Tesla’s “trademark crisis” in the Chinese market is gradually moving from behind the scenes to the forefront.
On one side, there's a nearly $15 billion “Silicon Valley upstart,” and on the other, shrewd “Chinese businessmen.” A trademark conflict has tightly linked these two otherwise unrelated parties together.
The three trademarks “TESLA,” “特斯拉 (Tesla),” and “Tesla Motors” have all been preemptively registered by others. This could become the Achilles' heel that hinders Tesla's business expansion in China, potentially costing the company a hefty tuition fee.
Whose “TESLA”?
Tesla's current situation closely resembles Apple's three years ago. Back then, Apple announced the global release dates for its iPad tablet but left out mainland China because Shenzhen Proview had already preemptively registered the “iPad” trademark.
As Tesla's General Manager for the China region, Zheng Shunjing was well aware of the troubles encountered with registering Tesla's trademark in China. From the application timeline, Zhan Baosheng was the first person listed on China's Trademark Network as having applied for the English "TESLA" trademark. On September 6, 2006, Zhan Baosheng first applied for the "TESLA" trademark under his personal name, with application number 5588947. On June 28, 2009, the "TESLA" trademark registration was successful, making Zhan Baosheng the legal owner. At this time, Tesla Inc. was deeply mired in dual crises concerning finances and products.
Notably, Zhan Baosheng's English "TESLA" trademark falls under Class 12, which includes land, air, and sea transportation vehicles. The protected subclasses 1202, 1203, and 1204 cover various aspects from whole vehicles to parts. According to China's Trademark Law principle of priority within the same class, Tesla Inc. can no longer apply for the "TESLA" trademark under Class 12.
Zhan Baosheng successfully registered the "TESLA" trademark
After successfully registering the English "TESLA" trademark, Zhan Baosheng applied for the registration of the "特斯拉 (Tesla)" and "Tesla Motors" trademarks on May 18, 2007, and April 2, 2009, respectively. The application numbers were 6055503 and 7298183. Currently, these two trademarks are in the state of "awaiting reconsideration after objection."
In October 29, 2009, Tesla attempted to reapply for the registration of the English "TESLA" trademark, with application number 7792673, but it has not been successful so far and remains in the rejection review stage.
On December 30, 2006, a person named Qiao Weiwei applied for a trademark under their personal name, which included the elements "TESLA MOTORS," "特斯拉 (Tesla)," and an image. The registration number was 5819809. Although this trademark contained elements similar to Zhan Baosheng's "TESLA" trademark, it was approved on January 21, 2010.
On May 6, 2013, Qiao Weiwei successfully transferred the trademark to Tesla Engine Co., Ltd., i.e., Tesla Inc., and the registered address was subsequently changed to 3500 Deer Creek Road, Palo Alto, California, USA.
This means that Tesla Inc. currently also owns a legally protected Tesla-related trademark, albeit one with similarity issues and a later application date than Zhan Baosheng's.
Additionally, this trademark has another problem: it protects too few similar groups, only including 1201, 1207, 1209, and 1210, with a usage scope limited to "railway vehicles, sledges, airplanes, and ships." The main similar groups involving whole vehicles and parts, such as 1202, 1203, and 1204, are not protected.
Qiao Weiwei transferred the trademark to Tesla Inc.
For Tesla, which covets the vast market prospects of China, the trademark issue is undoubtedly one of the most pressing problems at present. If it cannot be resolved soon, it will mean that all future activities in China cannot use the name "TESLA," and the opening of Tesla's flagship store at Beijing's Parkview Green FangCaoDi shopping mall will remain indefinitely postponed.
"I offer 2 million RMB, he wants 2 billion!"
Tesla once sent a team specifically to China, offering 2 million RMB to purchase the Tesla trademark, but CEO Elon Musk revealed in an interview with "China Entrepreneur" that the trademark holder Zhan Baosheng demanded over 30 million USD, nearly 2 billion RMB, which is 100 times higher than Tesla's psychological price point.
China Trademark Network query results show that besides the "TESLA" trademark, Zhan Baosheng also holds trademarks related to foreign companies like Philips and Mitsubishi, as well as the Chinese trademark for "Angry Birds" - "愤怒的小鸟 (Angry Birds)."
Media attempts to contact Zhan Baosheng multiple times were unanswered, with the only answer being quickly hung up upon the reporter stating their purpose.
