Formula One takeover: a rocky road for IP?
Following the announcement that US mass media company Liberty Media has agreed to buy Formula One (F1) for $8 billion, lawyers tell WIPR how trademarks, brands and licences could be affected.
Liberty Media released a statement on September 7 that it would acquire F1 from CVC Capital Partners, F1’s controlling shareholder.
The first stage of the buyout is now complete, with the deal expected to be finalised in early 2017. Liberty Media currently has an 18.7% stake (which will rise to 35.3%), while Bernie Ecclestone remains F1’s CEO and Chase Carey joins as the new chairman.
In one example of F1 protecting its core brand, in September 1997 F1 Licensing filed a trademark for ‘F1 Formula One’ at the European Union Intellectual Property Office (EUIPO). The mark covers classes 4, 9, 16, 18, 25, 28, 38 and 41, protecting goods such as sportswear, radio and television broadcasting, blank tapes and discs, and candles. It was registered in May 2003 and will expire in 2017.
Another trademark for ‘F1 Formula One’ was registered at the EUIPO in July 2014 and covers class 4, including industrial oils. Other trademarks registered at the EUIPO include ‘F1 Cafe’, ‘F1 Restaurants’ and ‘F1 Pit Stop Cafe’.
WIPR spoke to lawyers about the possible IP considerations of the deal.
Catherine Wolfe, partner at Boult Wade Tennant, says: “The valuation of the business at $8 billion will partly be due to the iconic and high status of the trademarks, which are such a crucial part of the modern business environment.
“‘Formula 1’ and ‘F1’ are both valuable brands with high attractive force, given the association with the glamour of top-end motor racing and exotic venues such as Monaco.”
Dan Smith, director and head of advertising law (UK) at law firm Gowling WLG, says that from a sponsoring and brand licensing perspective, the F1 brand is still strong—shown by the recent sponsorship deal with Heineken.
The Heineken deal was announced by F1 in June this year and is a global partnership. The drinks company is the exclusive global beer partner of F1 and has access rights across the majority of F1 events.
The amount was not disclosed at the time, but The Guardianreported that the deal could be worth $150 million to F1 over five years.
But Smith adds: “F1 has suffered in recent years. Global viewer numbers are down and there has been a failure to reach out to a new generation of fans through digital media; Bernie Ecclestone once dismissed social media as ‘nonsense’.
“If the new owners can finally crack expansion in the US and put an effective digital marketing strategy in place, then sponsors and licensees are set to benefit and Lewis Hamilton might not be the only one cracking open the champagne.”
But the role of IP in the deal is not yet clear. Simon Clark, partner at Berwin Leighton Paisner, adds that, as he understands it, “Liberty Media are buying CVC’s share in the F1 business. Where there is a share sale, there is no transfer of trademark ownership, as the trademarks will remain owned by the same company.
“This avoids the need for all the worldwide trademark registers to be amended to record the new owner of the trademarks against each registration,” he explains.
Benjamin Scarfield, UK and European trademark attorney at Kilburn & Strode, tells WIPR: “The Formula One Group (FOG), subject to the acquisition, is a collection of companies with numerous investors, all with the end goal of the promotion and exploitation of those rights in the sport.
“As with any commercial acquisition, the exact nature of the investment, takeover or change of control will be subject to extensive contractual terms and negotiations. The dealmakers must strike a commercial balance between both the new investors and the existing stakeholders,” he adds.
As for IP, Scarfield says that “the distribution of ownership of the IP is not simple, with a variety of subsidiary companies coming into play. Perhaps the most revenue-oriented subsidiary, Formula One Licensing, is the proprietor of a range of commercially-minded trademark registrations, including for marks such as ‘F1’, ‘Formula One’, ‘British Grand Prix’ and ‘F1 Grand Prix’”.
He adds: “The portfolio of rights is also territorially extensive, providing FOG with the tools to both maintain their strong control on the marketing and promotion of a multi-million dollar sport, and to generate revenue.”
Charles Braithwaite, partner at Collyer Bristow, says that IP relating to F1, such as names, logo and trademarks, is owned by certain FOG companies. These groups are controlled by Delta Topco, a parent company.
He adds that subject to approval and if the whole deal goes ahead, Liberty will own approximately 100% of Delta Topco. This means that Liberty Media will have control over all the FOG companies—including all the related IP.
“It is widely believed that Liberty Media will try to modernise F1 and expand its appeal through wider use of digital and other media platforms,” he adds.
In the meantime, the various parties to the agreement seem happy. Ecclestone has said he would like to “welcome Liberty Media and Chase Carey to F1 and I look forward to working with them”.
In addition, Greg Maffei, president and CEO of Liberty Media, has said: “We are excited to become part of F1. We think our long-term perspective and expertise with media and sports assets will allow us to be good stewards of Formula One and benefit fans, teams and our shareholders.”
