Is Tesla Sued in China or Held Ransom?

Tesla sued in China

Tesla Motor’s advance into the Chinese market has been slow and fraught with obstacles, none bigger than a trademark infringement with a local Chinese businessman. Is this another case of legalese or blatant ransom money?

Tesla sued in China over name

It’s been a while since we’ve heard of Tesla being sued in China. Unfortunately, the news is now resurfacing with the infamous Chinese businessman, Zhang Baosheng taking the company back to court. Mr. Zhang has long been seen as Tesla’s biggest obstacle to its entry in the highly profitable Chinese car market. He registered the word “Tesla” in China before the company arrived there. For this, he estimates the plump sum of $3.85 million, or 23.9 million yuan will suffice for compensation. But Mr. Zhang won’t stop here insisting that the company stops all sales, marketing, shutting down showrooms, as well as its Superchargers, according to his lawyer Zhu Dongxing.

No one is commenting, Tesla China nor our businessman Mr. Zhang.

Ransom, or serious infringement?

We conducted a quick research to find out if Mr. Zhang had done anything substantial using the Tesla name, but our queries turned up empty. Was Mr. Zhang sitting on the name, hoping Tesla Motors would sell their cars in the country to better slap them with a suit? The question remains unanswered at this moment, although it seems highly likely.

We found out that he had registered the trademarks to the Tesla name in English and Chinese back in 2006, and since then tried to sell back the label back to Tesla Motors. The negotiations collapsed. Tesla Motors lodged complaints against Mr. Zhang to the Chinese authorities and won. However, he wasn’t served with or has seen the lawsuit, according to Mr. Zhang. The original lawsuit would have prevented Tesla from using the Chinese phonetic name: “Te Si La”.

According to Reuters, Veronica Wu, head of Tesla’s China operations reported that Mr. Zhang and Tesla Motors had resolved their differences. Since then, Tesla’s biggest hurdle in China was no longer a threat and the company began deliveries of the Model S sedans to its eager customers since April. However, Mr. Zhang came back with a new and improved lawsuit that brings new doubts as to whether Tesla will be able to meet its expansion goals in China. The company expects China to become its biggest global market next year.

Tesla’s stock closed down 3% yesterday, something we believe Elon Musk must see as the silver thread in this ridiculous affair.

Frivolous suits and highway ransom

Doing business abroad is not for the faint of heart, and China’s cultural differences certainly have proven to be a thorn in the side of many companies. Bloomberg goes as far as saying that Mr. Zhang is trying to steal the Tesla name from Tesla Motors, according to Tesla spokesman Simon Sproule. Is Tesla legitimately sued in China or being held ransom by trademark loopholes? We hope Mr. Zhang puts his fertile mind to better use in the future. One thing is certain. This does not benefit the EV community, nor Tesla Motors’ Chinese customers.

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