Lotus vs. Lotus ?

[Kootje]

http://www.f1pits.net/nieuws/koopt_team_lotus_caterham_cars/

Ssssst ,dat was het nieuws wat ze volgende week woensdag bekend wouden maken.

Lotus-Caterham klinkt wel vertrouwd trouwens.
Zeker omdat de Caterham eigenlijk 'n Lotus super 7 is.


Overigens laat de uitspraak in het Lotus vs Lotus verhaal nog zo'n 2 weken op zich wachten.
Dat wordt dus begin april ergens.

[JimmySPA]

Caterham, gave auto's. Jammer dat ze hun naam verbinden met een achterhoede F1 team, wat voorlopig niks wordt...

[0634]

Voorlopig misschien niet, maar ik heb wel het idee dat Fernandes serieus bezig is en ook van plan is om nog wel even in deze sport actief te blijven.

[Edwin90]

Daar lijkt het voorlopig wel op...wel vond ik het behoorlijk eigenwijs om aan de naam Lotus vast te houden (ongeacht hij in z'n recht staat of niet) Lotus staat blijkbaar achter Renault. Het lijkt me meer en meer een verloren gevecht te worden.

[gloudiesaurus]

Ik vraag het me af...
Weet wel dat niemand wijzer wordt van 2 Lotussen in de Formule 1...
Ik had dit jaar eigenlijk al wat meer van Lotus verwacht, ze zitten nu in een soort gat tussen de "bestaande teams" en Virgin en HRT.
Ik vind het in ieder geval wel een aanvulling in de Formule 1... wellicht hebben ze nog wat meer tijd nodig.

[KVDracer]

Ik vind dat Lotus het toch ook niet echt slecht doet. Je moet rekenen dat het een volledig nieuw team is. Teams die volledig van op nul begonnen zijn waren Super Aguri, die het anderhalf seizoen hebben uitgehouden, en BAR Honda, die in hun eerste jaren ook niet echt goed bezig waren. En  anders waren het meestal bestaande teams die overgenomen werden en dan is het makkelijker om een goede wagen op de baan te brengen.

[gloudiesaurus]

En Team Lotus koopt Caterham Cars, wil Team Lotus dan toch echt de naam Lotus houden? Het lijkt er wel op...

Caterham Cars en Team Lotus, een interessante combinatie. Al is Caterham volgens mij niet een heel groot bedrijf...

[T.Nuvolari]

Vanmiddag het verdict!

[Kootje]

Vanmiddag het verdict!

Eindelijk !!!

Al moet ik bekennen dat de hele heisa over 2 Lotussen achteraf erg overdreven was.
Persoonlijk zie ik Lotus Renault GP nog steeds als Renault en Team Lotus Renault als Lotus.

[Franky R.]

http://www.gppits.net/nieuws/vandaag_uitspraak_team_lotus_vs_lotus_renault/

Om ca. 1300 uur, Europeese tijd is er hopelijk meer te vertellen/schrijven...

[Kootje]

Héhé.....de uitslag is binnen.
En wat denken jullie.....er verandert helemaal niets.

http://www.f1today.nl/20110527/team-lotus-houdt-naam-team-lotus-group-lotus-in-beroep.html

Wat 'n verspilling van tijd en belastingcenten.

[Kootje]

Het rechtbankverslag in 5 delen

Deel 1:

INTRODUCTION

This is a trial (on liability only) about three matters.
First there is the issue as to whether or not the Claimants and/or the Defendants have the right to race in Formula 1 ("F1") racing in cars which bear the name "Lotus" or "Lotus" in combination with the word "Team".
Second (and perhaps less important) is a dispute over a License Agreement ("the License") dated 21st December 2009 granted by the First Claimant Group Lotus ("GL") to the First Defendant 1Malaysia Racing Team ("1MRT") whereby GL granted 1MRT various rights including the right to race in Formula 1 under the name "Lotus Racing".
Third the Claimants claim the Defendants are infringing in various ways 10 trademarks registered in their name, in particular by commencing to use the name "Team Lotus" and/or the word "Lotus" and/or the Lotus Roundel (being a special badge created by Colin Chapman, the founder of Lotus Cars; "The Lotus Roundel") in relation to a F1 motor racing team which has no connection with the Claimants and was neither authorised nor endorsed by it. It is claimed that the name Team Lotus is or includes Lotus and is thus identical to the word Lotus registered in the name of the Claimants, and the goods and services in relation to which the Defendants are using Team Lotus includes goods and services which are identical or similar to those within the specifications of the Claimants' trade mark registrations ("the Marks").
In this judgment when I refer to Team Lotus I intend to refer to the activity of racing Lotus cars in Formula 1 without thereby indicating who has the right to race Formula 1 cars under that expression. I am merely echoing under what actual name Lotus cars were raced in Formula 1 until 1994. The only other occasion when Lotus cars raced in Formula 1 was in 2010 under the License and under the name Lotus Racing.
In addition the Claimants assert that they have for many years developed the Lotus business of sports car development and manufacture and vehicle engineering and in particular promoting its "Lotus" brand. They assert that the Defendants' actions by using the name Team Lotus and/or Lotus and/or the Lotus Roundel in relation to Formula 1 motor racing which has no connection with the Claimants and was neither authorised or endorsed by them are wrongful passing off.
Ancillary to those various claims the Claimants seek relief in respect of trade mark registrations effectively registered in the name of the Second Defendant Team Lotus Ventures Ltd ("TLVL") as set out in the schedule to the Re-Re Amended Particulars of Claim, where it is contended they are held upon trust for the Claimants. In addition in the alternative they assert they were invalid, or the assignment to TLVL was void, or alternatively the marks ought to be revoked for non use.
Separate revocation proceedings were commenced by GL at the UK Intellectual Property Office (proceedings no. 83660, 83661 and 83780) but were transferred to be determined by me at the same time.
Not to be outdone, 1MRT claims that GL has committed repudiatory breaches of the License which entitled it to be absolved from further performance upon its acceptance of those breaches on 23rd September 2010.
The Defendants seek injunctions against the Claimants from passing off an F1 racing team as being connected with Team Lotus and/or the Lotus Roundel and in what is called the "JPS livery". That relates to the historically significant colouring of F1 Lotus racing cars in the 1970s when Team Lotus cars raced with the sponsorship of John Player. At that time the racing cars were coloured black and gold. It became an iconic colour and was in fact replicated in some of the sports cars manufactured at that time by GL such as the Europa and later the Esprit.
In addition the Defendants claim the revocation of the Claimants' trade marks in so far as they relate to any aspect of racing business and that as between TLVL and the Claimants the latter have no right to obtain any trade mark registrations in respect of Team Lotus or the Lotus Roundel or the livery or the JPS livery or any mark containing the word Lotus in relation to the racing business.
THE PRESENT DIFFICULTIES

