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How much Intellectual Property is there in Formula 1 GP?

Mercedes AMG PETRONAS F1 Team

Source (Google)

Human sports, albeit, made to entertain, as well as help to bring communities and nations of all races together, to witness true human ability and exceptionalism can be found in many categorizations such as (football, basketball, golf, break-dancing, car-racing), etc. Car racing (Formula 1 – F1 racing) finds its place, if not at the zenith of the most expensive sports, it will make the cut in the top three. It requires extreme concentration, as the hunters (other drivers) and the hunted (1st position driver) compete for the pole position (1st position), with each position offering points, translating not only for an opportunity to win the world constructor’s and driver’s championships but in monetary revenues and its ripple effects on the markets eg: stock markets, driving sales of participating entities in the winning team’s progress.

Modern sports, characterized by its business-oriented philosophy in its execution, has a lot that goes into partnerships, branding, merchandising, and other companies providing resources and functionalities, to ensure accuracy and fairness are achieved, whiles making a name for themselves, seek to cement their expertise in the value they provide to this sports competition, as well as harness the marketing potential these events offer. Talk of Cloud services (AWS, Azure, Oracle, Salesforce), digital timekeeping (Hublot, Rolex), automotive companies (Mercedes, McLaren, Ferrari), etc., and a plethora of other sponsorship by entities such as (Shell, Aramco, Red bull and Lenovo), these major players contribute to a smooth enjoyment of the sports to both viewers and teams competing with their impressive car aerodynamics, designs and engines, following rules outlined in the FIA: ISC (International Sporting Code).

However, not all participating teams in F1 racing have the pedigree of hailing from the automotive industry or are funded by wealthy companies with billion-dollar valuations, as it is an expensive sport, and each car crashed into the walls or involved in a fatal accident, is of value in millions of dollars going down the drain plus the life of an individual at stake, thus, there’s always the need to exploit various intellectual property rights of other companies in the same competition or not, for provision of tires, engines, vehicle design, communication systems, etc., to achieve a standard vehicle for the event participation, at an affordable cost, following standards and regulations set out by the FIA (The Fédération Internationale de L'Automobile), and WMSC (World Motor Sports Council).

Looking at the intertwined dependencies of corporate entities and brands, in F1 racing events, it can be realized that, there is no single law that can protect all such proprietary material and resolve all issues that can arise from these collaborations in the F1 racing event, from individual rights to sponsorship, broadcasting rights and licensing to protect the business interest and innovations of all participants involved. Thus, Intellectual property (IP) which comprises patents (protects inventions that are new, innovative, and capable of finding industrial application: not granted only on products but also to processes of achieving a result), trademarks (a distinctive sign or an indicator representing a trade or business), trade secrets (a practice, process, patterns, or a compilation of information which is not generally known or easily acquired by which a business obtains an economic advantage and strategic positioning over its competitors), copyrights (laws protecting the expression of ideas and not ideas in itself), is deployed to tackle the various issues that may arise, Kalamadi, S. (2012).

Considering a racing event, held in about twenty-one different countries and under different jurisdictions, it is apparent that filing for patents is the least road traveled by competing parties, as before a patent is passed, multiple racing seasons would have already been done with, and the technology patented would not hold its value and become obsolete (Gerard-Reimer, 2021), unless perhaps it’s a technology which finds applicable value in commercial production in the auto markets.

Whiles other avenues exist in circumventing the problems of issues with multiple jurisdictions, that is, getting global patents with the Patent Corporation Treaty, a submission still needs an evaluation period to grant the patent. And according to Article 21 (2)(a) of the Patent Cooperation Treaty, a period of 18 months is allowed before the publication of an international patent from the priority date of its application.

Also, with disclosures made as part of patent specifications, teams would not be in favor of such disclosures with their aim of winning a championship title, as this act will not only sabotage their chances of taking a winning prize at the podium but also as to whether the patent filed would be granted, (Rogan, 2019). Thus, patenting is not the go-to option by Formula 1 teams, but rather a reliance on Trade Secrets done primarily through contracts like that of confidentiality, (Gerard-Reimer, 2021).

On Trade Secrets under TRIPS and the International Sporting Code

A reference made from the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), Section 9, Article 39, states that, any natural and legal persons have the possibility of preventing information lawfully within their control from being disclosed to, acquired by, or used by others without their consent in a manner contrary to honest commercial practices, so long as such information has commercial value because it is a secret, and not generally known or readily accessible to persons within the circles that normally deal with that kind of information in question.

