Trade Secrets and Industrial Espionage in Formula One Motorsports

By Lakhani, Shirin | Denver Journal of International Law and Policy, Spring 2018 | Go to article overview

Trade Secrets and Industrial Espionage in Formula One Motorsports


Lakhani, Shirin, Denver Journal of International Law and Policy


INTRODUCTION

From lights out to the waving of the checkered flag, and every turn and chicane in between, Formula One (Fl) is an exhilarating and glamorous international sport for car enthusiasts and adrenaline junkies alike. This high-tech motorsports formula has the biggest car manufacturers (Mercedes, Honda, McLaren, Ferrari, the list goes on) (1) competing at the cutting edge of engineering and design. Coinciding with this world of vanguard innovation is the inescapable world of patents, trademarks, trade secrets, and copyrights. Needless to say, most intellectual property (IP) attorneys would keel at the opportunity to be knee-deep in these waters.

In a realm where fractions of a second can determine who wins the race and who unceremoniously collides into a barrier of stacked Pirelli tires, every team wants to have the best car on the track. This entails having the better engine, the superior gearbox, the perfect amount of downforce and grip, the preferred tire strategy, and the team of engineers and drivers that is a cut above the rest. IP's place in this thrilling ride is ubiquitous--from the trade secrets that each team covetously hides, to the sponsors whose trademarks adorn both uniform and chassis, to the engineering and design elements ultimately patented for commercial production to the masses and the licensing revenues generated through television broadcasting.

This Comment will focus on the importance of trade secrets in Fl, the ways they are misappropriated through industrial espionage, and how teams can reduce the leaking of classified information. This Comment is divided into five parts. Part I gives a brief overview of the sport of F1 and how it is regulated. Part II provides a justification for the superiority of trade secrets over patents in the industry of motorsports. Part III takes a step back to explain the legal framework for international trade secret litigation, while Part IV applies that framework to Fl. Finally, Part V and VI concludes the analysis with recommendations for mitigating trade secret misappropriation risks.

I. Fl-A Brief History

A. The Sport

"[Fl] is a deafeningly loud, extraordinarily expensive, rock-star-meets-the-road spectacle." (2) The first F1 races were held in 1946, following on the coattails of World War II. (3) The first world championship took place in 1950, in Silverstone, England. (4) From its outset, F1 was perceived as a sport full of both adrenaline and danger. Thirteen drivers died at the wheel in just the first decade. (5) In response, a constructors' championship was introduced in 1958 to encourage safer design and technological advancement. (6) (It was not until 1994, however, when the iconic Brazilian driver Ayrton Senna died, that F1's ultimate governing body, the Federation Internationale de L'Automobile (FIA), turbocharged its safety standards. (7) Not a single F1 driver has died at the wheel since then.) By the 1970s, F1 cars were faster, with much greater downforce, superior aerodynamics, and, of course, more power. (8)

Another major change, this time to the business of F1, came in the 1970s when Bernie Ecclestone, a British business tycoon, rearranged the sport's commercial rights, turning it into a multi-billion dollar empire. (9) He became president of the Fl Constructors' Association (FOCA) in 1978, through which he greatly pushed for team coordination as a means to achieve more favorable licensing and commercial deals. (10) Soon enough, another regulating body rose up in 1979, the Federation Internationale du Sport Automobile (FISA), creating disputes over which organization supersedes. (11) It wasn't until 1981, when the Concorde Agreement was signed, that the power struggle began to ease. (12) After several years of contentious disputes about television rights and a number of mergers and acquisitions later, the F1 Group was formed to manage the promotion of the FIA Formula One World Championship and the majority of Fl-related licensing deals. …

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