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In the late 1990s a tussle over Rolls‑Royce played out between Volkswagen ("VW") and BMW. While Volkswagen paid more for the carmaker, it was BMW who ended up with the brand. This is a wonderful case study on how getting the IP wrong can rewire an entire industry.
History - the short version
In 1998, Volkswagen outbid BMW to acquire Rolls‑Royce Motor Cars from Vickers (for GBP430 million), gaining the Crewe factory, engineers and Bentley. But the "Rolls‑Royce" ("RR") name and the famous "RR" device were owned not by the car company Vickers sold, but by Rolls‑Royce plc (the aerospace company), which had licensed those marks into the motor business.
BMW however, secured the "Rolls Royce" trade mark and RR Logo from Rolls‑Royce plc for GBP40 million. A complicated transitional arrangement was agreed to in terms of which Volkswagen was licensed to continue using the trademarks until 31 December 2002. After this transitional period, BMW launched a new car company, Rolls‑Royce Motor Cars Limited, which — from 2003 — became the sole maker of Rolls‑Royce cars. Volkswagen, meanwhile, consolidated Crewe around Bentley, which it still owns today.
What actually happened
At the heart of the story is a clean separation between the manufacturing business and the brand. Vickers was selling the shares and assets of Rolls‑Royce Motors Limited (including Bentley and the physical manufacturing plant). But it did not own the core "Rolls‑Royce" trademarks. Those were held by Rolls‑Royce plc and licensed for automotive use. Volkswagen's purchase from Vickers included the "Spirit of Ecstasy" mascot and the radiator grille shape rights held by Rolls‑Royce Motors Limited, but not the "Rolls‑Royce" trademark or RR device, which remained owned by Rolls‑Royce plc. When Volkswagen acquired the car-making business, it acquired the licence position then in place — but it did not acquire the ultimate ownership of the name and device. That gave Rolls‑Royce plc, as trademark proprietor, leverage over the future use of the brand.
BMW had an existing supply relationship with Rolls‑Royce/Bentley for engines and electronics — and, critically, a strategic interest in the brand rather than the Crewe factory. BMW negotiated directly with Rolls‑Royce plc to acquire the Rolls‑Royce automotive trade mark rights for. That transaction meant that, once existing licensing and transitional arrangements expired, BMW would be the only party entitled to put the "Rolls‑Royce" name on cars.
What followed was a carefully staged unwind. For a time, Volkswagen continued to produce Rolls‑Royce‑branded cars at Crewe under licence. BMW, meanwhile, prepared a greenfield operation at Goodwood. On the agreed transition date in 2003, the switch flipped. BMW's new Rolls‑Royce Motor Cars Limited became the exclusive automotive licensee and user of the "Rolls‑Royce" mark, and Volkswagen focused Crewe entirely on Bentley. The market still feels that decision today: Bentley as a Volkswagen Group marque; Rolls‑Royce as a BMW Group marque.
VW's chairman at the time (Ferdinand Piech) admitted that "I would have preferred to keep both brands" and that if he had sorted out the trademark and parts issues earlier, "the price would have been much lower than Volkswagen finally paid."
Key lessons for dealmakers
This was not a loophole or a clever technicality. It was classic trade mark law playing out at scale. First, trade mark ownership can sit outside the operating company. When that happens, the licence is the lifeblood of the business. Second, change‑of‑control and assignability provisions in licences matter just as much as the purchase agreement. If the brand owner can influence or terminate rights on a sale, the highest bidder for the factory may not be the ultimate owner of the brand. Third, co‑existence and staged transitions are often the pragmatic solution. A time‑limited licence allowed continuity for customers and dealers while the parties reset the brand architecture.
There's also a strategic point. Trademarks are not mere badges; they are the asset. In this case, the proprietor of the "Rolls‑Royce" trademarks could decide who made Rolls‑Royce cars. The manufacturing assets followed the brand, not the other way round.
Why this still resonates in South Africa
We frequently see brand–business separation in South Africa too, especially in franchising, joint ventures, and where local entities operate under global brands. Chain of title, territorial coverage and the precise scope of licences can be decisive. The Rolls‑Royce saga underscores the need to:
- map ownership of all core marks and get sight of every underlying licence, sub‑licence, and consent;
- stress‑test change‑of‑control, assignment, and termination clauses well before concluding the transaction; and
- plan for transitional branding and consumer communications if rights are moving between corporate groups.
In short, conduct a comprehensive IP due diligence investigation. This is a specialist area of law and should be conducted by experienced commercial IP practitioners. If you don't put the IP at the centre of the transaction thesis, you may buy the factory and lose the name on the gate.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
