Tycoons battle for pole position over the Lotus name

The British sports-car maker is adamant the Formula One team has no right to use its name, report Joe Saward and Sarah Arnott

What's in a name? Potentially a great deal if you are the sports car maker Lotus and your name is linked with nearly four decades of Formula One success.

At the recent Mondial de l'Automobile in Paris – the oldest and biggest international car show in the world – the Group Lotus chief executive, Dany Bahar, unveiled a completely new range of cars and announced that the 58-year old British marque would be returning to racing. Competition is in the Lotus DNA, he argued. The company wants to "do justice to its heritage". The problem is: does Group Lotus own the heritage it so proudly claims? Mr Bahar is a slick salesman. In 2009, after as stint at Ferrari, the Swiss national used a rumoured $450m (£280m) of private investment – and an audacious plan to turn Lotus into a rival of Ferrari's – to persuade Malaysia's Proton, Group Lotus's parent company, to allow him to run the Norwich-based company.

"In the 1970s to 1990s, Lotus was mentioned in the same sentence as Ferrari, Lamborghini and Maserati," Mr Bahar said when he was appointed. "We believe it's the right time to bring Lotus back to where it was."

Mr Bahar has set himself quite a challenge. Lotus-buyers are traditionally middle-bracket enthusiasts spending around £30,000, rather than the super-rich willing to pay £150,000-plus for a Ferrari. With some of the new line-up of Lotuses priced at upwards of £135,000, Mr Bahar will need to find customers who are willing to buy one of his cars when they could afford a Ferrari. Making a grab for Lotus's sporting heritage could be just the help he needs. But as a tactic, it is like straight-lining a chicane: it's a faster route, but you might get caught out.

The biggest threat to Mr Bahar's strategy is the AirAsia magnate Tony Fernandes. The world-famous Team Lotus dropped out of F1 in 1994, after 36 years and 79 grand-prix wins. But 15 years later, in time for the 2010 season, Mr Fernandes revived the team as Lotus Racing, thanks to a deal with Group Lotus, before Mr Bahar joined the company, allowing him use of the name. So far, so straight forward. Except that after the single 2010 season, Group Lotus withdrew the licence.

And it doesn't end there. David Hunt – the younger brother of the late world champion James Hunt – claims to own the rights to the original Team Lotus brand, bought when the team collapsed in 1994. So when Group Lotus rescinded its licence, Mr Fernandes talked Mr Hunt into selling, and from next season the Lotus F1 team will be Team Lotus once more.

But Mr Bahar and Group Lotus are not happy and claim that Mr Hunt has no right to the Lotus name. "There is and always has been only one Lotus, the Lotus started by Colin Chapman," Group Lotus spelt out in its opening salvo. "Group Lotus believes these rights [to the Team Lotus name] to have no proper legal foundation, a fact of which Mr Fernandes was well aware when his company purchased them."

Although Group Lotus says its motor racing ambitions stop short of F1 at the moment, it is still taking "all necessary steps" to control the Team Lotus brand. And late last month, Lotus Racing launched an action in the High Court in London seeking confirmation that it can use the name next year.

Stripping out the bluster, the argument that Lotus was historically a single company rests on shaky ground. The two companies, Group Lotus and Team Lotus, were both started by Mr Chapman in the 1950s. But they were specifically created as separate entities, to avoid one company causing financial difficulties for the other.

The original Lotus Engineering, established in 1952, built replicas of Chapman's racing designs. And two years later, Chapman created Team Lotus to do the racing. Both sides benefited from the scheme: Team Lotus from the expertise, and the engineering business from the reflected glory. But the two businesses parted company in 1986 when the Chapman family sold the car-making arm to General Motors.

While the row grinds through the courts, industry-watchers claim the two sides should do a deal. Not only does common sense suggest Group Lotus work with Mr Fernandes rather than push him out of the way. The airline entrepreneur also has something to gain.

More importantly, both have a great deal to lose. If the High Court rules that Mr Fernandes does indeed own Team Lotus, then Group Lotus will have lost the best marketing tool in their challenge to Ferrari. And Mr Fernandes will be building a brand without a product to sell. Given such logic, insiders whisper that Mr Fernandes might solve the problem with an offer to Proton to buy Group Lotus. It would be a rational course if he decides a rose by any other name simply does not smell as sweet.

Maker's Marque: The History of Lotus

*Lotus began as Lotus Engineering Limited in 1952 and has made cars on the site of a Second World War airfield in Norfolk since 1966.

*Now owned by Malaysia's Proton, it was the brainchild of Colin Chapman, a highly innovative engineer who had a lasting influence on motor racing and died a multi-millionaire in 1982.

*In 1954, Mr Chapman established the F1 Team Lotus, which raced from 1958 until 1994, won 79 grands prix, and counted Stirling Moss, Graham Hill and Ayrton Senna among its drivers.

*In 1986, General Motors bought the Group Lotus car-making business, selling it on to Bugatti's owner, Romano Artioli, in 1993 for £30m. When Bugatti folded in 1996, Lotus was sold to Proton.

*Top-selling models have included the Lotus Elise, Lotus Eclat and Lotus Esprit. The 1976 version of the latter was used by Roger Moore as his "Bond car" in the 007 film The Spy Who Loved Me. Other models include the Lotus Exige. The current model of the popular Lotus Elise accelerates from 0 to 60mph in 4.3 seconds.

*The five cars unveiled at the Paris Motor Show this month were the Elite, the Elise, the Elan, the Esprit and the Eterne. These constitute "the complete remake of the brand", according to the Lotus chief executive Dany Bahar, who predicts that sales will double to more than 6,000 per year.

*In keeping with its transformation to a super-premium brand, the company is planning to cut its UK dealerships from 23 to three; the worldwide network will reduce from 160 to 135.

*Lotus is leading the project to build a handful of hydrogen-fuelled, zero-emission London taxis for the 2012 Olympics.