Tesla, Inc. has had an interesting history so far – not only with its products and founder, but also with its trademarks. In fact, the company was almost named something completely different, as CEO Elon Musk revealed in a tweet:
Tesla was almost called Faraday, as original holder of Tesla Motors trademark refused to sell it to us!
— Elon Musk (@elonmusk) December 1, 2019
All because of a trademark, the now famous electric vehicle company almost had a different name entirely. Can you imagine driving around (or lusting after) a high end electric car named… Faraday? Just doesn’t have quite the same ring, but because of trademark law and the protections granted by the USPTO (United States Patent and Trademark Office), it nearly happened.
As detailed by The Independent, Tesla Motors, Inc eventually paid $75,000 to buy the trademark rights from the original owner. The rest is history.
Tesla’s trademarks will likely be very familiar to any fans of the company. They include…
- Model 3
- Model S
- Model Y
- Model E
- Model X
- Tesla Roadster
And several image/logo trademarks you can see here.
Trouble in China
By now, you may have heard of the term “patent troll.” It’s a phrase that makes the skin crawl collectively among Silicon Valley CEOs. The moniker represents those who may knowingly register patents on existing, branded products or processes, and lay in wait until the unsuspecting company infringes the registrant’s rights.
In many cases, it’s difficult to determine who came first – the chicken or the patented egg. Either way, this alarming trend isn’t the first of its kind, nor will it be the last. Businesses will always battle against brand infringement, especially on foreign soil.
Tesla’s Chinese trademark clash is proof that so-called “trademark trolls” won’t soon retreat beneath their foreign bridges either. In 2006, a Chinese businessman named Zhan Baosheng filed for the “TESLA” trademark in his home country just three years after the conception of the U.S. “TESLA” brand. Tesla’s Chinese presence was further complicated when Zhan registered the Tesla logo and Chinese-language iteration of the brand name.
Regarding Tesla’s trademark and Zhan’s intentions, only one thing is certain: Business owners have a lot to learn from Tesla’s trademark tussle.
Sure, Tesla may have a well-known brand with a noteworthy multi-national presence, but that doesn’t mean Zhan will forego fighting for his rights. Although the Chinese courts ruled in 2013 that Tesla had legitimate claims to the Chinese brand name, Zhan is far from finished.
The capitalist filed an appeal that recaps Tesla’s purported Chinese brand infringement and calls for the U.S. carmaker to cease production, sales, and marketing operations within China. Zhan is investing real money in the fight, as well. The filing fees for the Chinese lawsuit are equivalent to around $26,000 in U.S. currency.
Key Takeaway: Whether or not a trademark claim is legitimate, it doesn’t necessarily stop it from being contested in foreign courts. Even if the courts don’t side with Zhan, Tesla is looking at a lengthy appeals process.
You already know that foreign trademark registrants aren’t afraid to fight, but what about the realities of a battle’s impact on production and bottom-line numbers? The seed of Tesla’s issue remains: The company pursued a Chinese presence because the country is a mecca for auto sales and manufacturing – and a lucrative one at that.
In the past, companies have made name-change concessions for the sake of the Chinese market. Land Rover, for one, changed the Chinese name of its “land tiger” vehicle following allegations of trademark infringement. The company settled on the Chinese character representation for “street tiger” – nomenclature that clearly strays from the company’s branding.
Tesla made the mistake of assuming its trademark was safe in foreign territory when it should have developed a brand strategy for China (a huge auto market) from the start. As a company, Tesla was still proverbially “finding its legs” in 2006 when Zhan filed the trademark; however, Tesla’s lack of foresight could potentially cost the automaker millions before this trademark battle is finished.
Key Takeaway: Companies building their brand overseas may want to register early and everywhere; at the very least, they’ll want to consider registering in any conceivable market they might enter.
Eventually, Tesla settled with Mr Zhan, as detailed by Reuters.
“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 e-mailed statement on Wednesday. Separately, Tesla and Zhan have also reached commercial terms for the transfer to Tesla of certain domain names, including tesla.cn and teslamotors.cn, the company said, declining to give financial details.
Securing your trademark in the U.S. and overseas is key to establishing the safety of your brand name or logo in any market. A trademark attorney can provide invaluable insight into your company’s branding needs, helping you plan for your future in a foreign market.