Zhan Boeshang is suing Tesla Motors for trademark infringement, sending Tesla stock down more than 2.5 percent, as of early afternoon Tuesday.
According to Reuters, “Tesla said in January that the trademark dispute between it and Chinese businessman Zhan Baosheng — long seen by analysts as a barrier to Tesla’s entry into China — had been resolved.”
Tesla arrived in China in 2003. In 2006, Zhan applied to register the Tesla trademark, and in 2009 the application was granted. Tesla tried to buy back the trademark in 2012, but Zhan rejected several million-dollar offers. This led directly to Tesla revocation of the trademark in July 2013.
“SAIC’s Trademark Review and Adjudication Board … revoked [Zhan’s] Tesla trademarks in July 2013 in response to the U.S. carmaker’s request,” Bloomberg reported. “He’s appealed and the case is under review. Trademark rulings become official when appeals end, according to Chinese law.”
Even though the board revoked Zhan’s Tesla trademark, Zhan still owns the trademark until the appealed case is closed. Now, in the name of trademark infringement, Zhan is trying to force Tesla to shut down all operations in China and pay him $3.85 million in compensation. On the other hand, Tesla spokesperson Simon Sproule claims Zhan’s actions classify as theft.
“We have brought multiple actions against Zhan on account of his theft of our trademarks, and various Chinese authorities that have ruled on the matter have agreed with Tesla,” Sproule told Bloomberg. “Zhan’s lawsuit will not stop us in any way from operating in China.”
Zhan still considers himself to be in the right.
“Tesla is violating my rights every day by selling their vehicles in China,” Zhan told Bloomberg. “I want them to say sorry.”
Regardless of Tesla’s guilt or innocence, the legal troubles are affecting Tesla stock. Monday’s market close placed Tesla at 222.66, but Tuesday’s pre-market open revealed a drop to 218.65. (RELATED: Tesla To Investigate Model S That Split In Half And Caught Fire After 100-Mph Chase)
The Bejing Third Intermediate Court will hear Zhan’s case on Aug. 3.