Tesla faces new trademark troubles in China

Tesla factor floor, image courtesy of Tesla.

A businessman in China who registered for a trademark on “Tesla” in Chinese and English is now suing the U.S. car maker, which could complicate Tesla’s expansion plans in the country where it delivered its first Model S cars in April.

According to Bloomberg, Zhan Baosheng filed a lawsuit last week demanding the shutdown of Tesla showrooms and charging stations unless the company pays him $3.9 million for infringing the mark. Tesla shot back that it is Zhan who is stealing its intellectual property, and vowed the suit will not impede its expansion plans.

Tesla’s trademark troubles in China first surfaced last year on news that squatters were sitting on its brands, though the dispute appeared to be moving in Tesla’s favor after a board ruled that Zhan’s trademarks were invalid. Zhan appealed, however, meaning the outcome is not final, and this month’s lawsuit will only add to the uncertainty.

Like other Western companies, Tesla is at the mercy of the vagaries of the Chinese intellectual property system, which tolerates “trademark trolls” like the one that stung Apple for $60 million in 2010.

Intellectual property claims in China are also complicated because of the frequent overlap between Chinese companies and the state, and government’s unspoken policy of using hackers to steal secrets from U.S. companies.

“Tesla is violating my rights every day by selling their vehicles in China,” Zhan told Bloomberg on the day he filed the lawsuit. “I want them to say sorry.”

Zhan also controls the domain name Tesla.cn, which redirects to his Twitter page:

https://twitter.com/chinese/status/481488048467632128

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