What is the driving force behind Intellectual Property of Formula 1

This article is written by Nisha Modak, pursuing a Diploma in Intellectual Property, Media and Entertainment Laws from lawSikho.com.

Pole position

Everyone is driven by something, and that something is finishing first and finishing fast. The most extravaganza and flamboyant sport of all is the Formula 1(F1).  It is the pinnacle of motorsport wherein a clear difference of performance is seen in each team at every level. Winning and losing can be measured by the tenth and sometimes hundredths of a second. The team in-directly decides the fate of each player in this sport. The basis of innovation capabilities and knowledge acquired, and it is acquired through its competitors is the formula in Formula 1. To protect such formulas, watertight protection is required at every level and such formulas can be protected by Intellectual property (IP). The amount of planning, creativity, and engineering is involved hence, the same level of protection is involved. 

F1 applies the rule of not working hard but working smart. The sporting regulations in Formula 1 are not only a long battleground for teams but also a part of the process, as the intellectual capital acquisition is accepted. F1 has created a competitive balance between teams leading to race-specific competition and non-team sports. The IP is the difference between losing and winning. The 107-second rule not only works on the track for the lap time but in every aspect of F1. Neither Hamilton nor Michel Schumacher are the heroes of F1, but their engineers are. IP of each team determines success on and off its circuit as it takes into consideration not only patents but also its Trademarks, Copyright, personality right, and many debatable topics like Shoey, F1’s collision with its own mark, and McLaren – Ferrari Spygate.

Pit stops in Patents

Naturally, if the engine is the key that gives the competitor an edge over the other and which helps the car to win even by a few seconds, the innovation and technology, and design of that engine is the first IP protection they must seek. Though Patent protection is mirrored in other high-tech fields like telecommunications and pharmaceuticals that also leads to intense competition, F1 instead lacks Patents. The reason behind this is simple, it is a competition. It means that if a team designs an innovative technology for its engine, making the car 10 seconds faster and giving it an advantage against other competitors and they further go upon to lock such a patent, other teams will simply vote it out through the Fédération Internationale de l’Automobile (FIA), FIA Technical Working Group process by the end of the season. The other teams will not have access to it. FIA has regulated that the patented technology would be ruled illegal if an F1 team were to try and enforce a patent. This regulation is kept in mind so that the competition at the level field is maintained and as many cars as possible are competing in the race together. 

Another problem faced by the F1 industry with respect to enforcing Patents is the time involved in acquiring a successful Patent. F1 races take place all over the world and such a team would have to obtain a Patent in each of these territories. Even through PCT applications, the Patent publication will be effected promptly after the expiration of 18 months from the priority date. By such time, another team would have come up with an innovation, as this industry moves fast and F1 would have completed 2 seasons leaving such a Patent ineffective for that time. At the same time, the teams would not want disclosure of their Patent which can be advanced upon by competitors especially when the grant is not assured.

The Cockpit safety system case

 A classic case of Patent is the Cockpit safety system case wherein in Jens Nygaard filed a suit against FIA and asked for compensation, F1 and two teams accusing the use of Halo protective system as FIA, Formula One, Mercedes, Red Bull, Ferrari, and other companies made and imported the Halo and a similar “Aeroscreen” device meant to protect drivers’ heads and necks in races which was owned and is patented by Nygaard. Though Mercedes unveiled Halo for its car in 2015 and denied any involvement, FIA in return refused to compensate Nygaard and refused to acquire a license stating that FIA adopted Halo in 2017 and actively made it compulsory for all F1 teams to use the system. The judgment is pending in court.

Inventions that were helpful to each team

Some Patent inventions which were helpful to each team and solved various problems and are probably banned for their usage in F1 e.g. Active suspension system by Professor Smith working then with the Williams F1 team and to the contrary Lotus Renault GP now known as Renault F1 Team had filed an application (WO 2011/089373) of such a Patent that, the flywheel arrangement as used before was not required by providing inertial reaction of a fluid. Patent between Cambridge Enterprise and McLaren (EP 1,402,327 B2), using the code name J-Damper was kept secret by NDA between the companies for years.  The patent was obtained on the introduction of a third element adjacent to springs and shock absorbers. Though F1 lacks Patents, this has not stopped F1 Teams to acquire hidden Patents.

Traction control of Trade Secrets

Though the teams cannot Patent and reap benefits out of it, the motivation and the spirit of competition are kept intact by protecting their invention through Trade Secret. It is not only highly confidential that holds information but also holds commercial value and is subject to certain stringent steps to keep the same a secret. Trade Secret in F1 defines and underlines IP strategy on the basis of which it is formed by keeping a Trade Secret.

