VOLKSWAGEN’S TAKEOVER OF ROLLS-ROYCE: BUYING THE COMPANY BUT NOT THE IP RIGHTS

In an extraordinary oversight, VW failed to seek the rights to the Rolls-Royce brand name as part of its pitch for the company. This was […]

In an extraordinary oversight, VW failed to seek the rights to the Rolls-Royce brand name as part of its pitch for the company.

This was despite Rolls-Royce directors having made it clear that BMW was their preferred custodian of the Rolls-Royce brand name. RRMC and BMW had already established a joint venture to produce jet engines – with BMW providing the financing and Rolls-Royce the expertise – which was three years away from realising profits.

The situation led to a protracted, expensive and acrimonious legal battle before the European Commission, in which VW questioned RRMC’s moral right to control the brand name.

THE LESSON: DO YOUR DUE DILIGENCE

The important lesson from this extraordinary case is that bidding for a company does not automatically give the potential purchaser the rights to produce that company’s product.

Had VW conducted an extensive due diligence audit, it would have discovered where the IP rights were held and understood the nuances of associated contracts that allowed production of the key asset: the Rolls-Royce car.

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