Without ascribing any significance to the word in this context no Lotus cars raced in Formula 1 after 1995 until the 2010 season. In that season as I have said 1MRT entered into Formula 1 pursuant to the License from GL. That relationship was short lived and dissolved in acrimony in September 2010. Both sides accept that the License has come to an end but both assert that it came to an end by reason of their respective acceptances of the other party's alleged repudiatory breaches.
Thereafter (or possibly in anticipation of the fallout) GL entered into a fresh relationship with Renault to enter a car in F1 with the name Lotus or Lotus Racing or possibly Lotus Renault. That entry has been accepted.
Not to be outdone 1MRT has entered a car in F1 to race under the name Team Lotus. Last year of course it raced under the name of Lotus Racing. It purports to do so by reason of its acquisition of the Team Lotus trade marks from TLVL. That registration has also been accepted.
The issue over the racing colours arises from the decision of GL to paint its cars in the "iconic" black and gold. Last year the Lotus Racing cars were what might be called "traditional" Lotus colours of green and yellow. There are thus currently 2 sets (4 in total) of cars entered into F1 proposing to or already racing with the name Lotus incorporated in their name.
The major issue therefore is whether or not 2 sets of Lotus cars can legitimately race in F1 under a name incorporating Lotus in some way and use the Lotus Roundel. The organisers of F1 do not apparently regard it as a problem.
PROCEDURAL MATTERS

The Claim Form in this matter was issued on 5th October 2010. The Claimants issued an application for summary judgment of part of the claims and that came before me on 24th January 2011. Then I directed that there be a speedy trial of all issues on liability. The urgency was plain enough to see. If the continued presence of 2 sets of Lotus cars in Formula 1 was contrary to one or other party's rights it was clearly in the interest of the parties and the public as a whole that it should be determined as soon as possible and should not be allowed to sit throughout the Formula 1 season. That season was due to start in March in Bahrain but for reasons unconnected to motor racing the race was cancelled. Later races have taken place. However the other alternative was that the Claimants contemplated a trial before the 2012 season. That would mean there would at least be a full season (depending on the result of this case) where one team might be racing when it ought not to be.
The timetable was tight and the parties are to be commended both as regards their witnesses and more particularly their lawyers in the way in which the case was put together before the trial and the way in which the trial proceeded. The case finished within the time limits of 10 days and comfortably so. I have been greatly assisted by the written and oral submissions from both sides and that too has contributed greatly to enable me to deliver a judgment within the time that I have been able to do.
BACKGROUND

The background to the case concerns the desire of both parties to exploit an association with Lotus and the late Colin Chapman. To understand the dispute it is necessary to delve in to the historic past in relation to Lotus racing cars and Lotus sports cars. That also necessarily involves an examination of the role and importance of the founder behind all of these activities, the late Colin Chapman.
Both sides in effect claim to succeed to the heritage. GL's claim is to succeed to the entirety of the heritage both in the manufacture and sale of road cars and the manufacture and the entry of cars in to Formula 1. The Defendants' claim is limited in reality to entry into Formula 1 in respect of which they claim exclusivity under the name Team Lotus. It is not disputed by the Defendants in reality that they accept at the best on their case that there might be 2 teams racing in F1 under a name which includes the words "Lotus". They claim to be entitled to race under the name Team Lotus and to use the Lotus Roundel with the words "Team Lotus" incorporated in it.
Mr Morpuss QC who with Miss Patricia Edwards appears for the Defendants accepts that the Defendants' Counterclaim is merely a tit for tat claim. If there is confusion as alleged by the Claimants (which they deny) the conclusion they submit should lead to the cancellation of the Claimants' Marks not theirs. Hence the Counterclaim.

[Kootje]

Deel 2:

