Lotus : The Day of Reckoning in the IPR battle draws nearer…
Chris Sawyer, Executive Editor of US-based website Cars In Context, reflects upon this week’s developments in the dispute over the IPRs to the Team Lotus Trade Marks.
Well, 21 March, 2011 is to be the day of reckoning. That is the day when Mr Justice Peter Smith will hear arguments from the lawyers representing Group Lotus and Tony Fernandes/1Malaysia Racing Team (1MRT) over the use of the Team Lotus name. The courtroom drama will take place after the opening race of this year’s Formula 1 season in Bahrain, but before the Australian Grand Prix in Melbourne.
The High Court Judge will consider the parties’ respective claims and counterclaims in respect of the IPRs to the Team Lotus name and what 1MRT allege was Group Lotus’ early termination of the five-year Licence to operate as Lotus Racing F1 which commenced at the beginning of last season. Mr Justice Smith apparently hopes to have the Trial wrapped up in 10 days. However, given that he will, no doubt, have to get to grips with the seemingly complicated legal history of Team Lotus, that might be turn out to be a tad ambitious.
Group Lotus had, unsurprisingly, gone for the knockout punch last Monday and applied for a Summary Judgment against 1MRT in respect of that company’s use of the Team Lotus name – a successful outcome would have ended the legal drama and given Group Lotus unquestioned rights to the Team Lotus name and logo.
However, by asking the warring parties to try and reach a solution before the Trial commences and identifying the legal points which he wishes to be addressed, Mr. Justice Smith has indicated that the case is not as cut-and-dried as Group Lotus and its supporters, including the Chapman family, would have you believe. More than that, the Judge’s initial ruling suggests that he would prefer the parties to resolve their dispute without recourse to him and might not, perhaps, take too kindly a view of those parties who, he feels, waste his time.
Granted, that’s a lot to read between the lines, but the judiciary often prefers litigants to settle their differences without the Court’s help. Mr Justice Smith’s decision sets that out as the preferred option – if this action goes to Trial, each side had best be prepared to argue on the legal merits of the case, with historical precedent on their side. Anything less, I believe, will call down his sanction, if not his wrath.
I have said from the outset and still believe that Tony Fernandes and 1MRT have the stronger case, backed up by historical precedent and supported, in its early days, by the Chapman family itself. The Chapman family can fairly claim to have supported Fernandes and 1MRT/Lotus Racing F1 only as long as there was a valid Licence from Group Lotus, but the revocation of that Licence – in the absence of any actionable breach of contract on the part of Fernandes and 1MRT/Lotus Racing F1 – is probably only a secondary consideration.
I suspect that, if Fernandes et al can establish that they upheld the good name of Lotus and did not act in breach of the relevant contract, then the real reason for the abrogation of the contract between Group Lotus and 1MRT/Lotus Racing F1 will take centre stage. Furthermore, it can be argued that Fernandes is not putting the Lotus name on 1MRT’s cars, but that of Team Lotus, a historically separate entity.
I understand, from past statements, that Group Lotus will claim that 1MRT does not have the right to use the Lotus logo and that the company will then seek to claim the right to prevent any other legal entity from using the Lotus name in motor sport or the production of vehicles. My sources in both England and Kuala Lumpur say the production claim extends to the production of racing cars as they are separate, but not indistinct, from road transport – this may turn out to be Group Lotus’ strongest argument.
The fact remains, though, that Group Lotus and its owner, Proton, had ample time in which to buy the assets of Team Lotus from David Hunt’s company, Team Lotus Ventures Limited, prior to the latter’s sale to Tony Fernandes/1MRT. Further, Fernandes can create his own distinct Team Lotus badging – that might conceivably take the form of a green and yellow badge minus Colin Chapman’s initials, the triangular Lotus ‘lozenge’ logo (again minus the ‘ACBC’ initials) from the immediate post-Chapman days or any of a number of other concepts.
Anyway, if Fernandes/1MRT were to lose the lawsuit (something I don’t believe will happen), they could run the cars in Adelaide with the Team Lotus branding disguised to look like a bar code, much as Ferrari did with its Marlboro logos.
However, if Group Lotus were to lose the action, I believe we would see some rapid changes take place at Group Lotus. My sources suggest Dany Bahar’s tenure at the helm of Group Lotus is under scrutiny. Reports say that Bahar has overspent his budget by more than 25% and that the financial backers of his planned overhaul of Lotus are beginning to ask some serious questions – questions they should have asked when he announced his plans at last year’s Paris Motor Show.
Bahar’s plans have since grown to include a greater involvement in the IndyCar series, Lotus-designed and -built road and racing engines and purchase of a major stake in the Renault F1 team. I understand that Group Lotus’ financiers are now asking more questions, more loudly – to the point, it should be noted, that there is some question as to whether or not Bahar will see out 2011 as Group Lotus’ CEO.
My sources reckon that, with the lawsuit over naming rights and the addition of a leased Cessna Mustang to the Group Lotus liabilities sheet, Bahar has drawn a bullseye on his back. Much, in fact, like the one former Ford CEO, Jac Nasser, drew on his when he bought seemingly every orphan automaker (he also made a play for Proton and Lotus) and outfitted each division with its own bespoke Gulfstream jet so that divisional executives would be immersed in the hallmarks of their brands every time they travelled on company business.
Nasser’s exit from Ford was both bitter and swift once the decision was made. Lotus enthusiasts can only hope there’s another Alan Mulally sitting in the wings to take Dany Bahar’s place.