Tesla's China drive hits patent bump

A man gestures as he walks past a billboard-sized photo of the Tesla Model S car, outside the boarded-up first China flagship showroom of Tesla at an office-shopping complex in Beijing.

Popular electric carmaker Tesla Motors Inc's plans to enter the world's biggest auto market have stalled after a businessman in China claimed trademark rights to the name, according to people close to the California-based company.

The maker of the best-selling United States electric car, the premium Model S sedan with a price tag of US$70,000, had originally hoped to launch a flagship showroom in Beijing at the start of the year, according to three sources, but has had to put that idea on hold due in part to the trademark issue.

As a result, the 10-year-old company's first shop-front in China, at the Parkview Green Fangcaodi mall in the capital, sits boarded up. While there is no Tesla sign, the shop is adorned with billboards of the Model S, which was launched in the US last year.

In addition to the trademark issue, Tesla has yet to complete product registration with Chinese authorities enabling the sale of the Model S, although one source said Tesla was almost through with the process.

Kingston Chang, general manager of Tesla China, refused to comment.

Atsuko Doi, a Tokyo-based Tesla spokeswoman, said the company had this week begun taking "reservations" for the battery-powered Model S in China. The company opened its first Asian showroom in Tokyo in 2010. "We are planning to open a Beijing store this year," Doi said in an e-mail, without providing further details.

Zhan Baosheng, the businessman in south China's Guangdong Province, owns the "Tesla" trademark in China, according to his agent who processed the papers to register the name with the State Administration for Industry and Commerce.

An official with Jinda Trademark, the Guangzhou-based agency Zhan used to make a registration for the Tesla name, said Zhan registered the name in 2006. Zhan registered trademarks to the Tesla name in both English and Chinese.

Zhan runs a website using the Tesla China domain (www.teslamotors.com.cn), and operates a Tesla-branded account on popular Chinese microblog site Sina Weibo, collecting information from consumers interested in placing orders for or getting more information about his "Tesla" cars.

Zhan's Tesla website carries a brand logo almost identical to the American Tesla logo, and showcases one product, though the car looks nothing like the Tesla Model S. The website says the firm's "dream is to build China's best electric car."

Legal experts familiar with trademark disputes in China said it might be difficult for Tesla to resolve the trademark issue unless it buys Zhan out.

China has rules that protect globally renowned brands, but that might not apply in the case of relatively new companies such as Tesla.

Apple Inc was embroiled in a similar case for years, before reaching US$60 million deal last year for the rights to use the iPad trademark in China.

Tesla's founder Elon Musk has expressed excitement at entering the Chinese market, pointing to the big demand for luxury cars due to the country's expanding wealthy class.