UK: High Court – LOTUS Trade Mark And Passing Off

Group Lotus plc and another v 1Malaysia Racing Team SDN BHD and others, [2011] EWHC 1366 (Ch), Peter Smith J, 27 May 2011

The High Court has given its judgment in a case concerning trade mark infringement and validity, passing off and breach of contract relating to LOTUS trade marks.

Colin Chapman founded the Formula One Team Lotus in the 1950s, and then the car manufacturer Lotus Cars Ltd. The claimant was the car-manufacturing side of Lotus, and the defendant represented the Formula One racing side.

The factual history was complicated. The two sides had entered into agreements which provided for: the sharing of know-how, the use of various Lotus names, and the right to apply for new trade marks in line with their respective rights under the agreement. In December 2009, the claimant entered into a further licence giving the defendant the right to use the name "Lotus Racing" for Formula One racing.

The relationship between the parties then broke down and proceedings were commenced under several heads of claim and counterclaim. The claimants alleged trade mark infringement, passing off and repudiatory breach of the 2009 agreement. They also claimed that the defendant's registered marks were invalid or should be revoked for nonuse. The defendants alleged repudiatory breach of the 2009 agreement, passing off and partial revocation of the claimants' trade marks in relation to motor-racing activities.

The fact that both sides wanted to enter a team using the word "Lotus" in the 2011 Formula One season resulted in a speedy trial being ordered in January 2011.

In its decision, the court dismissed all the claims and counterclaims for trade mark infringement and passing off, and allowed the claimants' application for revocation of the two of the defendant's trade marks for non-use. Otherwise, the defendant was entitled to re-register and use its trade marks without further challenge from the claimant. The court also held that the claimant had been entitled to terminate the licence for breach, and could claim damages for breaches relating to production of unlicensed products.

The court said that each side owned separate goodwill in the Lotus name (in the defendant's case, in combination with "Team") and the Lotus roundel logo for its respective activities.

In order to have succeeded in its passing off and section 10(2) infringement claims, the claimant had to show that there was confusion, or a likelihood of confusion, on the part of the relevant public. The court said that there was no evidence that the relevant public (viewers of Formula One racing and purchasers of sports cars) would be confused into believing that the defendant's business was run by the claimant. Even when the two sides were both running Formula One teams containing the word "Lotus" (as in the 2010 season), sports commentators and the public appeared to have experienced no difficulty in differentiating between the two. It was quite common for competing Formula One teams to use names containing the same brand names, such as Renault, Ferrari and Red Bull.

The judge dismissed a claim for infringement under section 10(3) on the ground that, although the claimant's marks had a reputation, it was for car manufacturing rather than motor racing. Hence the defendant's motor-racing activities neither took unfair advantage of those marks, nor caused them detriment.

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Charles Russell's Intellectual Property Group
 
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