THE EVIDENCE

The evidence adduced by the parties to support their respective stances on the historical development fell in to three categories. By far the most important in my view was the contemporary documentation. This is usually the best tool in resolving disputes. It usually sets out (unless the writers are being particularly clever) what people were thinking, saying and believing at the time without "writing for posterity" on the basis of what they then said would be relevant in subsequent litigation, unlike (say) diaries by politicians.
Second I had some limited evidence from those who were there at the time in question. People who fell in to that category were Mr Monk, Mr Becker and Mr Bell (for the Claimants); Mr Wright, Mr Peel and Mr Waters for the Defendants. Of those witnesses the one that was most helpful for me was the evidence of Mr Monk. I will elaborate on the analysis of this evidence further in this judgment.
The third category was that which consisted of writers and journalists. In that category were Mr Nye, Mr Blunsden for the Claimants; Mr Ludvigsen and Mr Tremayne for the Defendants.
I do not overlook the other witness evidence called or agreed dealing with matters other than the history save perhaps of that of Mr Mosley whose evidence attempted to deal with both historical and current matters.
In regard to the journalistic evidence I have been provided with a copy of the book written by Mr Ludvigsen, one written by William Taylor ("The Complete History of Lotus Cars 50th Anniversary Special") and the authorised biography of Colin Chapman by Gerard ("Jabby") Crombac. In addition I had extracts from a large number of other journals, press cuttings and other books. I found this evidence of limited use. As will be seen from the analysis both sides' journalists expressed strong views in support of their own beliefs. There is always a difficulty in dealing with mythical figures such as Colin Chapman. Truths become elided with "urban myths". Stories get better with telling and distorted. What appears in the books is often a distillation of fact, myth and conjecture. It is difficult to draw any clear conclusions from it and whilst it was interesting to read it does not in my view help me with the overall picture. I therefore treated the evidence of these witnesses with caution and was only generally prepared to use them if they supported something else.
A BRIEF FACTUAL SURVEY

I will set out what is a brief factual survey of the history of the development of Lotus in what I hope are uncontroversial terms. I have identified a number of key events which I shall examine in more detail further in this judgment.
Mr Chapman started racing cars in 1947. He built cars for Trials initially. They were mostly single seat racing cars. Some were sold in a kit form (to save purchase tax apparently) to third parties. They raced them but not under the Lotus name. These owners were called "Privateers" (the analogy should not be pressed too far). He apparently chose the name Lotus from the start as he called his wife to be "Lotus Blossom". The cars were initially raced in Trials. Thereafter they were raced initially in the 1950s in Formula 2 and some were raced in sports car classes. Significantly he raced under the name "Team Lotus" for at least 10 years before GL was even in existence.
A change occurred with the manufacture of type 14 in 1957. This was the first on road 2-seater sports car and was sold under the name Elite. In so far as there is any clear evidence I think it is fair to say that his first love was racing. He tended to regard road cars as being an adjunct to his love of racing. By that I mean he tended to view the road manufacturing side as a method of making money to fund the racing. That is not to say that he did not involve himself in the manufacture of road cars; he was clearly involved in the production of the Elite and later the Elan and the Esprit.
In the late 1950s and early 1960s corporate entities were created and ultimately it is this creation of different corporate entities which has led to the present dispute. Lotus Cars Ltd was created on 12th June 1958. In February 1961 Team Lotus Ltd ("TLL") (company No. 683396) was incorporated. However it is clear that before that incorporation when the Privateers entered their cars they entered in whatever name they chose, Lotus cars were entered under the title "Team Lotus" (Nye paragraph 24). Lotus Cars Ltd changed its name to Group Lotus Car Company Ltd and later to Group Lotus Plc and is the First Claimant.
In 1961 Colin Chapman entered F1 for the first time. He did it through the newly created TLL until 16th February 1982 until it was struck off and dissolved for failure to submit returns. A new company Team Lotus International Ltd ("TLIL") (company No. 1229833) was incorporated. It appears to have taken over the F1 operations seamlessly as the GL board minutes show. It is still in existence. At all material times the majority of the shares were held by the Chapman family.
Apparently the major reason for this arose from a number of high profile accidents sometime fatal which often exposed the racing car owners and drivers to financial liability and sometimes the threat of imprisonment. The separation therefore was to ring fence the other assets from exposure by having the racing car companies without significant assets to enter races rather than being used for the purpose of car manufacturing. A second reason for the diversification is as I have set out above, namely Mr Chapman's first passion was racing not building.
This is significant in three respects. First GL can claim to be a continuous manufacturer of Lotus Sports Cars under the name "Lotus" from 1958 until the present day. The ownership of GL has changed over the years but it remains the same manufacturer. Second GL was clearly created as the vehicle for the manufacture and sale of the Sports Cars starting with the Elite. Third racing still continued under the name Team Lotus but it changed in 1960 primarily to racing in F1. That racing was done through TLL and TLIL until 1994.
TLL following its incorporation on 14th February 1961 appears to have carried on the activity which Colin Chapman formerly did under the name Team Lotus but then separated the operation into TLL for the reasons I have set out above. As at April 1967 Hazel Chapman had 3,850 shares, Mr Chapman had 25 and the rest were distributed between Fred Bushell, John Standing, Peter Kirwan-Taylor and Lotus Engineering Co Ltd. On 25th April 1967 all the TLL shares were acquired by Group Lotus. Thus from that date (for a short period) both the car manufacturing and the car racing arms were under one umbrella. The shareholders of TLL received the same number of shares in GL. As at 31st October 1982 shortly before Colin Chapman's death he held 70 of the 98 issued shares his wife Hazel had 13 and Fred Bushell held 10. I assume his shares were acquired after his death.
Thus the name Team Lotus came into being before either GL or TLL was in existence but became deliberately associated exclusively with TLL after 1961.
Before 2011 it is important to appreciate that GL never raced in F1 directly in its own right. At best it can say that it raced through TLL and TLIL from 1960 to 1994 and through 1MRT (it's Licensee) in 2010. There has never been a car racing in F1 under the name Group Lotus or just Lotus.
SHARE OFFER IN 1968