The rules under FIA specify that it is not illegal to reverse engineer cars, but only which are done based on their exterior appearances. In 2020, Racing Point’s team admitted that their car (also known as Pink Mercedes), RP20 was modeled closely on the Mercedes Car W10 which had won 2019’s race. If car manufacturers of F1 have some parts of the car that are deemed to have a powerful aerodynamic effect, they are to be ‘listed’ which means that they must prove that they have developed and designed such parts by themselves and for their own exclusive usage and the same are not purchased from their rivals or third party. “This was initiated to ensure that F1 remains a constructor series.” However, several complaints were filed from F1 teams after Renault accused the Racing Points team of using rear brake ducts which were listed for the start of 2020 and appeared to be similar to that of the Mercedes 2019 car. “It had been able to shortcut the design of a listed part, allowing it to use those design resources elsewhere and potentially gain an advantage over rivals.” However, Racing Point has simply reverse engineered it by photographing Mercedes. This led the FIA to specify that rules are not black and white and open to interpretation. Since then, it is no longer legal for other teams to use brake duct design due to their aerodynamic effect which is already in use by the current team.

Different methods applied to protect data-driven highly confidential secrets

To protect their technical information from being leaked out, teams use different methods to protect their data-driven highly confidential secrets. For instance, Mercedes engages in a USB storage, Pen drive Policy provided by Mercedes High-Performance Powertrains (HPP) and mandates that this device shall be used for HPP encryption requirements and its security compliance and that usage of any other USB is prohibited. Even after this protocol from Mercedes, Mercedes Engineer Benjamin Hoyle resigned to join Ferrari after his term contract ended. Mercedes took aggressive steps to protect its confidential information. It was alleged that Hoyle not only took files containing codes to decrypt raw data, its Hungarian Grand Prix report but also tried to cover its tracks by deleting some data. Mercedes is looking for a way to get its data back and to seek restraints for Hoyle from working with any other F1 team. 

The F1 controversial espionage “Spygate” : one of the biggest Trade Secret misappropriation cases

The F1 controversial espionage “Spygate” is one of the biggest Trade Secret misappropriation cases wherein Ferrari launched an investigation and sued McLaren as, then Ferrari Technical manager passed and leaked confidential information not only of its budget, engines, technical report but also that Ferrari has cheated and won the Australian Grand Prix in 2006 The documents so leaked also contained 780-page documents relating to 2007 F1 Ferrari car, altogether which resulted in penalty sum of USD 100 million to McLaren and exclusion of McLaren from 2007 Constructors’ World Championship.

Just four companies- Ferrari, Honda, Renault, and Mercedes supply engines and form the grid of the entire F1 sport and thus keeping (Teams)each other’s secrets while developing their own engines for winning the championships is quite the challenge in F1 specifically in connection to its IP as they need to protect any kind of traction in their own Trade Secrets.

Trademark traffic

Formula 1 has a reputation that it has been reserving for more than 50 years. The reputation is formed on the name, logo, and brand value. Clearly, F1 has managed to do that all these years as their history of the championship is associated with this marks like F1 logos, F1 FORMULA 1 logos, F1 FIA FORMULA 1 WORLD CHAMPIONSHIP logo, FORMULA 1, FORMULA ONE, F1, FIA FORMULA ONE WORLD CHAMPIONSHIP, GRAND PRIX, F1 GRAND PRIX, FORMULA 1 GRAND PRIX, and related marks are Trademarks of Formula One Licensing BV, a Formula 1 company. This instrument of IP shall be given utmost importance when it comes to F1, without which standing and the name of F1 is blurred and the world will start to become unrelated when it comes to the Soul of Solo motorsport in the world.

Since Liberty Media purchased F1 in 2017, F1’s logo has been changed from slanted Letter F and the speed lines opposite to, curved stripes running through the middle which is followed by a straight line. However, the big stationary giant Minnesota Mining and Manufacturing Company (3M) opposed the mark in the European Intellectual property Office (EUIPO) which was accepted due to previous registration and has a resemblance to their mark which appears on therapeutic clothing on Futuro range. The main problem here is 3M applied for a Trademark on its logo on 17th February 2017, which after 4 months the mark was registered and F1 applied in November 2017, which gave an upper hand to 3M. Also, that F1’s logo was applied in 26 classes out of 45 classes wherein Logos can be registered, and the collision occurred as F1 launched a line of clothing with a new logo, while 3M has applied in the class for only therapeutic clothing. Though F1’s application excludes therapeutic clothing which 3M’s mark is registered this does not guarantee that there won’t be a likelihood of confusion between the 2 designs.

If the mark is decided in the favour of 3M, the value of the company would be staggering and that F1’s portfolio of brands that have become household names could hit the finances of the company big time. F1 has made applications of the other 2 alternative logs which have been panned out and not opposed. However, if F1 has decided to go ahead with another logo, which represents its branding, there might lead to a shift in the recognition of F1 only as a sport and not a monopoly of the highest class of auto racing.

F1 has not only been seen as a top-end category of motor racing but the word mark F1 was also found lacking distinctive character, as per the court finding in the case of Formula One Licensing BV v. OHIM, and specifying that, ““F1” was thus descriptive, and so the public would not consider it to be the dominant element of the overall impression conveyed by the application mark “‘F’ and the numeral ‘1’ which are seen as the generic designation of a category of a racing car and, by extension, of races involving such cars and that,  there was no likelihood of confusion between the F1 mark and a later figurative mark for “F1 live. “As for the “F1 logo” mark, the court considered that there was a lack of visual similarity and only weak phonetic and conceptual similarity.”

