Lotus vs Lotus legal battle ends in a draw

Say what you will about the state of Formula 1 racing today, but at least when the day is done, there's a winner and there are losers. The drawn-out legal battle between Group Lotus and Team Lotus, however, has come to a rather anticlimactic resolution.

As you may recall, Group Lotus (that is, the car manufacturer and engineering consultancy) licensed its name to a Malaysian racing team a couple of years ago. That team then turned around and independently acquired the name Team Lotus from a third party. Group Lotus cried bloody murder and terminated its agreement with the team, who in turn did not relent. Then Group Lotus entered into a partnership with the Renault team (which also powers the Team Lotus cars), resulting in two teams carrying the name Lotus-Renault and a whole lot of confusion.

Unable to resolve the issue, the two outfits went to court, and having heard both sides, the judge has rendered his verdict. Of sorts. Justice Peter Smith found both parties in the right, and declared, essentially, that while the name Lotus belongs rightfully to the automaker, the name Team Lotus – deemed to have been separately cultivated, and neglected for years by the automaker – rightfully belongs to the Malaysian racing team, which acquired the name. The judge also ruled that Team Lotus had breached certain terms of its contract with Group Lotus, and awarded the latter damages to be paid by the former.

At the end of the day, Team Lotus has the legal right to continue using its name, while Group Lotus has the right – both within F1 and without – to the name Lotus by itself. Which hardly makes the matter any more clear, though the automaker is expected to appeal the decision. Follow the jump for statements from both parties.
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Team Lotus Statement
27th May 2011

Team Lotus is very happy that the court case concerning the rights to the Team Lotus name has today come to a positive conclusion and that the team can now focus its full attention on its long-term challenge for honours on and off track. The decision confirms that Team Lotus is the true owner of the full Team Lotus name and the iconic roundel, establishing in law that the Anglo-Malaysian team is the rightful heir to Team Lotus and all associated goodwill.

Team Principal Tony Fernandes gave his comments on behalf of his fellow shareholders Kamarudin Meranun, SM Nasarudin and the 250 strong workforce based in Malaysia and Hingham, UK: "We are all pleased that it has been clarified that we are the rightful owners of Team Lotus. We have always been confident that the factual evidence we presented would lead to this decision and today's judgment confirms that belief. We are of course disappointed about the decision that Group Lotus was entitled to end the our licence agreement in 2010. We entered into that contract on the basis that we were beginning a long-term partnership with Group Lotus but unfortunately they then used technical breaches of the merchandising pre-notification process to bring the licence and our partnership to an end. However, my fellow shareholders and I are firm believers that when one door closes another door opens. In the early days of our agreement we realised its termination was inevitable and as events have unfolded the end of the licence has proved positive for us, with many new avenues being opened up as a result.

"We wanted to develop a long-term relationship with Group Lotus and help them sell more cars around the world but that door closed and now we are delighted that we can turn our attention to ensuring success for Caterham Cars on the road and Team Lotus on track. These are two very exciting brands and their future development, bringing these two iconic brands together under the Caterham Team Lotus umbrella, will see us introduce new Caterham cars and a range of new Team Lotus brands into the global marketplace. Now our main aim is to build on the solid foundations that has made Caterham Cars the model for how to run a profitable contemporary car company and add more history to the incredible story of Team Lotus over the coming months and years and with the people, spirit, passion and determination we have in both businesses we know that marks the next stage in our incredible story."