Colin Chapman in 1968 was persuaded by the allure of selling a large number of shares for a significant amount of money into floating one of his companies. The company which was floated was the car manufacturing company. I have been provided with a copy of the share offer dated 3rd October 1968. There are a number of significant matters in that document. First in the Chairman's letter (i.e. Colin Chapman) it was stated that the motor racing activity in view of the risks has been excluded from the operations of Group. This was done under a contract a copy of which has not survived. It was stated that motor racing "continues to be carried on by Team Lotus Ltd with which the Group has no direct financial association but from which it derives substantial benefits from publicity and design information".
Similarly under "Material Contracts" (item (2)) there is reference to the sale of the shares in TLL to GL by its shareholders as above in consideration of the issue of shares in GL. It also recorded a sale on 26th September 1968 between GL and Mr & Mrs Chapman, Mr Bushell, Mr Standing and Mr Kirwan-Taylor whereby they acquired back for £5,000 the entire share capital in TLL. Accordingly apart from a short period between April 1967 and September 1968 TLL was separate from GL and was never its subsidiary.
Given the importance that Colin Chapman attached to racing as opposed to manufacture it would need clear evidence in my view to come to a conclusion that despite this clearly defined and deliberate separation TLL acquired no rights at all to race in F1 under the name Team Lotus. That is GL's case nevertheless.
Prior to the flotation that was not of significance because Colin Chapman controlled both arms. It is quite clear that no consideration was made before 1968 of the inter-relation between the activities of the various companies in legal terms. This is shown by the fact that GL was the registered holder of all of the relevant marks including (significantly) Team Lotus 891,303 in class 12 "Land Vehicles". Thus GL had the registration for TLL. In my view there was no legal significance to this because nobody considered it at the time when Colin Chapman controlled both companies. If there was any reason for it, it is because Colin Chapman according to the evidence usually tried to have GL pay for as much as possible. This practice continued after flotation although it was more difficult because Colin Chapman had to account for GL's dealings to the shareholders 48% of which represented outsiders. For example Colin Chapman had qualified as a pilot in the RAF and liked flying (although some of his passengers did not necessarily enjoy it). GL had at its peak I believe 4 aircraft and a helicopter. It paid for the operation of these but they were usually used almost entirely for TLL activities in particular when F1 racing took place around Europe flying to the various events including transportation of parts for the F1 cars. This was apparently not picked up on audit although there were grumbles about this benefit at shareholders meetings which Colin Chapman brushed aside. TLL never paid for this benefit. It also received direct financial support but this was addressed (see below).
RACING

Until the 2011 season GL had never directly raced in F1. It is important to appreciate that the entirety of its claim to be entitled to race under the name Lotus and to stop TLL from racing under Team Lotus is based on its claim that it has the goodwill and the Marks which gives it the sole rights in respect of F1 despite that lack of direct involvement in F1 activities both before and after the creation of GL. All racing was done under the name Team Lotus. It was not ascribed to any company formally until an agreement in 1985 (see below) although it was clearly for the reasons above intended to be run through TLL. If the F1 activity was to be regarded as a GL activity it would become exposed to precisely the potential claims which had led to the deliberate creation of TLL. Colin Chapman raced under that name from 1947 but there was no incorporation of a Team Lotus Company until 14th February 1961.
I note that for periods GL has raced sports cars. Equally there was racing under the name Team Lotus (before 1961) in Formula 2 and 3. TLL also raced several sports cars see for example the Type 62 which bore a passing resemblance to the Lotus Europa Sports Car but was raced as Gold Leaf Team Lotus by TLL. However these in my view are exceptions and nothing significant turns on them. In my judgment the real dispute between the parties is over the control of the rights to race in F1.
From 1961 all racing activities in F1 were done by TLL and TLIL under the name Team Lotus until 1994. Its ownership was separated in 1968 as I have said and that separation was deliberate. The Chapman family became the owners of the majority of the shares in TLL again in September 1968 together with some colleagues as minority shareholders.
With the flotation of GL Colin Chapman remained chairman and retained 52% of the shares, nevertheless a significant change had thereby occurred. He lost his independence as the chairman and in effect the sole ownership of a private company. He was still the majority shareholder but the public had a significant interest and that changed things. For the first time he was accountable to outsiders.
Jabby Crombac in his authorised biography of Colin Chapman quotes Hazel Chapman as saying this (page 357):-
"With the decision in 1968 that Lotus should become a public company, Colin Chapman became a very wealthy man, but with the benefit of hindsight, Hazel feels that perhaps this was not such a wise move after all. "The pressure", she says, "was on him all the time. You are manipulated by the Stock Exchange and there is so much going on which you know nothing about. Colin couldn't stand that side of it. He kept the maximum number of shares for himself and his family that he was allowed, because he wanted to remain the boss but, nevertheless, as far as he was concerned he had become only a puppet. We gave much of it to stockbrokers to invest in a portfolio of shares but they lost most of that for us, so in the end floating the company was nearly all disadvantages".
Perhaps this is why Chapman moved his own offices, and the racing team, to Ketteringham Hall where he could insulate himself from the factory. "He wanted to be a one man band again", explained Hazel.... He had the Orangery converted into a large drawing office and Team Lotus was fully established in the same building....If he had lived, and if Lotus Cars had been forced into liquidation, as was a distinct possibility at the time of his death, it is pretty obvious that he would have stayed on at Ketteringham Hall, where he would have kept himself busy with his racing cars and his microlight aircraft."
It is nevertheless GL's case that had that occurred a liquidator of GL could have stopped Colin Chapman from racing under the name Team Lotus something which he had done since 1947, because TLL had no right to use that name. I find it difficult to believe given the sentiments expressed by Hazel Chapman above, in particular that he would have intended such a possibility to have occurred.