Tesla's General Manager for the China region, Zheng Shunjing, stated: "Tesla's trademark indeed encountered problems in China, but how to resolve them will be handled by headquarters. We are currently fully engaged in solving the issue."
About a year ago, Apple spent 60 million USD to finally settle the two-year-long "iPad Trademark Infringement Case." As for the value of Tesla's several trademarks, it is temporarily immeasurable. Both parties have now formed their respective legal teams. If Tesla does not want to rename its products, a fierce battle over trademark ownership may be imminent.
Besides purchasing the trademark, Tesla has another way to resolve the issue. Article 44 of the Trademark Law stipulates: trademarks that have been unused for three consecutive years can be ordered by the Trademark Office to be corrected within a specified period or have their registered trademark revoked.
According to lawyers, anyone can raise an objection based on "three years of non-use" for any trademark. After receiving the objection, the Trademark Office will notify the trademark registrant, limiting them to submit evidence materials of the trademark's usage prior to the revocation application or provide legitimate reasons for non-usage within 2 months of receiving the notice. If they fail to provide valid usage evidence or do not have legitimate reasons within the deadline, the Trademark Office will revoke their registered trademark.
In short, if Tesla requests the Trademark Office to revoke Zhan Baosheng's registered "TESLA" trademark on the grounds of "three years of non-use" and Zhan Baosheng cannot provide relevant usage evidence, he may very likely lose ownership of the trademark.
In fact, Zhan Baosheng is already facing such trouble. On March 4, 2013, the Trademark Office began a "review for revocation due to three years of non-use" for the "TESLA" trademark under his name. After receiving the dispute application and supplementary materials on April 18, the review continued, but the results have not yet been published.
The "TESLA" trademark faces a "review for revocation due to three years of non-use"
Lawyers introduced that as a trademark registered under a personal name, Zhan Baosheng must provide evidence for the promotion, production, and sales of products related to "TESLA." If he entrusts another company to use the trademark on his behalf, he must also provide proof such as a commission agreement, which is often an easily overlooked issue for many individual trademark holders.
It is understood that Zhan Baosheng is preparing evidence. He hopes to prove not only that he registered the "TESLA" trademark but also that he is indeed developing and manufacturing electric vehicle products. Once the evidence is established, Tesla's chances of successfully obtaining the "TESLA" trademark will become even slimmer. Currently, both Tesla and Zhan Baosheng remain in a stalemate.
The domain names have also been preemptively registered
For Tesla, which operates entirely through online direct sales, the importance of domain names goes without saying. Unfortunately, tesla.com.cn and teslamotors.com.cn, two domain names related to the Chinese market, have both been preemptively registered. Tesla's current official website, teslamotors.com, does not support Chinese language or booking services for mainland China.
Notably, although tesla.com.cn and teslamotors.com.cn are not owned by Tesla Inc., their web design misappropriates Tesla's logo and states, "Tesla cars will soon begin reservations; please reserve the following information."
At the bottom of the page, the designer intentionally placed a link to the "Tesla Official Weibo Account." This Weibo account points to Guangzhou Hao Kai Trading Co., Ltd. Investigations reveal that this company has no connection with Tesla Inc. but is instead a company specializing in automotive aftermarket products, mainly focusing on car fragrances and fixed bases.
Screenshot of the homepage of tesla.com.cn/teslamotors.com.cn domains
A media outlet contacted Guangzhou Hao Kai Trading Co., Ltd. regarding this matter. The company was very cautious, repeatedly asking about the journalist's intentions. They refused to comment on anything related to Tesla and claimed they had never heard of Tesla electric vehicles.
However, if Tesla wishes to purchase these two domain names, it will likely have to pay another tuition fee.
In addition, Tesla has encountered difficulties in the company registration process. Recently, Shen Qi, Tesla's Sales Director for the China region, stated: so far, Tesla has only completed one-fourth of the procedures required to register a company in China. Without government approval, they can only wait, and the opening time cannot be estimated.
Summary:
As an intangible asset and important component of intellectual property, trademarks bring hidden but profound pain. Two paths lie before Tesla: one is to acquire the "TESLA" trademark through negotiation and transfer, and the other is to rename. The former is the path Apple took, while the latter can refer to the practices of brands like "Lotus" and "Lexus." It is certain that whichever path Tesla ultimately chooses, it will have to pay a high price.