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Will Tesla Trademark Tangle Delay Electric Car's China Launch?

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Website of 'Tesla Motors China', Aug 2013

Website of 'Tesla Motors China', Aug 2013

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With its Model S on sale in the U.S. for more than a year now, and the first European delivery in Norway this month, Tesla is turning its attention to China.

The company has already built a showroom in Beijing's Parkview Green Fangcaodi mall, says Reuters, but it sits boarded up without the distinctive "Tesla" logos above it.

That's because the Tesla trademark has been registered in China since 2006 by Zhan Baosheng, a businessman in Guangdong province.

He has no relationship at all to the Silicon Valley electric-car maker, but he has set up a "Tesla Motors China" website.

That site has photos of an angular two-door coupe with Tesla's trademark spear-T logo on the front of it.

While Chinese law protects global trademarks from predatory pre-emption, Reuters notes, it's unclear whether a new and unrecognized brand like Tesla could claim such protection.

2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

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Tesla Motors [NSDQ:TSLA] has had a showroom in Tokyo since 2010; the company began taking "reservations" for its Model S electric sedan from customers in China this week, according to a company spokesperson in Tokyo.

Earlier this month, in Tesla's second-quarter earnings call, CEO Elon Musk noted that the company was developing a more luxurious rear compartment for the Model S version it plans to sell in China.

There, roughly half of new-car buyers do not actually know how to drive, so they are chauffered around in their new vehicles--making the quality of the rear-seat area and its amenities very important.

China is not only the world's largest single car market, but its largest market for luxury vehicles as well.

"If you take something like, say the Mercedes S-Class," Musk said at the time, "they sell approximately half of all their worldwide production in China."

Analysts expect that in the end, Tesla Motors in the U.S. will have to pay Baosheng to get its trademark back.

Reuters notes that Apple had to pay $60 million last year to recapture its right to use the global "iPad" trademark in China.

UPDATE: We contacted Tesla Motors for comment on this issue, and communications manager Shanna Hendriks replied:

We cannot comment on the trademark issue. I can confirm we started taking reservations in China this past Wednesday and will be opening a store this year in Beijing. Deliveries expected in Spring 2014.

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