Proton said in a statement that it had terminated a licence for Fernandes's 1 Malaysia Racing Team to compete as Lotus Racing and would "take all necessary steps" to stop him using the Team Lotus name from 2011.
The Malaysian car company that owns British-based Lotus sportscars squared up for a fight with racing team boss Tony Fernandes on Monday over the right to use the evocative brand in Formula One.
Proton said in a statement that it had terminated a licence for Fernandes's 1 Malaysia Racing Team to compete as Lotus Racing and would "take all necessary steps" to stop him using the Team Lotus name from 2011.
Fernandes, the Malaysian entrepreneur who announced at last weekend's Singapore Grand Prix that Lotus Racing would compete as Team Lotus next season, fired back a broadside of his own.
Lotus Racing chief executive Riad Asmat said in a statement that the team had issued proceedings in the London High Court "for a declaration that Team Lotus Ventures has the rights to use the Team Lotus name and everything associated with that brand in relation to Formula One".
The original Team Lotus was created by the late Colin Chapman in the 1950s and became one of the most successful teams in the sport's 60-year history, with 79 race victories before it folded in 1994.
Top drivers who competed for the seven-times constructors' world champions included Stirling Moss, Jim Clark, Graham Hill, Mario Andretti, Nigel Mansell and Ayrton Senna.
"A new dream starts today, Team Lotus is back," Fernandes declared on Friday.
Valuable brand
Fernandes, who runs the Air Asia airline, said he had acquired Team Lotus Ventures from David Hunt -- brother of the late world champion James -- who had retained the rights to the name since the team's exit from F1.
Proton disputed those rights.
Proton chairman Nadzmi Salleh said: "We believe the Lotus brand to be one of the most valuable brands in Formula One today.
"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 One 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."
Group Lotus, which owns Lotus Cars and Lotus Engineering, is now a wholly-owned subsidiary of Proton and is run by former Ferrari executive Dany Bahar.
Until 1994, Lotus's last year in F1 until this season, the team and car firm were in common ownership.
"Since 1994, David Hunt has claimed to have acquired assets of Team Lotus, including its name, from the liquidator," said Proton.
"He has never raced as Lotus. Mr Hunt's attempt to acquire the name Team Lotus was ineffective. Group Lotus is the owner of all rights in the "Lotus" automotive brand including those relating to Formula One."
Proton said Group Lotus had terminated its current licence to Fernandes because of "flagrant and persistent breaches of the licence by 1 Malaysia Racing Team, which were damaging to the "Lotus" brand."
Asmat said the team had never discussed extending the licence and the Proton sponsorship accounted for about 1.5% of his budget.
Lotus Group recently announced a move into Formula One's GP2 and GP3 support series as partners to the championship winning ART team.
In a further clash between the two Malaysian firms, Fernandes will also be involved in GP2 with his own Team Air Asia, that will be closely linked to what would be the Team Lotus Formula One team.
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