Who owns the Rover brand and the intellectual property rights? Manufacturing Editor John Revill investigates...

The administrators of MG Rover must be scratching their heads.

When BMW sold the business to MG Rover for £10 it included a licence to use the registered trademark Rover on cars. MG Rover claims that last year they sold all the intellectual property rights to the Rover 75 and 25 to Shanghai Automotive for £67 million.

Shanghai Automotive appears to be claiming that it can build these cars under the Rover marque, but that would be unusual in trademark licence terms, according to Neil Maybury.

Mr Maybury, principal at intellectual property law specialists Maybury & Co, said many questions surrounded the right to use the Rover name.

He said: "The trademark licence from BMW to MG Rover allowing MG Rover to use the Rover marque would, apart from being personal to MG Rover, almost certainly have contained a clause terminating, or at least giving an option to terminate, the licence on MG Rover going into administration or liquidation.

"Equally, it would be unusual in a trademark licence to allow the licensee to assign or indeed sub-licence the Rover marque to a third party without at least the express written permission of BMW.

"Assuming that the licence of the Rover marque to MG Rover was personal to them, then any attempt by MG Rover, in the absence of the permission of BMW, to give it away to Shanghai Automotive could not succeed. You cannot give what you do not have."

Mr Maybury said even if there had been some form of sub-licence by MG Rover it would still not affect a clause in the original agreement between BMW and MG Rover that the original licence would terminate on the administration of MG Rover.

Although it is rumoured that the law of Singapore applies to the licence by BMW to MG Rover, any licence under a UK registered trademark needs to be registered within six months if, for example, the proprietor wants to claim damages for infringement.

A check at the Patent Office revealed no such registration, said Mr Maybury.

But yesterday BMW said it had no concerns over the trademark being used by SAIC and would not be, for the moment anyway, cancelling its licence agreement.

A spokeswoman for BMW said: "If we did cancel the main licence, that would have a knock-on effect and cancel the sub-licence. But at the moment we do not see the need to."

This is because when the licence agreement was signed, BMW made an agreement with Ford to prevent the Rover name being used to make 4x4 vehicles, which could compete with the Land Rover brand bought by the American car maker.

The BMW spokeswoman said: "If we felt we could not meet our obligations to Ford, then we could cancel the licence. But the agreement relates only to the Rover 75 and 25, which don't compete with the Land Rover."

Meanwhile, questions remain about whether SAIC got the intellectual property rights on the cheap.

Rob Hunt, a partner at PwC and joint administrator, said the question of who owned the rights for the Rover 75 and 25 needed to be settled.

"This is an issue that needs to be understood by ourselves and any purchasers of the business because it has ramifications for them because it tells them what they can and cannot make.

"SAIC has maintained they have bought certain IPR off MG Rover, and we are talking to our lawyers to make sure what they purport to own, they actually own.

"It is very important we get to the bottom of this, it is a complicated issue and if we are not happy then we will be in dispute and seek a way of trying to resolve it."

Mr Maybury added the valuation of intellectual property rights was far from being an exact science.

He said: "At the end of the day a valuation depends on what a willing purchaser will pay a willing seller in an arm's-length transaction.

"Although the sale of the intellectual property rights relating to the Rover 75 and 25 before the main deal was done with Shanghai Automotive would appear unwise to say the least, it would be a difficult argument to say that those rights were worth more and, if so, how much more."