UK: It's All In The Name

Last Updated: 9 August 2011
Article by Ben Rees

It's all in the name

Lining up on the starting grid for the 2011 F1 Season were two Malaysian-owned teams, both with Renault engines... and both racing under the Lotus brand – 'Team Lotus' and 'Lotus Renault GP'.

The Lotus name first returned to Formula 1 in 2010, following a 16 year sabbatical, with Malaysian entrepreneur Tony Fernandes' newly formed '1 Malaysia Racing Team' (1MRT). A year on, and Fernandes' team, currently driving under the 'Team Lotus' moniker, have been locked in a bitter dispute with 'Group Lotus', owned by Malaysian car giant Proton, over the use of the famous racing name.


In 2009 Fernandes, owner of the Malaysian budget airline Air Asia and long time Formula 1 fan, entered into a licence with Proton to enable 1MRT to race under the Lotus brand in their debut season and beyond (the 2009 Licence). The new Lotus team, with drivers Jarno Trulli and Heikki Kovalainen, failed to score a Championship point but were widely seen as the most competitive of 2010's three debut teams. Their difficult debut season took a turn for the worse when, following months of strained relations, Proton terminated the 2009 Licence with 1MRT at the end of the debut season following what Proton termed "flagrant and persistent breaches" by 1MRT.

Not to be deterred, and seemingly keen to hold on to some form of association with the Lotus brand, Fernandes turned to David Hunt, brother of the late 1976 Formula 1 World Champion James Hunt, who had acquired the 'Team Lotus' name from the administrators of Team Lotus Ventures Limited following the former F1 team's financial demise in 1994. Fernandes and Hunt came to an agreement which would see the 1MRT racing under the 'Team Lotus' name in 2011.

In what would turn out to be the start of a press release war between the two teams, on 27 September 2010, 3 days after Fernandes' Team Lotus announcement, Proton announced that they would "support Group Lotus in taking all necessary steps to protect its rights in the "Lotus" name, including resisting any attempts by Mr. Fernandes or his companies, or any other unauthorised person, to use the "Lotus" name in the 2011 Formula 1 season". The press release insisted that Group Lotus was the only entity with the right to exploit the brand. Then, on 8 December, Proton made the dramatic announcement that Group Lotus would be entering the Formula 1 fray for the 2011 season after reaching a deal with the well established Renault team. The battle lines were well and truly drawn, and it wasn't long before the case was before the High Court.

Lotus – a divided operation and the road to trial

The Lotus story is a complicated one. Colin Chapman began the Lotus brand and raced in the 1950s under the Team Lotus name. In the late 1950s and early 1960s different corporate entities were established; Lotus Cars Ltd, to run the road car operation, and Team Lotus Limited, to run the racing operation. In effect, the claims and counterclaims heard in this dispute, which predominantly relate to passing off and trade mark infringement, can be dated back to the formation of the two companies.

Over the decades the companies had shared resources and know-how on an ad-hoc basis and, in the successful period for Team Lotus in Formula 1 in the 1970s, Group Lotus were keen to establish a link in the public's consciousness between the Lotus road car and the Formula 1 operation. This is perhaps most clearly illustrated in Group Lotus' sale of road cars in the famous 'John Player' black and gold livery, which was for years closely associated with the successful F1 Team Lotus. However, save for a very short period, Team Lotus and Group Lotus have operated as entirely distinct legal entities.

Lotus founder Colin Chapman died in 1982 and, by 1985, Group Lotus' profits were waning. In an effort to make Group Lotus a more desirable prospect to potential purchasers, it was decided that it was necessary for the two Lotus entities to crystallise their distinct respective operations in writing. The agreement that followed sought to demarcate the companies, drawing the dividing lines between the intellectual property each company could call their own, and to set out their particular areas of operation going forward.

In the period since, Team Lotus, following a 'pass the parcel' of sales and acquisitions, found its way into the hands of David Hunt in 1995; it was this company that entered into an agreement with Tony Fernandes in 2010, following 1MRT's failed 2009 Licence collaboration with Group Lotus (itself now in the hands of Proton). It is not entirely clear, but it appears that Fernandes acquired what was left of Team Lotus, including its name and goodwill.


The dispute centred around two central issues: whether Group Lotus were entitled to terminate the 2009 Licence entered into with 1MRT, and (perhaps of greater importance) whether David Hunt's agreement with Tony Fernandes entitled 1MRT to use the Lotus brand and other 'Team Lotus' intellectual property.

