In the rapidly-growing brand-conscious consumer culture of China, image is everything. From electronic gadgets to clothing, Chinese consumers are eagerly snapping up prestigious western brands at eye-watering prices, while unscrupulous entrepreneurs are doing everything they can to copy, mimic, or claim established brands as their own.
In some cases, so-called “trademark trolls” are even purposely applying to the Chinese authorities to establish a Chinese trademark of already established western brands, just so they can sell the brand for an extortionate rate to the highest bidder.
And that’s exactly what happened with Californian automaker Tesla Motors when a trademark troll obtained a Chinese-market patent of the Tesla brand. After a lengthy legal battle however, the two sides have now reportedly settled “completely and amicably.”
Enter Chinese businessman Zhan Baosheng, who had registered the Tesla brand name in China back in 2006 — long before the real Tesla Motors entered the Chinese market. Although Zhan’s principal business is in the world of skincare products, he registered the Tesla.cn and TeslaMotors.cn top-level domains, putting a rudimentary Tesla-themed website on each, offering to sell both domains to the highest bidder.
What followed was a long and drawn-out legal battle between Zhan and Tesla Motors which resulted in both sides heading to the courts.
In January this year, a Chinese court ruled in favour of Tesla and said that the electric automaker was both the rightful owner of the Tesla brand and moreover, did not have to pay Zhan for the privilege. At the time, it seemed like that would be the end of the Chinese Tesla battle, but Zhan wasn’t about to give up, filing an appeal instead.
As Bloomberg reported this morning however, Tesla and Zhan have finally resolved their trademark spat.
It’s not clear if the appeal made it to court — or in fact if it was heard — but under Chinese law if a case goes to appeal, the outcome of the appeal becomes the final verdict.
“Mr. Zhan has agreed to have the Chinese authorities complete the process of canceling the Tesla trademarks that he had registered or applied for, at no cost to Tesla,” Tesla said in an official statement this morning. “Collectively, these actions remove any doubt with respect to Tesla’s undisputed rights to its trademarks in China.”
The news of the resolved dispute will be welcomed not only by Tesla Motors but its many hundreds of thousands of Chinese fans. When Tesla opened its first Chinese store earlier this year, there was some question as to if the company would be forced to use a phonetic alternative to Tesla in order to even sell the car.
As Bloomberg points out, Chinese trademark trolling isn’t anything new and has plagued legitimate companies trying to enter the Chinese market for decades. With this particular spat over however, Tesla is a company which hopefully won’t have to endure the problem any more, instead focusing on selling its luxury Tesla Model S to the growing numbers of tech-savvy, wealthy middle class who want to dump the pump for something a little more electrifying.
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