Formula One© (F1) brings together the worlds of wealth and legal disputes in equal measure. A sport where the top drivers reportedly earn in excess of £60 million per year, compared with the paupers of the Premier League who have to get by on a measly £5-6 million.
Wealth
But how does this sport generate so much wealth compared to its football counterparts? The sport has for many years attracted high net worth individuals - think yachts, private jets and Monaco apartments - but only in the last couple of decades has it generated astonishing sums of investment and a die-hard following round the globe.
The commercial rights for F1 have been owned by Libert Media since 2017, and their revenue is derived from media rights, tickets sales and various revenue generating events; particularly those held outside Europe in the oil rich states of the Middle East who in recent years have been dipping into their deep pockets to invest in the most popular global sports. The drivers are able to command sky high salaries based on private investment made into the likes of Mercedes, McLaren, Ferrari and Red Bull and lucrative sponsorship deals with companies such as Tag Heuer, Pirelli, Heineken and Qatar Airways.
But such wealth also becomes a breeding ground for disputes and fall outs. Money creates emotion and each team operating in F1 is aiming to gain an advantage on its rivals to attract further investment and sponsorship. This has seen regular issues arise relating to Intellectual Property rights and how preciously each racing team protects its technical and engineering designs.
Trade secrets
Patents, trademarks, and copyrights are typically the order of the day but given patents can take years to gain approval, and latest rule changes can make them redundant, teams choose to rely on committing team members to secrecy and for team plans not to be shared ahead of each new season. This creates the need for Non-Disclosure Agreements (NDAs) and confidentiality clauses which form part of a team’s employment terms. In 2007, Ferrari accused McLaren of eliciting trade secrets from a former senior employee resulting in a reported USD100 million fine for McLaren.
Trademarks
Trademarks are quite commonplace amongst teams with their bespoke logos, team names and car aesthetics. In 2024, Team Haas sued Guenther Steiner for infringement of trademark relating to images used in Steiner’s book “Surviving to Drive”, claiming they were published without permission for his personal financial gain. However, the Californian Court ruled that the images were artistically relevant, not misleading and reflected Steiner’s time as team principal at Haas and the images were within that context.
Industrial Design Protection
Another defence adopted by teams is Industrial Design Protection, whereby certain visual aesthetics of the car can be registered and protected. During 2020 F1 pre-season testing in Barcelona, Racing Point debuted their new car the RP20, which immediately raised eyebrows as it did not go unnoticed that this latest vehicle bore a striking resemblance to Mercedes’ championship winning drive from 2019. the resulting dispute was referenced by many as “the Pink Mercedes dispute” highlighting Racing Point’s similar colour choice.
The dispute provoked strong reactions given that although each racing team builds its own car, not all have the resource to source parts for an entire vehicle, with the time and cost of constructing a car each season representing a significant sum which is rightly safeguarded. The Fédération Internationale de l'Automobile (FIA) conducted an investigation after Renault raised a protest and found in their favour, finding the rear brake ducts imitated Mercedes and therefore breached FIA regulations. Racing Point were fortunate in that their RP20 design was legitimate as the basic design for the brake ducts were permitted, resulting in a lesser sporting sanction as opposed to disqualification.
Copyright
In the matter of Force India Formula One Team Limited v Malaysia Racing Team (2012), accusations of copyright infringement were made, where two of the corporate Defendants were accused of copying information for rivals Team Lotus (operated by Malaysia Racing). Issues of liability and quantum were heard together, with Force India awarded a relatively paltry sum of £25,000 being the sum the parties might have agreed on at the date of the breach of confidence. Force India had presented a claim for £13 million, however, the Judge was not persuaded as to the value of the information infringed which was largely reflected in saving design time as opposed to improving performance markedly.
Want a Lewis Hamilton watch …
Alongside disputes involving the teams, there have also been cases of drivers turning to their lawyers to protect their names, personal brand, and image rights. Although in the case of Lewis Hamilton, in an attempt to trademark his name on various merchandise, he saw a challenge raised by the watchmaker Hamilton. The EU Intellectual Property Office (EUIPO) ruled the name “Hamilton” was too common to be claimed exclusively by Lewis Hamilton and that the average person did not automatically associate the name “Hamilton” solely with the racing driver.
How we can help
Our Forensic Services team have worked on a significant number of Intellectual Property Disputes, and we are always happy to have an initial no obligation discussion on any matters where we can add value and advice. For further information, please contact your usual Crowe contact.
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