Mindful of the then impending start to the Formula 1 season, and in the hope of ensuring that only their cars raced with the Lotus badge, Group Lotus sought to have the licence issue decided by way of summary judgment before the first chequered flag of the 2011 season fell. The judge took little time in deciding that the matter was best decided with a full 'speedy' trial which was listed to be heard from 22 March.

The drama continued right up to the doors of the Royal Courts of Justice; days before the trial, David Hunt withdrew his support for Fernandes, 1MRT and Team Lotus, citing both a disagreement over a deal struck between them in January and "potentially some serious holes" in Team Lotus' case. Ominously in this already rather ill-fought and very public spat, Hunt said that, failing an about-turn by Fernandes, "this trial won't be the last battle he's facing, even if he wins."

Having heard the evidence over 7 days in March and April, Mr Justice Peter Smith has now handed down his written judgment. In it, he considers claims and counterclaims relating to passing-off, trademark infringement and breaches of the licence agreement entered into by the two parties.

Arguments and findings – both teams remain on the grid

Put simply, Group Lotus argued at trial that it was the entity to which the origins of the Lotus brand could be traced and, as such, it claimed the intellectual property rights subsisting in both Lotus Cars and Team Lotus. They said that the Defendants had, over the years, infringed its intellectual property relating to the Lotus brand under the Trade Marks Act 1994 (TMA). Group Lotus also argued that the goodwill that had been established in the company was 'indivisible' and that the whole Team Lotus operation was merely an arm of this collective goodwill.

The judge dismissed Group Lotus' claims (and the Defendants' tactical counterclaims) on these points. The 'Team Lotus' moniker, it was held, had never been directly associated with Group Lotus. The link between the two companies was summarised by the judge: "all [Group Lotus] wanted was the kudos of being associated with the successful racing team but certainly not any of the exposure" (at paragraph 116).

Group Lotus' goodwill argument was also dismissed; there was a clear understanding, evidenced by the 1985 agreement, that there was separate goodwill owned by each of the entities. Formula 1 fans too would understand the separation – they were not an easily confused bunch, having long since got to grips with the notion of similarly named teams on the F1 grid.

Group Lotus had arguments in reserve, but these too failed - there was held to be no abandonment of the goodwill by the Defendants, despite the 14 year racing sabbatical; the Lotus brand was still very much a respected name in racing, and one that was worth fighting over.

The judge also held that a restrictive covenant in the 2009 Licence entered into between Group Lotus and 1MRT, which sought to restrain 1MRT from using the word 'LOTUS' upon termination of the licence was deemed void (for being both too vague and too wide in scope) and in restraint of trade. There was, therefore, nothing to prevent the deal concluded between Hunt and Fernandes.

As a result of the findings, 1MRT is free to continue competing in the Formula 1 calendar under the 'Team Lotus' brand.

Was it all bad news for Group Lotus?

Whilst not affecting 1MRTs ability to race as Team Lotus, Group Lotus did successfully argue, under section 46 of the TMA, that two of the Team Lotus marks were to be revoked owing to a period of 5 years non-use (between 2003-2008).

They were also successful in their claims relating to a breach of the 2009 Licence; the judge concluded that 1MRT had breached provisions of the licence relating to merchandising, for which Group Lotus is entitled to damages (although it is anticipated that such damages are likely to be relatively modest).

Final standings

Whilst Group Lotus can point to pyrrhic victories with regards their trade mark revocation and breach of the 2009 Licence arguments, it is them, rather than Team Lotus, who are more likely to be licking their wounds in the paddock. Once the dust settles, this hard fought and tempestuous legal battle can be seen to have simply continued the pre-trial status quo; however the fact that Fernandes and 1MRT can continue to race as 'Team Lotus' is likely to be seen by the Defendants as a moral victory, if nothing else.

It has been clear throughout the saga however that the legal battle was doing nothing for the teams' success on the track – or the Lotus brand itself. Jarno Trulli has said that he viewed the spat as "embarrassing and surreal" whilst Tony Fernandes has himself acknowledged that the legal case may well have deterred potential sponsors from backing his team.

With Group Lotus looking set to appeal the decision, the off-track distraction for the drivers, sponsors and supporters of the respective teams may not yet be over.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Ben Rees
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.