Tesla Motors (NASDAQ: TSLA) Settles Dispute Over Trademark In China

Earlier this week Tesla Motors Inc (NASDAQ: TSLA) announced that they have completely resolved a dispute over the Tesla trademark with a businessman in China.

Tesla has already announced in January of 2014 that it has ended the dispute with Zhan Baosheng, the Chinese businessman who accused Elon Musk’s company of illegally using the “Tesla” trademark. Zhan claimed that he had registered the “Tesla” trademark before the electric car company, based in Palo Alto, California, arrived in China. However, Zhan insisted on bringing the case to court and putting the US electric car manufacturer on trial.

Zhan had registered the trademarks to “Tesla” in both Chinese and English in Guangdong, China’s southern province, in 2006. In the past he had tried to sell the trademark to the United States company, but negotiations failed and fell through.

Tesla said in a statement that the company has successfully reached an agreement with Mr. Zhan Baoshen to completely and amicably resolve the dispute between the two parties. These events remove any question with respect to Tesla’s rights to its trademarks in China.

This resolution removes a huge obstacle for the American electric car maker and its CEO and founder, Elon Musk, to expand rapidly into China, one of the world’s largest auto markets. Musk plans for Tesla to grow rapidly in China, and expects that the country will be the company’s largest global market by next year.

The government at Beijing has announced a multitude of incentives to boost the sales of electric vehicles, such as tax cuts and purchase subsidies.

Volkswagen (ETR: VOW) and BMW (ETR: BMW) are also eyeing China as a key market for their own electric car models.

Tesla released a statement through email on Wednesday that Mr. Zhan has agreed to let the authorities in China to complete the process of dropping the Tesla trademarks that he applied for. Tesla will not be fined for this outcome.

Tesla and Mr. Zhan have also made commercial agreements to transfer specific domain names to Tesla Motors. Some of these domain names include tesla.cn and teslamotors.cn. The company refused to release financial details.

In the same statement, Tesla stated that the company is looking forward to growing its business in China and expanding its electric vehicles’ impact in the market.

Tesla’s dispute over the trademark brings light to a technical issue that plagues many foreign companies who conduct business operations in China. Global companies such as Koninklijke Philips NV (AUS: PHG) and Apple Inc (NASDAQ: AAPL), have all faced trademark disputes in the country before.