Since Liberty Media’s take over, F1 has been rebranding its image and giving it a more flamboyant look. Shoey- means a podium celebration of drinking champagne from Shoe, Trademark was granted to Formula one licensing even though initiated by Daniel Riccardo on the F1 podium, which technically goes back 15 years being an Australian invention. It was registered in one class, being the main category, which covers glasses, beer mugs etc. F1’s Trademark and its acquiring Trademarks is one of the main driving forces of its Intellectual Property. 

Copyright crew

Like any other sport, F1 is well protected under its Copyrights as well. As the internet is ruling the world through digital domination, F1 has been more protective of its digital and broadcasting rights and as a strategic move to attract young viewers, it could be shifting its broadcasting rights to Amazon prime. F1 also makes all the teams sign a Concorde Agreement which specifies that all teams shall design almost all parts of their car right from gearboxes to tires in avoidance of misuse of confidential information.

F1 industry still facing infringement of Copyright

Even after all measures are taken, the F1 industry still faces infringement in Copyright. In Force India Formula One Team Limited v. Malaysia Racing Team SDN BHD & others, the Force India team were awarded €25,000 in damages “due to breach of copyright in relation to the design of a scale model of an F1 racing car of a rival F1 team. Copyright infringement took place by giving confidential information of CAD files which were developed by Aerolab for Force India team who were design consultants and had entered into a development contract with Force India in 2008”. “This all served to further demonstrate that whilst Aerolab did misuse some of Force India’s confidential information, they did not obtain any benefit, other than saving some time.”

The gaming industry is on F1’s radar 

Though Copyright has relevance in F1, the gaming industry is on the F1 radar recently as it being a popular community in the gaming world, many YouTube channels are facing takedown notices as the same cannot be broadcasted over their channel as Formula 1 Management (FOM) has claimed Copyright over more than a million videos. The reason behind this is that FOM being the commercial wing of F1 has claimed Copyright on gameplay footage being used by such YouTubers or gamers broadcasting their games in the F1 industry equating to not acquiring an implied Copyright license.

Personalities of the teams and their competitors form a part of F1’s IP. Lewis Hamilton, now being the bigger name of F1 than ever due to his 7-world championship titles, has limited his contract for the season of F1-2021 to one year only from signing a two-year contract at least with the team. This is a big hit to Mercedes as Hamilton’s name is associated with it and if he decides to quit Mercedes by the end of the year, the brand value and the most valuable marketing asset will be lost, thereby Mercedes losing its personality as a team and being a profit-making team rather than just being a cost. The teams in this digital age must figure a way out to maintain all of their Copyright and avoid exploitation which leads to banking upon its rightful rights. 

Chasing chequers : conclusion

The idea behind Intellectual Property is to protect and stop others from gaining success by making use of something that is or was developed and created by someone else, its owner. IP has been the epitome of F1 without which it stands nothing. IP being the crux of F1, it is difficult to point out and specify a single right driving its force and that one cannot function without the other as all its IP are interdependent and co-exist. The game is getting tuff by the day as new contracts and regulations are in the pipeline for the 2022 season specifically after Covid-19. These also include such regulations that there is no dominance of power by one team and the game shall remain fair and equal for all. 

F1 basically runs by technology which is starting to make their way not only on the circuit but also onto road cars. “However, due to the use of trade secrets to protect most inventions, and how difficult it is to determine whether a patent application is derived from F1 innovation, the exact size of that force is difficult to quantify from a look at the patent register”. F1 should consider taking up Patenting activities as F1 teams develop technologies that could also be applicable in its production cars, who indirectly could lose technology as there is larger scale patenting seen on in road automobiles and could reach the masses quickly. FIA needs to be keener on keeping the teams as well as F1’s IP intact by conducting more observations, inspection check of cars, regularly conduct IP audit and safeguard each team’s policy independently which will help in the progression of F1 in the circuit as each car and team majorly relies on IP.

References

Formula 1: A Driving Force Behind Intellectual Property? – Intellectual Property – UK (mondaq.com)  
https://www.law360.com/articles/1331368/race-car-driver-hamilton-cleared-of-patent-infringement?copied=1?copied=1 
https://www.motorsportmagazine.com/articles/single-seaters/f1/what-racing-point-did-wrong-brake-duct-penalty-explained 
https://blogs.orrick.com/trade-secrets-watch/2015/12/23/trade-secrets-in-the-fast-lane-formula-one-and-the-importance-of-trade-secret-protection/ 
https://www.theengineer.co.uk/f1-ip-dispute-trade-secrets/#:~:text=There%20is%20a%20long%20list,available%20in%20the%20automotive%20industry
https://www.foxsports.com.au/motorsport/formula-one/f1-reportedly-trademarks-the-term-shoey-to-cash-in-on-daniel-ricciardos-podium-celebration/news-story/dbcab3f3fcd533781a372c39bc12400c 

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