Tesla Reaches Settlement to End China Trademark Dispute

By Alan Oh

Tesla Motors Inc. (TSLA), the electric-car maker led by Elon Musk, said it resolved a trademark dispute in China that threatened to complicate the company’s plans to increase sales in the world’s largest auto market.
Tesla and Zhan Baosheng, who had registered rights to the Palo Alto, California-based carmaker’s name in China before it entered that market, came to an agreement to settle their dispute “completely and amicably,” the carmaker said yesterday in an e-mailed statement. Zhan also will transfer website names he’d registered in China including tesla.cn and teslamotors.cn to the carmaker, Tesla said.
Liz Jarvis-Shean, a Tesla spokeswoman, declined to discuss financial terms related to the domain-name transfer.
“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,” the company said. “Collectively, these actions remove any doubt with
respect to Tesla’s undisputed rights to its trademarks in China.”
The trademark fight for Tesla, maker of the Model S sedan, echoed experiences in China for multinational companies including Apple Inc. (AAPL) and Burberry Group Plc (BRBY) that also clashed over their branding rights in the world’s second-largest economy. While Zhan sought to use the Tesla name in China for vehicles, his Cengceng Inc. business is a skin-care company.

China Sales

Musk, Tesla’s chief executive officer and co-founder, said last week that the carmaker will accelerate production of the Model S, priced from $71,000 in the U.S., and the Model X electric sport-utility vehicle, to a rate of 100,000 units a year by the end of 2015. The company began direct sales in China in April, and Musk has said volume there may match that of the U.S. by next year.
The company credited Chinese authorities “for laying the groundwork” to resolve the trademark dispute. “Tesla looks forward to continuing to grow its business in China and to expanding the impact of electric vehicles in this very important market.”
Tesla shares were little changed yesterday in New York trading, declining 3 cents to $238.49. They’ve risen 59 percent this year. The settlement was reported earlier in a statement by the Beijing Third Intermediate Court on its official microblog.