Tesla Motors Inc (NASDAQ:TSLA) Facing Trademark Infringement Issues

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By Erik Waters on July 10, 2014 Consumer Staples

Tesla Motors Inc (NASDAQ:TSLA) is facing some legal issues in the country of China. The company has been sued by Zhan Baosheng, a Chinese businessman who claims to have the rights over the name Tesla. According to Zhan, he registered these rights a long time before Tesla Motors even entered the country of China. Trademark infringement problems are not new; rather a lot of multinational companies face these issues when expanding their operations to other countries. Previously, Burberry Group and Apple Inc. (NASDAQ:AAPL) have faced similar issues over branding rights in China.

Tesla Motors is an American Automaker company that deals in the designing and manufacturing of electric cars. The company was founded in 2003 and it was expanded to China in the late 2009.

According to Zhang Baosheng’s complaint, since Zhang owns the rights of the name Tesla, Tesla Motors should close all its service centers and showrooms in China. Moreover, marketing activities, sales operations and supercharging facilities should also be shut down. The businessman has sued the company for a total of 23.9 million Yuan; which makes approximately 3.9 million dollars.

Talking about the registration of the name, Zhang registered for the trademark in 2006; the month of September to be more precise. The automaker company entered into China way after that time period. Tesla Motors got its rights for a period of 10 years, in the year 2009. Where Zhang has sued Tesla for trademark infringements, the automaker company has also sued Zhang for a number of legal actions. As far as Tesla’s business activities in China go, analysts are of the opinion that Zhang cannot stop the company from carrying on its business activities in the respective country.

Zhang’s allegations were ruled as invalid and he lost his case last year. Now, he has filed for a re-appeal. The Chinese businessman has paid a total of 161,500 Yuan as the case registration fee. Last year, U.S Automaker Company received a favorable verdict in its hands, from the Chinese regulators. However, the situation is not very clear for this year since the Chinese are known to use trademarks infringements in their favor especially when there is a western brand involved in the issues.

Zhang says that Tesla Motors contacted him in 2012 to buy his trademark rights for a total of $50,000. Later on, in May 2013, the price was increased to two million Yuan but he rejected both these offers. The businessman demands an apology from Tesla Motors (NASDAQ:TSLA) together with the compensation amount which the company has been sued for.

Zhang has also applied for the registration of Chinese translation of the name Tesla and the company’s logo. Moreover, rumors have it that the businessman is looking for the registration of other Tesla related trademarks as well. Zhang also has the internet domain of Tesla.cn which forwards all the users to his Twitter account. News has it that the businessman is not only interest in Tesla Motors (NASDAQ:TSLA) but he has also successfully registered for Loremo, Cuill and Cobasys in the country of China.