An Expensive Reminder to Secure Trademark Rights Prior to Foreign Expansion

Electric car manufacturer Tesla Motors was recently sued in China by businessman Zhan Baosheng. Baosheng registered the TESLA trademark in China in 2006, prior to Tesla's entry into the Chinese market. The lawsuit demands that Tesla pay Baosheng $3,850,000 in damages for trademark infringement, and demands that Tesla stop all sales and marketing activities in China, including shuttering all showrooms and Tesla's supercharging facilities. Arguments in this case are scheduled to be heard in August.

Even if Tesla ultimately wins this battle with Baosheng, the case serves as a timely reminder of how important it is to file trademark applications early in the business planning phase – particularly in first-to-file countries, such as China, Argentina, Brazil, Japan, Mexico, and many others. Unlike in the U.S., where trademark rights can only be acquired and enforced based on use, in many other countries rights are based on who was first to file. If you are planning on expanding your business outside of the U.S., be sure to include international trademark filing in your budget.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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