Rough Ride Not over for Rover Marque; in the Wake of the MG Rover Collapse, Business Writer John Revill Examines the Complex Issues Surrounding Who Owns the Intellectual Property to the Car Maker's Brand and Designs

Article excerpt

Byline: John Revill

To say the collapse of MG Rover has left a tangled mess would be something of an understatement, not least when it comes to the intellectual property rights.

The question of who owns the intellectual property (IP) rights could still end up in the courts with lawyers poring over the details of deals struck by the Longbridge car maker during its final months.

In 2004, MG Rover sold the IP right for the Rover 25, 75 and K series engines to its would-be Chinese partner, the Shanghai Automotive Industry Corporation (SAIC).

SAIC paid pounds 67 million for the privilege, money which, it seems, was needed to keep MG Rover afloat while the bigger deal, a joint venture between the two firms, was sealed.

As everyone now knows, SAIC took fright at MG Rover's mounting losses and pulled the plug on the deal, and the last British-owned volume car maker plunged into administration.

But where does that leave the IP? And when it comes to the rights of the Rover name, was it really MG Rover's to sell in the first place?

Administrators PricewaterhouseCoopers (PwC) are considering legal action to reclaim the intellectual property rights to the company's name and products.

PwC has engaged lawyers to examine claims that SAIC already owns far-reaching rights to the designs of the 25 and 75 models and K series engines.

The inquiry could centre on whether the car and engine designs were under-priced and whether there were any flaws in the transfer of IP rights.

A fault in the deals could, in theory, lead to anything from legal action against directors to the annulment of the designs' transfer.

Rover's lack of rights to the designs is a serious impediment to selling its remaining assets because it prevents potential buyers making the cars without permission from SAIC.

Tony Lomas, joint administrator and partner with PwC said: 'We are reviewing with our lawyers precisely what IP had purportedly been acquired and the price they paid for it.

'We are looking at whether or not the price paid for the designs was appropriate. We are looking at exactly what was and what was not transferred. And we are looking at the interdependency of the different parts of the transaction.'

SAIC is confident it has the rights to the designs.

A spokesman for the Chinese state-owned firm said: 'The deal was negotiated and executed properly and SAIC are perfectly confident that their legal title to the intellectual property rights is sound - pounds 67 million is a lot of money.'

Chinese engineers spent a period of time at Longbridge last year, seeing how they could work with MG Rover, and examining the production processes.

Now the deal is off, it will be difficult to ensure the knowledge they picked up is not used elsewhere.

Further claims could also centre on whether SAIC has the right to use the Rover name on any new cars it produced in China.

The Rover name is owned by BMW and was licensed to MG Rover, but it is believed the name was sub-licensed to SAIC as part of the same IPR deal last year.

A source close to SAIC suggested that the administrators were looking to determine what the firm's interest was.

'Without SAIC's permission, nobody else can make a Rover,' said the source.

'They are trying to get the Chinese to say 'what we would want to do is to buy this, this and this'. I suggest we are going to have an argument between lawyers.'

The lawyers and, indeed, the administrators, must be scratching their heads. In an already extremely complicated company structure, who has the design rights and the right to the name is further tangled by the involvement not only of MG Rover and SAIC, Chinese and English law, but other motor manufacturers as well.

When BMW sold the business to MG Rover for pounds 10, it included a licence to use the registered trademark Rover on cars. …