Lotus v Lotus The Formula for Success

Published 15 April 2011

By Ben Rees. At the recent 2011 Malaysian Grand Prix, the local F1 fans in attendance might have been forgiven for being torn, or at the very least confused, as to which team to cheer on. On the starting grid 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 returned to Formula 1 in 2010 - following a 16 year sabbatical - with Malaysian entrepreneur Tony Fernandes’ newly formed ‘1 Malaysia Racing Team’ (1MRT) racing as ‘Lotus-Cosworth’. A year on, and Fernandes’ team, now driving under the ‘Team Lotus’ moniker, are locked in a bitter dispute with Proton, owners of ‘Group Lotus’, over use of the famous racing name.

Background 

In 2009 Fernandes, owner of the Malaysian budget airline ‘Air Asia’ and long time Formula 1 fan, entered into a licence with Group Lotus owners ‘Proton’ to enable his newly formed team to race under the Lotus brand in their debut season and beyond. The Lotus-Cosworth team, with drivers Jarno Trulli and Heikki Kovalainen, failed to score a Championship point in their debut season, but were widely seen as the most competitive of 2010’s three debut teams. Their difficult season took a turn for the worse when Proton terminated the licence with 1MRT following what they termed “flagrant and persistent breaches” of the licence agreement. 

Not to be deterred, and seemingly keen to hold on some form of association with the Lotus brand, Fernandes turned to David Hunt, brother of the late 1976 Formula 1 World Champion James Hunt. Hunt had himself bought 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 1MRT racing under the ‘Team Lotus’ name in 2011. 

The beginning of the public feud 

In what would turn out to be the start of a very public spat 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”. There was, according to Group Lotus, no differentiation to be made between the ‘Group Lotus’ and ‘Team Lotus’ brands. Rather inevitably, Team Lotus disagreed and sought to highlight the entities as legally and commercially distinct. The public jousting served to foster a great deal of public confusion as to the ownership of the Lotus brand, and who had the right to exploit it. 

To compound the confusion, on 8 December 2010, Proton dramatically announced that Group Lotus would be entering the Formula 1 fray for the 2011 season after reaching a partnership 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. 

The dispute 

The dispute now centres around two issues: whether Group Lotus were entitled to terminate the licence first entered into with Fernandes and 1MRT in 2009, and whether David Hunt’s sale of Team Lotus Ventures Limited to 1MRT entitles that team to use the ‘Team Lotus’ brand. Perhaps 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 at the first race, Group Lotus sought to have the licence issue decided by way of summary judgment before the first checkered flag of the 2011 season fell. The judge took little time in deciding that the matter was best decided with a full trial, which was listed for 21 March 2011. 

The end of the drama? Not quite. In the days before the trial, David Hunt, previously described by Fernandes as “the most honourable man” in the whole dispute, withdrew his support for Fernandes and Team Lotus. Against the backdrop of a disagreement over a deal struck between him and Fernandes in January of this year, Hunt cited “potentially some serious holes” in Team Lotus’ case and refused to co-operate with them at trial. Ominously in this already rather hotly contested and very public fracas, Hunt has said that, failing an about-turn by Fernandes regarding their January agreeement, “this trial won’t be the last battle he’s facing, even if he wins.” 

The ten day trial has now concluded and both teams now anxiously await the judgment, but it is clear that the dispute has done no favours for either team – or the Lotus brand. Trulli, attempting to focus on getting his first points for Team Lotus, has called the spat “embarrassing and surreal” and Fernandes himself has acknowledged that the legal case may well have deterred sponsors from backing his team. 

Team Lotus are looking to build a Formula 1 team organically, albeit with a commercial leg-up from one of the most recognisable names in the sport. Group Lotus, with Proton’s backing, are looking to exploit the success of an already established Renault team, in order to aid the resurrection of Lotus as a road car brand. However it appears that, whatever the outcome, the dispute has done nothing but damage the brand both teams wish to exploit.

See 'Lotus v Lotus: A Divided Operation' for commentary on the judgement.

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