[Kootje]

Deel 3:

THE ATTRACTION

In motor racing Team Lotus is an iconic brand second only to Ferrari. That is despite Team Lotus not having raced in F1 for 15 years and not having won a race since 1987. In the 1960s and the 1970s Team Lotus won F1 Constructors Championships on seven occasions. Its drivers' legendary figures included Graham Hill, Jim Clark, Jochen Rindt, Emerson Fittipaldi and Mario Andretti who together won F1 Drivers' Championships on six occasions. Jim Clark for Team Lotus also won the premier US event in US motoring, the Indianapolis 500. In later years in the 1980s and 1990s Team Lotus had more limited success albeit still with drivers who became household names including Nigel Mansell, Ayrton Senna, Nelson Piquet and Mika Hakkinen. Team Lotus' last Grand Prix wins were by Senna in 1987 i.e. 24 years ago.
Despite that passage of time there is still a great allure to Team Lotus in F1. Of particular attraction were the JPS Lotus Cars and their distinctive colours. It was so popular that the colours were copied in sports cars as specials, see for example the Lotus Europa twin cam Special (1971) decked out in the JPS colours of black and gold. The association with successful racing cars was always regarded as of being beneficial to GL. This has continued down to the present day. Advertising material has regularly been issued by GL over the years incorporating racing cars in it. On motor show displays for Lotus Sports Cars, F1 Team Lotus cars regularly made an appearance and there are clear publicity benefits from being associated with being a successful F1 car. However it is to be noted that the benefits are to being associated with a successful car. GL clearly cooled to this association in the 1980s and 1990s (see below) when Team Lotus was less successful. It also sought to distance itself from the De-Lorean scandal in so far as that was possible by edging out those associated with it such as Fred Bushell.
It is difficult to see any corresponding benefits accruing to TLL in publicity terms from being associated with GL. However I accept that initially there was cross-over of technical assistance and staff. This seemed to me to dilute when the demands of F1 cars became far more complex. The demands of F1 racing cars clearly out stripped from a technical point of view the demands of road cars. Conversely safety and other requirements in road cars meant there was less interest in F1 cars from a sports car manufacture point of view.
Nevertheless there is and remains an allure to the Lotus name in F1 racing. The issue in this case is whether that allure is to Lotus and GL or whether it is to Team Lotus and thus to TLL/TLIL or both GL and TLL. There are consequential issues as to whether TLL/TLIL's rights have been lost or are void for various reasons.
All the witnesses called save one support the view that there is still goodwill attached to Team Lotus in F1. The exception is Mr Nye who expressed the view that Team Lotus was dead after 15 years of not racing and was consigned to history. That is contrasted with the evidence of Mr Ludvigsen, Max Mosley and David Tremayne. The real issue is whether or not F1 racing under Team Lotus is part of the goodwill attached to GL or has an independent free standing goodwill vested in TL.
WHAT'S IN A NAME – GROUP LOTUS

It is quite clear that Group Lotus has established a distinctive reputation as being a niche manufacturer of road going sports cars under the name Lotus. A number of Lotus cars led to that reputation starting with the Type 7 first produced in 1957 and still apparently in production today as the Caterham 7. Thereafter there was the Lotus Elan famous in the 1960s as the car driven by Diana Rigg in the Avengers, the Lotus Europa driven by George Best in the 1960s and the Lotus Esprit being associated with Roger Moore playing James Bond (although I do not believe there was actually a submersible version).
The sports cars clearly had a different allure and were intended so to do. Thus Colin Chapman was apparently quoted as saying this:-
"We sometimes get the feeling that because we are so prominent in racing, the general public still feel that Lotuses are really racing cars. In order to expand our market segment we have got to be able to sell cars to professional men- doctors, dentists, people like that – who do not want a car which they feel has too sporting a background. They feel it wouldn't be a sensible car for their wife to drive, it wouldn't be a sensible car to drive in town and so on.
We are quite sure that we are putting off a potentially large sector of customers because they feel that a Lotus is just a racing car that you can drive on the road. I think there will become a time when we will have to stop racing just to convince people that we no longer build racing cars. (Colin Chapman Inside the Innovator (Carl Ludvigsen at page 359-360))."
The reference to women car drivers might not be quite so apposite in 2011 and is difficult to square with the Lotus Elan and Diana Rigg.
COLIN CHAPMAN