Team Lotus Statement Two
27th May 2011

Team Lotus is very pleased with the judgment in the dispute with Group Lotus and does not intend to appeal any of the key findings. As Group Lotus has already announced its intention to seek leave to appeal the Judge's decision on the headline argument in this case it is clear they do not feel they have won. There are a number of points that are interesting to note in the Judge's findings which invalidate any claim of victory by Group Lotus in the main cause of this action:

• The Judge ruled that Team Lotus owns the separate goodwill in the "Team Lotus" name and roundel and we cannot be prevented by Group Lotus from using either of them in relation to Formula 1 racing. This was their headline argument in this case and the primary objective of Group Lotus was to stop us racing under the Team Lotus name. On this point they have lost.
• Until 1985 Group Lotus and Team Lotus had their own separate pools of goodwill in respect of the two separate businesses – the road car operation as one entity and the Formula 1 team as another. The claim by Group Lotus to have always owned the goodwill in Team Lotus failed.
• Having clearly established that there were two separate pools of goodwill the judgement also establishes that the goodwill in the Team Lotus name and roundel has continued and still survives - it has not been eliminated by non-use. The claim by Group Lotus on that point has failed.
• It has also been established that there is no confusing similarity between Team Lotus and Lotus. As there is independent goodwill in the mark Team Lotus it is not confusingly similar to Lotus. Group Lotus cannot stop Team Lotus racing under the name we own, so again, Group Lotus has failed in their main cause of action.
• Although goodwill in the "Team Lotus" name and mark subsists, our trade marks for the Team Lotus name and roundel have been revoked for non use between 2003 and 2008. This however has no impact upon our ability to continue to use the "Team Lotus" trade marks, and indeed to re-register them.
• The only point that Group Lotus won, and could therefore claim any sort of victory on, was the point that the Judge himself referred to in paragraph three of his judgment as "less important". The Judge found in their favour that Team Lotus had breached the licence agreement by producing merchandising without pre-approval and that Group Lotus was therefore entitled to terminate. This has no bearing whatsoever on the key question as to whether Team Lotus is allowed to continue to race under the Team Lotus name.

27 May 2011

Group Lotus Wins On Key Issues In Formula 1 Naming Dispute

Mr Justice Peter Smith today gave his judgement in the dispute between Group Lotus plc and Team Lotus, Tony Fernandes and others in respect of the right to use the name "Lotus" in Formula 1.

Judgement Summary
• Group Lotus has the right to use the name "Lotus" on its own within Formula 1
• Group Lotus entitled to race in the historic black and gold livery
• 1Malaysia Racing Team (1MRT) ruled to be in breach of licence agreement, Group Lotus awarded damages
• Team Lotus Ventures Limited trademarks revoked for non-use
• Group Lotus trade marks unaffected
• Group Lotus has the right to use the Lotus marque on cars for road use

The Judge found that:
Group Lotus has goodwill associated with the name "Lotus" in Formula 1 and is free to compete in the sport under that name using the Lotus roundel;
Group Lotus is entitled to race in F1 using the historic black and gold livery;
1MRT is in breach of the Licence granted to them by Group Lotus to race in F1 under the name Lotus Racing and has awarded Group Lotus damages in respect of that breach;
Team Lotus Ventures Limited's trade mark registrations in the name of Team Lotus are cancelled as a result of non-use;
Group Lotus trade mark registrations are unaffected; and
Group Lotus has the right to use the Lotus marque on cars for road use.

The Judge also found that Team Lotus has the right to continue to race in Formula 1 under the name Team Lotus but the effect of the Judgment is that only Group Lotus can use the name "Lotus" on its own in F1. Group Lotus is concerned that this aspect of the Judgment will cause confusion in the eyes of spectators and the wider public. Accordingly, Group Lotus is seeking leave to appeal so that the right to use the Lotus brand in Formula 1 is clarified once and for all in the interests of the sport and the fans. Group Lotus and its shareholder Proton Holding Bhd are confident of success on appeal.

Speaking after the judgement, Sarah Price, Head of Legal, Group Lotus plc said: "Group Lotus is pleased that its right to race under the Lotus name in F1 has been upheld and that the Defendants' attempts to stop that have failed.

"The on-going dispute with Team Lotus and associated companies has been a cause for concern for all at Group Lotus. Despite the detailed judgment there are issues which still require clarification and we remain committed to obtaining this much needed clarity for the many fans of the Lotus marque - we are extremely grateful for their continued support. The decision to appeal has not been taken lightly."

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