A luxury hybrid model from Tesla Motors. (Photo/Xinhua)
In a repetition of the trouble experienced by Apple three years ago, Tesla Motors, a California-based maker of electric cars and components, may have to pay dearly to enter the Chinese market, where its trademark has already been registered in advance by trademark trolls.
Zhan Baosheng successfully registered the "Tesla" trademark for land, air, and marine transportation vehicles in 12 categories in 2009. Qiao Weiwei successfully registered "TESLA MOTORS" as a trademark in China before selling it to the carmaker on May 6, but the trademark covers only rail vehicle, sleighs, airplanes and ships. It is not applicable to finished car and auto parts.
As a result, Tesla was rejected by the Chinese authorities in its application for the "Tesla" trademark in 2009. The problem has blocked Tesla's bid to tap the country's huge market, including its plan to open a flagship store in Parkview Green Shopping Center on Beijing's Dongdaqiao Road.
Tesla CEO Elon Musk told the Chinese-language Chinese Entrepreneur magazine that the company once offered to buy the "Tesla" trademark in China for 2 million yuan (US$326,000) but trademark owner Zhan Baosheng wanted 100 times this amount.
Tesla subsequently hired a team of lawyers to solve the problem via legal channels. That effort may be difficult, if Apple's experience is any guide. One year ago, Apple finally agreed to pay US$60 million to Shenzhen-based monitor maker Proview for the "IPAD" trademark in China, following litigation lasting two years. Proview was at least not guilty of malicious opportunism, as it had made a product under that name several years before Apple launched its tablet computer.
According to the website cheyun.com, which focuses on auto technology, as an alternative to shelling out a huge amount in compensation Tesla may have the option to request China's Trademark Office to cancel Zhan Baosheng's trademark ownership citing the reason of not having made use of the trademark for three years consecutively. Zhan would then have to produce proof of having used the trademark in marketing, production or sales, or risk losing the registration. Zhan reportedly is preparing evidence to show that he is genuinely engaged in R&D and production of electric cars.
Furthermore, as a company that relies heavily on online promotion, Tesla is facing another problem in China as the domain names "tesla.com.cn" and "teslamotors.com" have also been registered in the nation.