Tesla ‘Amicably’ Reaches China Trademark Dispute Settlement

Aug 06, 2014 4:12 pm ET

(Updates with closing share price in final paragraph.)

Aug. 6 (Bloomberg) -- Tesla Motors Inc., 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.

Zhan Baosheng, who had registered rights to the Palo Alto, California-based company’s name in China before the automaker entered that market, agreed to settle the dispute “completely and amicably,” Tesla 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. and Burberry Group Plc 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 and said it “looks forward to continuing to grow its business in China and to expanding the impact of electric vehicles in this very important market.”

Tesla rose 4.4 percent to $248.93 at the close in New York, the highest in five months. The shares have gained 65 percent this year. The settlement was reported earlier in a statement by the Beijing Third Intermediate Court on its official microblog.