We are hearing that the Lotus-ART announcement last night is not merely about GP2 and GP3 and seems to be a precursor to a battle over the rights to use the Lotus name in Formula 1. From what we are hearing, Group Lotus, which is owned by the Malaysian government-controlled Proton car company, has embarked on three legal actions to stop Tony Fernandes from using the Lotus name next year. The Group applied for various trademarks relating to Lotus Racing earlier this year. The group is also believed to have withdrawn permission to allow Fernandes to use the Lotus name and is claiming that David Hunt, the owner of Team Lotus Ventures Ltd, had no right to sell the rights and logos to the Team Lotus name. The apparent aim of all this is to grab the Lotus name and to enter F1 with a Lotus-branded team, run by ART.
The bad news is that all of this is not on very solid legal ground. The Lotus company dates back to 1952 when Colin Chapman established the first Lotus company, called Lotus Engineering. Team Lotus, which ran cars in competition, became a separate entity two years later, while Lotus Engineering developed into Group Lotus in 1958, when the company began to build production road cars.
After Colin Chapman’s death in 1982 the Lotus companies were re-organized and Group Lotus was re-financed with capital from British Car Auctions, Toyota and various other parties. In January 1986 General Motors bought out most of the Group shareholders and, by the end of the year, had acquired a 91% stake in the road car business. This firm would later be sold on to Italian businessman Romano Artioli before Perusahaan Otomobil Nasional Bhd (Proton) bought control in 1996.
While all this was going on Team Lotus was a separate entity, controlled by the Chapman Family. In 1975 the racing operations were transferred to a firm called Team Lotus International Ltd and a trademark application was made in 1988 for a “Team Lotus”, including the celebrated CABC logo. At the end of 1990 two former Lotus employees, Peter Wright and Peter Collins, took control of the F1 team, with a company called Team Lotus Limited, with the rights to the name and logo being assigned to this new organisation. Four years later this latter operation went into administration and a firm called Paintglossy Limited (later renamed Team Lotus Ventures Limited) bought the rights to the name and logo from the administrator. The “Team Lotus” trademark process was completed in January 1995, specifically in relation to Formula 1 racing.
Group Lotus challenged this decision in the courts in 1998 – after the Proton takeover – and lost. Thus Group Lotus has no real legal claim on Team Lotus, based on the decisions made up to now. There is no reason to suppose that a new legal action will be any more successful than previous ones. It seems that Tony Fernandes has now acquired the rights and logos from Team Lotus Ventures Ltd and so, in theory, has the right to call his organisation Team Lotus. The Chapman Family seems to be in agreement with this situation – which is a point of some importance.
Fernandes is very well-connected in Malaysia. For the last nine years he has run Air Asia, which was established in 1993 by the Malaysian government’s DRB-Hicom. This fell quickly into debt and in 2001 the then Prime Minister Dr Mahathir Mohamad sold it to Fernandes for one ringgit. He then pulled off an amazing revival.
Proton is a loss-making state-owned automobile company. Its ownership of Lotus has made little difference. The Proton board decided in September 2009 to hire Dany Bahar as the firm’s new chief executive. He was employed at Ferrari at the time and brought in a number of Ferrari people as he set about revamping the firm, trying to turn it into a Malaysian version of Ferrari (albeit based in England). All of this probably explains why there have been conflicting reports in recent days regarding the Lotus engine supply next year. Team Lotus is believed to have a deal with Renault, but Group Lotus and ART seem to be keen to use the old Toyota F1 base and equipment. The price tag on this is about $30 million a year and the deal is for two years. Toyota provides Lotus with road car engines and so Bahar is obviously trying to stitch together the various elements of the deal to Ferrari-fy Lotus. There is currently no F1 entry for Lotus ART, which will require further investment.
The bottom line of all this is that there is probably going to be a power struggle in Malaysia to see whether Proton’s masters support Bahar or Fernandes. It is a case of my politician is stronger than your politician. Bahar is guy with ideas, but Fernandes has had solid and impressive results in the past and he seems to hold most of the cards with regard to the Team Lotus name. He also has an F1 entry, which is more than can be said for Bahar (at least as far as we know).