Although, there is no explicit provision with respect to Trade Secrecy under the International Sporting Code as applicable in the 2022 racing season, Article 12.2.1.c provides that any fraudulent conduct or act of prejudice to the interests of the competition or to the interest of motor sport generally, would be a breach of the International Sporting Code, (CODE SPORTIF INTERNATIONAL, 2022), and it is under this article that teams may resolve their disputes involving trade secrets, as was done in the Ferrari and McLaren dispute of 2007, (Dhawan, A, 2022: Pedal to the Metal, An Insight into the IP Regime of Formula 1).

Navigating Intellectual Protection in FIAs Technical Documentation

As noted in earlier, in [paragraph 3], not all participating teams hail from an automotive industry, therefore, they do depend on the established automotive firms for certain parts of cars, in order to function successfully. However, as a sport which seeks to promote innovation as well as entertain and provide revenue, certain rules are drafted for all partaking entities to maintain uniqueness, in its car make, following the established framework for production of a Formula 1 racing car.

Article 17, of FIA (The Fédération Internationale de L'Automobile) technical documentation, highlights all the pertinent features partaking entities or associates, need to take note of, either manufacturing by themselves or outsourced to a competitor or any eligible party capable of producing specific component parts, following constraints as established by the FIA.

Article 17 of the FIA, defines “intellectual property” as:

a) patents, rights to inventions, designs, copyright and related rights, database rights, trademarks and trade names, rights in get-up and related goodwill, and the right to sue for passing off or unfair competition (in each case whether registered, registerable, or unregistered);

b) proprietary rights in domain names;

c) rights to use, and protect the confidentiality of, trade secrets, know-how and confidential information;

d) applications, and rights to apply for and be granted registrations, including extensions and renewals of, such rights; and

e) all other rights of a similar nature or having an equivalent effect anywhere in the world

According to the above definition of IP, the FIA further classifies all components used in Formula One Car and equipment used to support a competitor’s operations during a Championship under the following listings:

(i) Listed Team Components (LTC)

Refers to components whose design, manufacture, and Intellectual Property are owned and /or controlled by a single competitor or its agents exclusively. Examples include Wheel drum and drum deflector, Fuel bladder, primary heat exchanges, etc. See Appendix 5 of the FIA Technical documentation for detailed listings under this category.

However, this does not prevent a competitor from outsourcing any R&D, engineering, and/or CAD design to a third party provided that,

  • the third party may not be another competitor or an associate of a competitor,

  • the third party to whom the design of the LTC is outsourced may not be another competitor, an associate to another competitor, or a party that directly or indirectly designs LTC or TRCs for any other competitor.

  • The competitor retains the exclusive right to use the LTC in Formula One for so long as it competes in Formula One.

(ii) Standard Supply Components (SSC)

This refers to components whose design and manufacture will be carried out by a supplier appointed by the FIA, to be supplied to each competitor on an identical technical and commercial basis. Examples include Wheel Covers, Clutch shaft torque sensors, Wheel rims, Tyre pressure sensors (TPMS), Tyres, etc. See Appendix 5 of the FIA Technical documentation for detailed listings under this category.

SSC components supplied must not be modified and must be installed and operated as exactly as specified, except for minor changes explicitly permitted.

(iii) Transferable Components (TRC)

TRC are components whose design, manufacture and IP resides within a single Supplying Competitor, or third party, but can be supplied to another Customer Competitor. Examples include Gearbox carrier, Gearbox cassette, Clutch, Clutch shaft, Power assisted steering. See Appendix 5 of the FIA Technical documentation for detailed listings under this category.

(iv) Open-Source Components (OSC)

These are components whose Design Specification and Intellectual Property are made available to all competitors through mechanisms defined in Article 17.6 including but not limited to the following component listings: Front floor structure, Pedals, Rear wing adjuster (DRS), Steering wheel, quick release.

Article 17.6.4 further, stresses the point of modification to an open source design, which states that “any competitor who creates a new, or modifies an existing, Design specification of an OSC or any OSC manufactured to a Design grants an irrevocable, royalty-free non-exclusive, worldwide license to all other competitors to use and modify any of its IP subsisting in such OSCs or Design Specifications to the extend contemplated by the Technical Regulations.

In conclusion, the FIAs technical documentation provides the cinch for participating teams to navigate the intellectual property rights in Formula One racing sports, with Listed Team Components (LTCs) driving home uniqueness to separate competitors, and thus, should any thimblerig by a competitor be brought to light, the FIA can assay the team in question and pass the relevant judgment following the guidelines in its documentation.

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