Tesla disputes trademark rights in China

Today, Tesla is a well-known brand of electric cars. Tesla is also, or perhaps more importantly, the name of the Serbian-American scientist Nikola Tesla, born in 1870, to whom we owe the common two-phase power system in our household sockets. We also owe him electric motors, alternators, generators and many other devices that are essential to life today.

Tesla’s abandonment of trademark registration

The brand’s cars were sold in China in 2014 (Model S), eleven years after registration of the Chinese company Tesla Motors, Inc. (特斯拉发动机有限公司). It is hard to believe, but apparently no thought was given to registering the Tesla trademark in the early years. Instead, someone else did – local entrepreneur Zhan Baosheng (占宝生) applied for protection of the Tesla mark in graphic form and in English and Chinese characters in 2009.

Tesla – infringer or victim in trademark dispute?

In March 2013, Tesla filed an application with the Chinese Trademark Office (CNIPA) to invalidate Tesla’s trademark rights to a Chinese businessman. According to Article 49(2) of the Trademark Law, if a registered trademark becomes the common name of the category of goods to which it belongs, or is not used for three consecutive years without justifiable reasons, any person may apply to the office to invalidate the trademark in question. In addition, a representative of Tesla filed a lawsuit against Zhan Baosheng for copyright infringement and unfair competition.

The defendant decided to go on the offensive. In June 2014, he sued Tesla for infringement of his formally due exclusive right to use the registered Tesla trademark.

In August 2014. The Beijing Court posted on Weibo (the equivalent of Twitter in China’s social media ecosystem) that it had successfully mediated an intellectual property dispute involving trademarks, copyrights and allegations of unfair competition between Tesla Motors, Inc. and a Chinese businessman. Zhan Baosheng ceased using Tesla-related trademarks and the company’s representative waived its claim for damages against Zhan Baosheng. The fierce trademark battle ended peacefully in 2015. Tesla eventually won the exclusive rights to the Tesla trademark. It has not been made public whether the local entrepreneur received an exemption from Tesla, although it is likely that some form of settlement took place. Perhaps Zhan Baosheng became the owner of one of the pedestrian Teslas, which were very prestigious at the time.

Can a family name be registered as a trademark in China?

There is another interesting thread in this story. It concerns the above mentioned engineer Nikola Tesla. According to the letter of the law, a trademark containing a surname is not protected in China for the benefit of a third party, especially since it is the name of a famous inventor. In this case, the Trademark Office apparently failed to recognise this subtle fact when examining the application for trademark protection, or deliberately ignored it because of the global brand recognition of the American manufacturer.

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