Tesla Trademark Dispute in China Resolved

By Joseph Mandour on August 28, 2014

teslaLos Angeles – U.S. electric automaker Tesla Motors Inc. says it has reached an amicable resolution to a trademark disagreement in China clearing the way for CEO Elon Musk’s plans to expand as the world’s largest auto market. This is the second time that Tesla has declared that the disagreement with Chinese businessman Zhan Baosheng has concluded. Baosheng had already registered the Tesla trademark prior to the California-based automaker coming to China. In January, Tesla had announced that the matter had been resolved. But then last month, Zhan filed to bring Tesla to court.  In its latest announcement, Tesla states that the issue has now been “completely resolved.”

Tesla has an ambitious plan for growth in China, which has recently unveiled a number of incentives, such as tax cuts and purchase subsidies to help boost the sale of electric cars.  As part of the deal, Zhan has agreed to have Chinese officials finalize the process of canceling the Tesla trademarks that he had registered or applied for, at no cost to Tesla.  In addition, Tesla and Zhan also reached commercial terms to transfer certain Internet domain names, including tesla.cn and teslamotors.cn, to Tesla.

This dispute between Zhan and Tesla is not the first time that an American company was forced to purchase its own trademark in China. Other corporations, such as Apple and Unilever, have had similar issues in the past.  China’s trademark laws follow a first-to-file principle that rewards “squatters” or “trademark trolls” who have targeted valuable foreign brands and registered them as their own.  This puts corporations entering China in a position where they have to rebrand their products, get involved in a legal battle in China, or pay big money to buy back the trademark.

Zhan, who is based in Guangdong, registered the trademarks to the Tesla name both in English and Chinese in 2006.  He has also tried to sell the label to the U.S. company in the past, but negotiations were not successful. Now, with the resolution, Tesla will have undisputed rights to its trademarks in China.

Tesla began deliveries of its Model S luxury electric cars in China earlier this year and Musk plans to grow the company’s brands further in the country.  Large automakers such as General Motors and Ford are also fighting for market share in China, which is now the world’s largest market for automobiles.

 

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