Colin Chapman's persona strides like a colossus over the entirety of the issue. He represented what is probably in many ways a dying breed that of the dynamic powerful leader. In addition to this he had very great skills as an engineer. Like many powerful persons he had a "difficult" personality but could easily be witty and charming as required. His personality in business operations appeared to be summarised best in chapter nine of Ludvigsen's book "Man Managing". Cash appears to have been a regular problem. The racing aspect clearly was a drain and had difficulties making money. It obtained some financial support from GL over the years but that was nowhere near enough to finance the Team Lotus operation. I have already alluded to the way in which the trade mark registrations were funded by GL and the aircraft operations were similarly funded. GL provided £75,000 as a minimum each year (there were clearly other sums that appeared in the accounts after the flotation). The outlay was described as being beneficial to GL in the terms of the generation of good publicity by TL through its successful racing operation. An illuminating quote again is to be found in Ludvigsen's book at page 283-284:
"An indication of Chapman's resourcefulness came from the early proliferation of his operating companies. There were a lot of them Lotus Engineering, Lotus Components and Racing Engines Ltd. The reason there were so many companies was that the buyer of a kit car could buy the Chassis from one company the engine and gear box from others so he could legitimately avoid purchase tax by buying components from different sources.
The multiple companies posed puzzles on occasions. Driver Trevor Taylor recalled filling up his racing car transporter sign painted "Team Lotus" at a Cheshunt petrol station. Just as we were filling up he said a voice came out shouting stop stop. We wondered what was going on. You can't fill up here not as Team Lotus anyhow. I said what about Lotus Cars? No. was the reply. Lotus Components? I said. No, no again. I was trying to think of another Lotus company what about Lotus Developments? I said. I'll just check – yes that's all right. Fill it with that account. Lotus had very little money then and what they had was made to go round best it could".
This meant that for example Colin Chapman (ibid page 284) said to Fred Bushell (the finance director) "Fred your job is just to get the money in so I can spend it". But there was never enough money there, so they had to do a sponsorship deal as early as possible. Sponsorship got more and more difficult to come by, as it was realised by sponsors like Camel that their money was paying off the previous years' debts. GL's financial contribution became less and less significant as the costs of running an F1 team escalated.
Through the various companies Colin Chapman exercised control. Ludvigsen in his book (page 296) set out the position of the various companies as explained to him by Colin Chapman in 1965. He refers to TLL and said this:-
"Develops and designs racing cars and operates or controls various teams which race from the factory or represent the mark on our behalf.
After the move to Hethel [in Norfolk] 3 more companies were added...... Each company had an executive director. In only one, Team Lotus, did Chapman hold this post. After little more than a decade in business he successfully devolved responsibility to trusted colleagues with former Ford man Denise Austin heading Lotus Cars. All were under the umbrella of Group Lotus Car Companies Ltd, where Chapman, Bushell and Kirwan-Taylor were the only directors. Although cosmetically disguised a dictatorship was still in effect".
I was unimpressed with Mr Ludvigsen's attempts to suggest that this paragraph showed the separation of TLL. It does exactly the opposite. As a matter of legal principle of course as I have set out above TLL was not part of the Group save for a short period and was certainly not part of the Group in 1965 when Colin Chapman was talking. This shows however accumulatively that up until 1968 Colin Chapman controlled all operations and all cash and manipulated them within all of the companies which he controlled from time to time as required. I do not believe and so find that there was any detailed analysis of inter-company rights and obligations before 1968.
THE ROUNDEL

A significant feature in the case is what I called the Lotus Roundel. The device called the Lotus Roundel has featured in virtually every Lotus car both racing and sports from the inception. It usually comprises of a solid yellow circle inset with a solid green triangle with the four interlocking initials ACBC (Colin Chapman's initials). Over time the appearance slightly changed. Sometimes it was just the interlocking initials. Other times it had the word Lotus under it and on other occasions it had the words Team Lotus. I have only been able to discern one car where the Roundel does not feature namely the 1971 56B which according to Karl Ludvigsen (page 79) was entered into the Grand Prix at Monza by "Worldwide Racing" to avoid attracting the Italian Authorities. In other races the car was entered with the description Gold Leaf Team Lotus on the side and with the Roundel on it (see the differing pictures on pages 120 and 121 of the Lotus Book). That book of course features a form of the Roundel on its dust cover. Equally the Roundel can be seen on the sports cars see for example the Elite (Type 75), the Europa (Type 65) and the Elan (Type 26R). All the cars in the 1950s bore the Roundel as well. Regularly the Roundel was fixed without any words. However Lotus does appear (especially) on the later sports cars and Team Lotus appears on the later racing cars see Type 102 for example. The Roundel was also missing from some versions of the JPS Special.
GL registered the Roundel including the word Lotus as a trade mark (No. 942138). The filing date was 3rd May 1969 in class specification 6, 12, 16, 20, 24 and 26. It registered a similar Roundel (No. 53926). This filing date was 1st April 1996 under classes 9, 12, 16, 28, 37 and 42. It also registered seven further registrations of the mark Team Lotus. All seven were made on 26th February 1966. These marks were surrendered pursuant to the 1985 Agreement (see below).
The Roundels were dealt with in the 1985 Agreement. Under clause 6.2 GL acknowledged TLL's right to continue to use the names "Team Lotus" and "Club Team Lotus" in relation to its business. I will deal with this in more detail when I analyse the 1985 Agreement. It also granted TLIL the right to use the ACBC monogram with or without the words "Team Lotus". Examples were provided in the 6th Schedule. One has the Roundel with the interlocking letters and the other has the Roundel with interlocking letters and Team Lotus. Reciprocally TLIL acknowledged the right of GL to continue to use the names Group Lotus and Lotus and the Lotus logo as set out in the 7th Schedule. That shows the Roundel with the addition of the word Lotus. Although there were provisions dealing with the cancellation of trade mark registrations in the name of GL and an agreement to replacement with registrations in the name of TLIL that does not appear to have applied to the Roundel.
On 9th April 2002 the Second Defendant ("TLVL") applied to register a trade mark under the name Team Lotus and was granted that registration on 20th May 2005. It also in 2010 applied to register the mark in respect of the Lotus Roundel incorporating the words Team Lotus. Earlier it had filed registrations on 15th March 1988 to register an identical Roundel incorporating the words Team Lotus. That was registered (No. 1338435).
Thus at the commencement of the proceedings GL has a Roundel registered under the name Lotus as a trade mark and the Second Defendant had a Roundel incorporating the words Team Lotus registered as a trade mark. I have appended copies (black and white and colour) of the TLL Roundel and the GL Roundel as set out in Schedules 6 and 7 to the 1985 Agreement to this judgment
KEY EVENTS

In my view there are a number of key events along the timeline of the life of Lotus sports cars and Lotus racing cars which are of vital significance in this case. They are as follows:-
1) The 1968 flotation.

2) The death of Colin Chapman in December 1982.

3) The 1985 Agreement.

4) The associated Agreements dated 30th January 1991 whereby Infiniti Developments acquired the business of TLIL and the benefits and burdens under the 1985 Agreement.

5) The License Agreement between Team Lotus Ltd (aka Infiniti) and TLIL dated 24th February 1994.

6) Sale and Purchase Agreement between TLIL (In administration) and Investfirm Ltd dated 27th October 1994.

7) Deed of Assignment of the same date between the same parties.

