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The Lotus Formula 1 team is facing the threat of possible legal action over its rebranding as 'Team Lotus' next season, as the row over the team's name moved up a gear on Monday.

Group Lotus parent company Proton said it would take 'all necessary steps' to protect its brand after claiming that Lotus F1 boss Tony Fernandes has no right to use the 'Team Lotus' name in Formula 1 next year.

Fernandes announced at the Singapore Grand Prix that he had acquired the rights to the 'Team Lotus' name from its previous owner David Hunt, and that he intended to rename his team for the 2011 season.

But in a statement issued on Monday, Proton said that it believed that Group Lotus was the owner to all rights surrounding the 'Lotus' name in the automotive sector - which included F1.

It suggested therefore that use of the 'Team Lotus' name in F1 would be a breach of its own rights.

The Proton statement said: "Last year, Tony Fernandes and 1 Malaysia Racing Team recognised this by taking a licence from Group Lotus to use the "Lotus" brand for the "Lotus Racing" team in the current Formula 1 season.

"With Proton's agreement, Group Lotus has now terminated its licence to 1 Malaysia Racing Team to use the "Lotus Racing" brand in the 2011 and future Formula 1 seasons as a result of the flagrant and persistent breaches of the licence by 1 Malaysia Racing Team, which were damaging to the "Lotus" brand.

"Following that termination, neither 1 Malaysia Racing Team, nor any other company associated with Mr. Fernandes such as Tune Group Sdn Bhd or Team Lotus Ventures Limited, has the authority of Group Lotus to use any "Lotus" brand in the 2011 Formula 1 season. This includes the use of the brand "Team Lotus".

"Group Lotus understands that Mr. Fernandes intends to rebrand the current "Lotus Racing" Formula 1 team to "Team Lotus" for the 2011 Formula 1 season. Mr. Fernandes indicates that Tune Group has acquired the rights to the name "Team Lotus" from a business formerly owned by David Hunt called Team Lotus Ventures Limited.

"roup Lotus believes these rights to have no proper legal foundation, a fact of which Mr. Fernandes was well aware when his company purchased them.

"PROTON will support Group Lotus in taking all necessary steps to protect its rights in the "Lotus" name, including resisting any attempts by Mr. Fernandes or his companies, or any other unauthorised person, to use the "Lotus" name in the 2011 Formula 1 season."

The growing dispute between the Lotus Group and Fernandes became clear last week when the road car company announced that it was sponsoring the ART GP2 team next year - in direct competition to Fernandes' own AirAsia outfit.

Proton's chairman Dato' Sri Mohd. Nadzmi Mohd made it clear that the company would do all it could to ensure that Fernandes did not run under the Lotus banner next year.

"We believe the Lotus brand to be one of the most valuable brands in Formula 1 today," he said. "We are the owners of this brand, and will take all necessary steps to protect it.

"Tony Fernandes has no rights to use the Lotus brand in the 2011 Formula 1 season, and we will strongly resist any attempts by him to use our brand without our permission and will withdraw our sponsorship of the Lotus Racing team."

"To put it simply, Group Lotus is everything Lotus. The fact that 1 Malaysia Racing Team entered into an agreement with Group Lotus to use the brand means that both Mr. Fernandes and 1 Malaysia Racing Team recognises and acknowledges Group Lotus' rights."

For an analysis of the dispute over the Lotus name, read Adam Cooper's feature here.