Shanghai court to hear $740,000 Tesla trademark lawsuit

China’s Shanghai Intellectual Property Court will hear a lawsuit filed by Tesla Shanghai Co., Ltd. (特斯拉(上海)有限公司), U.S. automotive and clean energy company Tesla, Inc.’s Shanghai unit, against three Chinese companies Zhongyin Food Co., Ltd. (中饮食品有限公司), Guangdong Zhongyin Food Co., Ltd. (广东中饮食品有限公司), and Tangjiu Network Technology (Shanghai) Co., Ltd. (糖玖网络科技(上海)有限公司) for trademark infringement and unfair competition practices on June 23 and 30 as scheduled. Tesla Shanghai seeks 5 million yuan ($740,000) in damages from the accused parties.


Tesla Shanghai sued the three companies in the Shanghai Intellectual Property Court for manufacturing and distributing beers and hard seltzers utilizing trademarks No. 48,150,844 for “TESILA 特斯拉 (Chinese transliteration of Tesla or Tesila)” and No. 13,113,593 for “特斯拉 TESILA MOTORS”, which infringed Tesla Shanghai’s famous registered Chinese trademark “TESLA” and diluted its brand for its deceptive similarity, in October 2021. Two defendants Zhongyin and Guangdong Zhongyin appealed the case to the Shanghai High People’s Court claiming that “TESILA 特斯拉” and “特斯拉 TESILA MOTORS” were trademarks that had been granted registration and hence Tesla Shanghai should have filed a petition against the disputed trademarks with an administrative agency instead of a judicial branch like a court.


The appeal also claimed that the trial court didn’t have jurisdiction over Zhongyin and Guangdong Zhongyin since the two companies were based in Guangzhou city, Guangdong province, although it had jurisdiction over Shanghai municipality-based Tangjiu, named as a third defendant, which, however, published online advertisements to seek for wholesalers and distributors for the alleged infringing goods without Zhongyin and Guangdong Zhongyin’s knowledge or solicitation on the website maintained by it. The two appellants asked the court to dismiss the complaint or move it to either of two courts based in Tianhe district and Foshan district of Guangdong province.


Tesla Shanghai submitted an appellee’s brief arguing that Zhongyin and Guangdong Zhongyin utilized trademark ’844 for beers, which was not included in goods in sub-classes within Class 32 registered, and trademark ’593 for hard seltzers, which was not included in goods in sub-classes within Class 32 registered either. The appellate court agreed with the appellee’s arguments and ruled the trial court to proceed with hearing the lawsuit over the scope of use of the two disputed trademarks invoking Article 1 of the Supreme People’s Court’s Provisions on Trial of Civil Claims of Prior User Rights to Trademarks and Company Names (《最高人民法院关于审理注册商标、企业名称与在先权利冲突的民事纠纷案件若干问题的规定》), which was enacted in 2008 and revised in 2020.


Tesla founder Elon Musk has been known to be intentionally or unintentionally laissez-faire with filings of the company’s intellectual assets, including patents, trademarks, and copyrights, and therefore incurred some unexpected obstacles to its business expansion. Tesla in 2014 resolved a long-standing trademark dispute with Chinese businessman Zhan Baosheng and had him transfer the “TESLA” and “特斯拉” trademarks, which Zhan registered in both English and Chinese in 2006 before the Palo Alto, California-based carmaker came to China, to it at no cost.


Zhongyin is found to have filed applications for or granted registration of about 50 trademarks related to Tesla since 2013, even four years earlier than Zhongyin’s incorporation. Its bad faith filings have been going on unnoticed or unscathed, and didn’t stop subsequent to Tesla’s official launch in China. Zhongyin is also found to have filed applications for registration of trademarks ripping off German liquor company Mast-Jägermeister SE, Chinese smartphone maker vivo, and more. The German liquor company won two trademark invalidation bids and failed the other two against Zhongyin.


Tesla’s inaction with trademark dilution in China might well be partially explained by the nature of the name itself. The company is named after Serbian-American inventor and electrical engineer Nikola Tesla as a tribute. The name of a historical figure such as Tesla can be trademarked, but enforcement and protection of the rights will be limited. Zhongyin was too shrewd to miss the cue by using the fact about the origin of TESLA as a defense on appeal.


The case docket no. is (2021)沪73民初551号, whose English translation is 551, first instance (初), civil case (民), Shanghai Intellectual Property Court (沪73).