All large companies are plagued at some point in their lives by copyright claims and patent infringement lawsuits. For this reason, it comes as no surprise that Elon Musk’s brainchild Tesla, whose subsidiary Tesla Motors has been credited with bringing electric cars into the mainstream, is facing a lawsuit in China.
36-year old Zhan Baosheng sued Tesla on July 3, asking that the court force the car company to “shut its showrooms, service centers, and supercharging facilities [in China]; stop all sales and marketing activities in the country; and pay [Zhan] 23.9 million yuan ($3.9 million) in compensation,” according to Bloomberg.
So is it the Tesla Motors lithium-ion battery packs packed inside the Model S that Zhan is claiming ownership? Is it the Tesla supercharger, or the battery swap technology they debuted a few years back?
Nope – it’s just the name “Tesla”.
It turns out that although Elon Musk’s company was founded three years prior, Zhan filed his trademark application in China “for auto-related purposes” in 2006. Tesla first came to Zhan in 2012 and offered to pay $50,000 for the trademark; when Zhan refused, Tesla offered two million yuan, or about $323,000. When Zhan refused a second time, Tesla went to a Chinese regulator, who ruled that Zhan’s trademarks were invalid. Zhan’s July 3 lawsuit is an appeal of that decision.
Zhan owns the Tesla.cn domain name and has it redirect to his Twitter account, the header of which he has changed to a photo of his trademark documentation. On June 24, he tweeted, “hi, I am the owner of TESLA trademark in China. The trademark is still in my hand, Tesla Motors is lying.” He also included a picture of himself holding the (now invalid, pending appeal) Tesla trademark.
Ironically, Tesla Motors’ founder Elon Musk shocked the world last month by announcing that all the patents belonging to his company Tesla Motors would be flung open to the public, deriding the concept of patents as “a lottery ticket to a lawsuit”, and “stifling progress”.
A Tesla spokesperson this week set down the company’s position on Zhan’s claim in no uncertain terms: “There can be no legitimate dispute that we used these trademarks first as we were the ones that created them,” Tesla’s Simon Sproule told reporters.
“Zhan’s is a cynical attempt to steal a property that we spent time and effort creating, and put into use long before Zhan’s crass attempts to steal them from us.”
Zhan also owns trademarks for the names Loremo, which happens to be the name of a German automaker founded in 2000; Cobasys, which is the name of a US company that supplies automotive batteries and battery parts; and Cuill, a 2007 search engine startup that has since crumbled.
In 2012, Apple paid $60 million (then £38 million) to a China-based company called Proview for the iPad trademark.