SDN BHD and others [2011] EWHC 1366 (Ch),  a gigantic decision of Mr Justice Peter Smith in the Chancery Division, England and Wales (388 paragraphs, plus appendices) to the effect that Team Lotus Ventures is allowed to call itself Team Lotus.

In short, British inventor and car designer Colin Chapman was the founder of Lotus Cars, which first competed in motor racing events in 1948.  He died of a heart attack in 1982 and, following which event there has sadly been a fair bit of contention as to who is qualified to use the term 'Lotus'.  This has crystallised into the litigation noted in this post, and alluded to in an earlier post here. Some flavour of the dispute and what it means to the parties can be gleaned from today's report in the Irish Independent:
"In Monaco this weekend, in one particular pit garage, they were celebrating an important victory. [Entrepreneur and AirAsia founder] Tony Fernandes was jubilant at the hot-off-the-press news that a high court judge had just ruled that his team has a right to use the name 'Team Lotus'. Down the way at Renault, by contrast, the team's shareholder and title sponsor 'Group Lotus' -- which is owned by Proton -- were in shock. Proton had originally granted a license to Fernandes for the use of the name 'Lotus Racing' for five years. But one year into the contract they withdrew it. So Fernandes, who has invested over £80m in his team since its inception in 2009, purchased the dormant name 'Team Lotus' from David Hunt (brother of former world champion James Hunt), who had picked it up from the administrators when the iconic team went bankrupt in 1994.
The original Lotus MK1 was
a souped-up Austin 7
...  'Team Lotus', as the name suggests, is and was an F1 racing entity, whereas 'Group Lotus' manufactures cars. 'Team Lotus' switched from Cosworth to Renault engines this season. Group Lotus and a company called Genii Capital own the former 'Renault F1' team. It gets even more complicated than that. ...  The Chapman family sold the Lotus company some 20 years ago and since then it has been owned by General Motors, Bugatti and now Proton. But having initially backed Fernandes' 'Team Lotus' in a fanfare of publicity, the Chapmans have switched their allegiance to Lotus-Renault.

Proton is Malaysian, as is the English-educated Fernandes. The car giant was part of a consortium that backed Fernandes when he first entered F1".
The Kat glazes over with all these details to understan
But what of the ruling itself? According to a note posted on the website of 20 Essex Court, whose barristers appeared for defendants Team Lotus, Peter Smith J has now held that Team Lotus Ventures (TLV) owns the goodwill associated with the Team Lotus name and roundel, and that Group Lotus's claim to the name should be dismissed. It's not all good news for TLV though, since the judge ordered that it be revoked for non-use during the period in which TLV was not involved in Formula 1 racing.  By way of consolation, TLV -- and not Group Lotus -- was entitled to the registration of new trade marks registered for the team's name and roundel.  In further holdings, the judge concluded that TLV's use of its name did not infringe Group Lotus's trade marks in the name Lotus and that 1Malaysia was not to be restrained, by reason of a licence agreement between it and Group Lotus in 2009, from using the name Team Lotus. However, 1Malaysia had been in breach of the licence agreement in failing to obtain approval for the manufacture and sale of 'Lotus Racing' merchandise in 2010, this licence having been validly terminated by Group Lotus in September 2010. Did you follow all of that? No? Well, it took this Kat a few readings before he got the hang of it, but he wouldn't want to have to explain it to anyone after he'd been at the catnip.

The judge made an interesting observation on this case, which occupied seven hearing days and plainly wasn't as much fun as the Da Vinci Code litigation in which this occasional IP judge presided:
"387. It is unfortunate in my view that this case came before the courts and was incapable of resolution beforehand. However if the parties cannot agree to resolve a dispute that is why the courts are here. At the end of the day I cannot help feeling that nevertheless the parties are better competing against each other on the F1 racetrack. Equally I cannot help avoiding the feeling that F1 followers would actually find that enhances F1 and they would be interested to see which of the two Lotus cars was more successful and which then might possibly be better placed to claim to be successors to the Colin Chapman mantle".
The IPKat is enchanted with the notion of competing parties resolving their disputes in this fashion.  If litigants fighting over a racing brand can settle their grievances over 24 laps at full throttle, there must be scope for other novel means of satisfying bruised honour.
Lotus judge: why sue, if you can race each other for the name? Lotus judge: why sue, if you can race each other for the name? Reviewed by Jeremy on Monday, May 30, 2011 Rating: 5

1 comment:

  1. And two days later in Monaco, Team Lotus finish 13th and 14th (first of what are still called the "new" teams, as usual) while Lotus Renault GP pick up eighth place but their other car ends up in the barriers (and the driver in hospital) because of someone else's mistake. Any parallels with the High Court judgement? It's certainly difficult to tell who came out ahead, but the two Lotus teams aren't going to be fighting it out on the track for a long time yet.


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