Before Tesla entered the Chinese market, the 'TESLA' trademark had already been squatted by another party in the automobile class. Tesla pressed on multiple fronts—cancellation for three consecutive years of non-use, invalidation, and copyright and unfair competition suits—and ultimately resolved the matter through mediation presided over by the Beijing Third Intermediate People's Court, becoming a typical example of the 'multi-track combination' playbook against trademark squatting in China.
Case Overview
The individual Zhan Baosheng applied to register the 'TESLA' trademark on automobiles and other goods in Class 12 on September 6, 2006; it was registered on June 28, 2009 as trademark No. 5588947. When Tesla entered the Chinese market and found this obstacle, it filed an application for cancellation for three consecutive years of non-use in March 2013 and a dispute (invalidation) application in April 2013; on September 3, 2013, Tesla filed two suits before the Beijing Third Intermediate People's Court for copyright infringement and unfair competition, claiming RMB 1.1 million and RMB 3.1 million respectively. On June 30, 2014, Zhan Baosheng filed a trademark infringement suit against Tesla before the same court, claiming RMB 23.94 million, creating a multi-point standoff.
Issues in Dispute
- Whether Zhan Baosheng's 'TESLA' trademark was a squatting and should be cancelled or invalidated;
- Whether Tesla's use of the 'TESLA' and '特斯拉' signs infringed Zhan's exclusive right to the registered trademark;
- The ownership of the domain names tesla.cn and teslamotors.cn.
Disposition and Case Numbers
On August 5, 2014, the Beijing Third Intermediate People's Court announced a successful mediation: Zhan Baosheng gave up using the 'TESLA' and related signs, and Tesla gave up its damages claims; the domain names tesla.cn and teslamotors.cn were transferred to Tesla; and the pending domain disputes, the 'TESLA' non-use cancellation administrative case, and the invalidation administrative case before other courts were all resolved together.
- Note on case numbers: the case ended in mediation and produced no public judgment number, so no specific judgment document number is listed here; the court level, timing, and mediation result govern;
- Referenced related decision: the ADNDRC (Asian Domain Name Dispute Resolution Centre) decision on the tesla-box.com domain name (case No. CN-1600933, 2016), involving a finding of domain squatting of the 'TESLA' trademark;
- Sources: Beijing News report 'Tesla trademark dispute in China settled', reposted by People's Daily Online's IP channel (August 6, 2014); public reports by China News Service, Jinghua Times, and others.
Key Takeaways
- Squatting opponents often deploy on multiple battlefields at once: trademark administrative procedures (non-use cancellation, invalidation) can proceed in parallel with civil litigation and domain disputes, forming combined pressure;
- Non-use cancellation and invalidation are the usual opening moves to clear squatted marks: where a registered mark has not been actually used for three consecutive years without justification, a cancellation application may be filed;
- Mediation is a commercially rational choice: for Tesla, clearing the obstacle and entering the market quickly was worth more than winning the lawsuit; for the squatter, settlement avoided the risk of ultimate invalidation;
- Domains and trademarks should be handled as one: brand enforcement must not overlook online assets such as domains.
Lessons for Businesses
Before entering a new market, conduct trademark searches and lay out filings first—especially advance registration in core goods or service classes—to avoid being forced into reactive battle after squatting; when facing squatting, combine non-use cancellation, invalidation, opposition, civil suits, and domain disputes, choosing the breakthrough according to the other side's registration and use status; negotiating settlement with squatters is a common way out, but bargaining chips come from actual progress in administrative and judicial procedures; and domains, pinyin, and foreign-language similar signs should be included in a unified brand protection checklist.
For the specific procedures above, you may book a non-use cancellation defense on MyTMBee, and a filed trademark agent will provide full assistance.