China: Tesla still has naming trouble image

Back in April, the US electric carmaker finally started deliveries of its Model S sedan, after it had trouble with a Chinese businessman that held the naming rights in the country.

While the company prepared to launch car deliveries and began setting up its sales outlets, service centers and recharging network – although it already took orders from prospective buyers, the automaker did not have command over its own name in China. The much debated issue was ultimately settled before Tesla’s CEO – Elon Musk – flew to the Asian nation to proudly deliver the keys of the first cars to their owners.

Or, that’s what everyone thought. It turns out that the same man -Zhan Baosheng, who registered the Chinese variant of Tesla’s name way before the company entered the market – has now sued Tesla for trademark infringement.

Zhan is looking for cash compensation of 23.9 million yuan ($3.9 million), while also calling for the US company to close its showrooms, service centers and charging facilities – besides ceasing all sales and marketing ventures in the country.

“We’ll be watching how China deals with this very closely,” said Paul Haswell, a Hong Kong-based technology law partner at Pinsent Masons. “So-called trademark trolls watch Western brand development and seek to register brands in China that are relatively well known in the rest of the world before they have any brand recognition in China, then use those trademarks as the brands expand into the East.”

According to Tesla spokesman Simon Sproule, the lawsuit has not been served to the company yet, while there is still in place a ruling from Chinese authorities over the trademark issue, which granted Tesla the rights to establish its business venture into the country.

Via Bloomberg