Tesla Wins Invalidation Case On Appeal 

Tesla Motors, Inc.’s, recent win against 北京华锐凯胜商贸有限公司 sheds light on how the Court determines whether goods are similar when they fall under different classes of the Chinese Classification of Goods and Services.

The determination as to whether goods or services are similar is made on a case-by case basis.  The general rule is that goods or services that fall under different subclasses (or parts of subclasses) are not similar. However, goods are considered similar when they “have relatively great relevance with regard to function, purpose, main raw materials, production department, sales channel sales place, consumer group, etc..” (Standard for Trial of Similar Goods or Services 2.1).

Tesla filed an invalidation action against 北京华锐凯胜商贸有限公司mark, (11485034, Class 9), arguing that 1) the mark is a similar mark over similar goods compared to Tesla’s prior marks, (No. 7792673, Class 12) and (No. 8008885, Class 12); 2) the mark infringes Tesla’s tradename right; and 3) 北京华锐凯胜商贸有限公司filed the mark in bad faith where Tesla used its mark over the opposed mark’s designated goods in mainland China and acquired a “certain reputation” before their filing date.

This article’s discussion centers around the first issue, whether the opposed mark is a “similar mark over similar goods” compared to Tesla’s marks.

The third party’s mark designates goods in Class 9, such as batteries for vehicles, high-watt batteries, battery chargers, optical devices, etc..  Tesla’s prior marks cover goods in Class 12, such as electric and high-performance vehicles. There is no question that the marks are similar.  The issue is whether the goods are similar.

The TRAB decided to maintain registration of the opposed mark, finding that the goods are not similar.  However, the TRAB did not explain their reasoning. Tesla appealed the TRAB’s decision to the Beijing IP Court.  The Court overturned the TRAB’s decision, finding that the goods are similar. The Court reasoned that Tesla submitted evidence, such as educational materials, national standards, demonstration of their practice in the business field, and media reports, to demonstrate that batteries and electric vehicles have a close connection in function, way of use, manufacturing department, sales channel and target consumers.

Further, the Court noted that the most important part of an electric vehicle is the battery, which is always sold together with electric vehicles.  When consumers need to change the battery, they will usually first consider visiting the original manufacturer.  Here, the original manufacturer of the battery is Tesla.

These factors led the Court to decide that there would be a high likelihood of confusion where a similar mark was used over the battery goods in Class 9. This case suggests that goods are similar when one is the main component of the other, and the consumer would go to the original manufacturer for repair.

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