Deed of Assignment between TLIL (then Team Lotus Holdings Ltd) and Paintglossy dated 9th January 1995.

9) Trade Mark License Agreement between GL and 1MRT dated 21st December 2009.

I will now go through those key events and the relevant documents in turn

THE 1968 FLOTATION

I have already set out the details of the 1968 flotation above. There was an Agreement between GL and TLL dated 26th September 1968. It has not survived. Under clause 30.2 of the 1985 Agreement it was provided that it should terminate immediately the 1985 Agreement became unconditional with neither side having a claim against the other.
It is difficult to discern its terms fully. The GL board meeting held on 19th May 1970 referred to arrangements under the 1968 Agreement. It related to cash sums that were provided by GL to TLL (then £20,000). It was on the basis that GL benefited from being associated with the racing activities of TLL. It is clear that by that time TLL had an additional indebtedness of £124,149 but the bulk had been repaid.
Over the years that was increased to £75,000 (board meeting 17th May 1975). By 26th September 1980 the inter-company indebtedness had increased to £114,000 (in addition to the £75,000 charge). By December 1982 GL's position was difficult. It had the adverse impact of the De-Lorean issues by that time. Colin Chapman had died on 16th December 1982 and at the board meeting on 29th December 1982 it was clear that its financial viability was under question. It had an extensive overdraft facility from American Express. That company appeared to be going through its own particular difficulties at that time. The structure of the board meeting is significant with 4 directors and a large number of financial advisors in attendance. There was express reference to concern about dealings between GL and non associated companies owned by Colin Chapman. Mr Kirwan-Taylor advised that in the wake of the 1955 Le Mans accident, car operations (i.e. GL's activities) should be separated from the racing activities (i.e. that activity carried on by TLL from its incorporation in 1961).
The continuing operational payment of £75,000 was a small proportion of the overall costs of racing cars in F1 but secured substantial benefits in publicity terms to GL being associated with a successful F1 racing team. It also secured access to technological advances which might be of assistance in sports car manufacture. I accept however the evidence of both sides which showed benefits accruing to both GL and TLL from an informal association both from a technological and administrative point of view.
The same stance was taken at the AGM the next day by the next board meeting (27th January 1983). Item 12 was a discussion of GL's relationship with TLIL (by that time) in the light of a note which was circulated. The note has not apparently survived. However the general decision of the board appears to be that TLIL's activities were advantageous to GL and the concept of integration suggested by certain possible investors was noted. However American Express were clearly reluctant to see monies made available to GL for its funding to be applied to possible funds for TLIL. By 2nd January 1982 TLIL was indebted to GL in the sum of £153,775 (E1.138).
There is no evidence to suggest that the 1968 Agreement addressed the question of intellectual property rights. The Defendants invite me to infer that but in my view there is nothing that can enable me to infer such a conclusion. The only reference appears to be in respect of financial support.
Nevertheless the documents do show a deliberate separation between GL and TLL both as regards the flotation and the subsequent financial arrangements.

[Kootje]

Deel 4:

THE 1985 AGREEMENT

The death of Colin Chapman three years earlier marked a watershed and a tragedy for the Chapman family and probably Lotus Cars.
I should set the background as to the 1985 Agreement. GL's previously successful trading had deteriorated. First there was undoubtedly the impact of the death of Colin Chapman in 1982. Second there was the adverse impact of the De-Lorean scandal. By the time of the 1985 Agreement the shareholding of GL was much changed. A consortium led by the British Car Auction Group Plc and Toyota Motor Corporation effectively controlled GL from their acquisition of 2,900,000 and 3,000,000 shares respectively. Further as Mr Monk said in his evidence for the Claimants he discerned afterwards that British Car Auctions were "fattening up" GL for a sale. Part of that exercise involved tidying up the relationship with "Team Lotus". Mr Monk was GL's company secretary from 1978 to 1982 and from 1984 to 1994. In addition between 1978 and 1982 he acted as legal assistant to the financial director of GL.
He gave evidence about the negotiations leading to the 1985 Agreement. This is not evidence to aid the construction although it is plainly part of the factual matrix which helps me understand what the parties were thinking and doing in 1985. In my view the evidence therefore is plainly well within the principles enunciated in Investors Compensation Scheme Ltd v West Bromwich Building Society (no 1) 1998 1 WLR 896 as explained in Chartbrook Ltd & anr v Persimmon Homes Ltd & anr 2009 1 AC 1101. In my view the submissions of GL in relation to the 1985 Agreement are so improbable from a commercial point of view that it is useful to look at the background to see what the parties thought they were doing. It is also of great assistance to me. The 1985 Agreement in my view represents the strongest piece of evidence to unlock the background to the operations of GL and TLIL especially in relation to goodwill and trade marks. There is very little other contemporary evidence to help me. In addition Mr Monk was there at the time of the 1985 Agreement came into being. His evidence was therefore also extremely useful.
It is clear that the consortium led by British Car Auctions wanted to maintain a relationship with TLIL because at that stage the F1 operation was still successful although not as successful as in the past. GL had its financial problems arising out of tax assessments levied as a result of the De-Lorean scandal and that is essentially I suspect why the Chapman family lost control. The purpose of the 1985 Agreement therefore was to set out the defined relationship between GL and TLIL. It must not be forgotten however that whilst GL wanted to retain the benefits of being associated with TLIL it would nevertheless still be concerned to avoid being directly involved with TLIL because of the risk consequences of F1 racing. That was the guiding light from 1961 and did not in my view diminish in 1985. This has a significant adverse impact on GL's case in my opinion.
In addition to that strategy GL wanted Mr Bushell to be out of the GL picture because of his association with the De-Lorean scandal. TLIL offered that exit strategy and Mr Bushell negotiated hard to obtain the maximum position for TLIL under the 1985 Agreement.
The negotiations were conducted on behalf of GL by Mr Wickins the chairman of the British Car Auctions and Mr Curtis and Mr Kimberly together with Stuart Mayes of Boult Wade Tennant trade mark attorneys. The negotiations on behalf of TLIL were conducted by Mr Bushell assisted by lawyers, he having resigned as a director from GL to focus on TLIL activities.
Significantly the 1985 Agreement expressly deals with trade marks by requiring GL to surrender the trade marks it had under the name Team Lotus and to permit TLIL to re-register those same trade marks. This arose, Mr Monk said, because Mr Bushell was most insistent the marks be transferred to TLIL. He was offered a license to use them in the negotiations but rejected that.
Mr Monk's evidence shows what to my mind is obvious that whilst there was a separation of the structures it was envisaged that there would continue to be a close relationship between GL and TLIL under the terms of the 1985 Agreement. In many ways this merely regulated the informality that existed before. There were clearly crossovers of staff in administration and technical know how. The evidence of both parties does not materially differ in my view. Whilst Colin Chapman was alive there was no need to address those activities in a strictly legal sense although he had had his wings clipped by the flotation in 1968. After his death and after the Chapman family ceased to have the majority shareholding in GL the position changed somewhat. Ultimately this led to the 1985 Agreement. After it was concluded in January 1986 GL's shareholders sold out to General Motors. Between January 1986 and 1996 various other organisations acquired the shares including Bugatti but ultimately in 1996 the shareholding was acquired by Proton its current shareholders. It of course is a well known Malaysian car manufacturer.
The 1985 Agreement came into force on 17th May 1985. Before I consider its terms in detail it is instructive in my view to look at the chairman's letter (i.e. Mr Wickins) dated 29th May 1985 addressed to the shareholders about the Agreement. By the time of writing the letter the 1985 Agreement was agreed but was conditional upon shareholder approval at a meeting convened for 21st June 1985.
The background to the Agreement is explained. The first purpose of the Agreement is stated to be the desire of the directors of both companies to:
"demarcate more clearly the businesses of Group and of Team Lotus (which is actively involved in the construction and promotion of racing vehicles and racing activities). That is the purpose of the Agreement. The companies were founded by the late ACB Chapman the former chairman of the company, although they have operated as separate and independent businesses since 1968 when the company shares were introduced to the Official List of The Stock Exchange.
As a result of the close association both historically and geographically between these and other companies formed by Mr Chapman, an informal exchange of technical expertise and use of trade marks (subject to the demands of confidentiality when the companies have been acting for third parties) has existed between your Company, Team Lotus and Technocraft for their mutual benefit. In addition your Company has joined in sponsoring the competitive racing activities of Team Lotus because of the benefits derived from such an association generally...."
The letter then went on to summarise various terms of the 1985 Agreement.
It is important to appreciate that as at the date of this Agreement TLL and TLIL had raced in F1 from 1961 under the name Team Lotus with the agreement of GL tacit or otherwise. Prior to the death of Colin Chapman this was not a problem for the reasons I have set out above. After 1982 that understanding carried on informally until the 1985 Agreement. TLL had adopted the Team Lotus racing description from that used by Colin Chapman himself in the 1950s. As I have said above GL was incorporated in 1958, TLL in 1961. GL was plainly incorporated to be the manufacturing and marketing operation in relation to the new launch of the 2-seater sports cars. For the Claimants to succeed in claiming the rights not only to Lotus and Lotus Cars but also the use of the name Team Lotus it seems to me they must explain how given that history of use they can assert the right to control it. In my view they fail so to do. Equally their arguments in my view are completely inconsistent with the terms of the 1985 Agreement as I shall show below. I will deal with the other submissions they make in relation to the nature and extent of the goodwill when I deal with goodwill separately in this judgment below.
I will therefore go through the 1985 Agreement highlighting the clauses which I think are relevant. As it is of crucial significance I also append a copy of it to this judgment.
The Agreement is between GL and TLIL. The recitals set out that GL was engaged in the business of manufacturing and marketing motor vehicles other than single seat racing vehicles and other ancillary matters. Recital (B) set out that TLIL was engaged in the business of making racing vehicles and entering them in motor racing events and other ancillary activities. Recital © acknowledged that both businesses originated from the work of the late Colin Chapman "but have been run as separate businesses since at least 1968". I interpelate to observe that in my view that is factually correct and that it was done so deliberately. The recital undermines GL's position that from 1968 TLIL had no rights to use even the name Team Lotus; a submission which is in my view so improbable that I reject it. As I have said I cannot believe that from the separation in 1968 Colin Chapman not merely restricted his control of GL because of its public persona but also clothed GL with complete control over TLIL. From his point of view that does not make commercial sense and there is no evidence to show in my view that occurred. Second it also goes against as I have said the purpose of the separation. If GL effectively maintained control over TLIL in the way it now submits it makes it difficult if not impossible to suggest it was nevertheless divorced for the purposes of liability arising out of fatal racing accidents.
Recital (D) acknowledged that there had been close co-operation and that it was the wish of all that the Agreement should define the nature of the relationship.
Clause 3 set out "Objectives and Benefits". The first (clause 3.1) was the desire of GL to obtain the benefit of know how developed by TLIL which might assist it in the manufacture of its own motor vehicles and also to obtain the benefit of being associated with the racing activities of TLIL as an aid to the promotion and marketing of its own motor vehicles. TLIL on the other hand (clause 3.2) stated that it desired to obtain the benefit of know how originated and developed by GL which might assist it in the manufacture of its own racing vehicles and the selling of its technical services. It also was desirous of obtaining financial support.