Mint Explainer: How Tesla’s first India lawsuit will affect EV trademark battles

Tesla could receive trademark protection in India even without officially entering the market, thanks to the concept of “transborder reputation”, which protects companies whose trademarks extend beyond local boundaries and enjoy global recognition. Photo: AP
Tesla could receive trademark protection in India even without officially entering the market, thanks to the concept of “transborder reputation”, which protects companies whose trademarks extend beyond local boundaries and enjoy global recognition. Photo: AP

Summary

  • Earlier this month the EV maker sued Tesla Power India Pvt Ltd, a battery maker in Gurugram, for trademark infringement. The case will reveal how well Indian IP law protects foreign companies and could set a precedent for future trademark-infringement cases in India’s growing EV market.

New Delhi: Elon Musk's Tesla Inc recently filed its first lawsuit in India – a trademark infringement case against Gurugram-based battery seller Tesla Power India Pvt.Ltd. The move is in line with the company’s proactive efforts to protect its trademarks and patents worldwide through lawsuits.

Mint examines Tesla's aggressive trademark-protection strategy and how India's trademark regime shields foreign companies operating in India from infringement by domestic entities. 

We also explain how this case could set a precedent for future trademark-infringement cases in India’s growing EV market.

Why did Tesla sue a battery maker in Gurugram?

On 2 May, Tesla Inc sued Tesla Power India Pvt Ltd, accusing the Gurugram firm of infringing on its trademark and misleading consumers by implying association with Tesla Inc's electric vehicle (EV) batteries. 

Tesla Inc alleged that customers were buying batteries from Tesla Power assuming it was affiliated with the US firm, leading to confusion and potential damage to Tesla Inc's reputation as it looks to enter the Indian EV market.

In response, Tesla Power argued that its primary business was supplying lead-acid batteries for various applications such as automobiles, inverters and UPS systems, and that it was not involved in manufacturing EVs. 

The company said any advertisements featuring the Tesla name were part of a marketing alliance with another EV manufacturer, E-Ashwa, and that it had no intention of producing or marketing EVs under its own brand. 

Also read: Tesla gets ready to import German-made EVs to India

The company pledged not to use the Tesla trademark or any similar deceptive branding for EVs, and agreed not to feature Tesla's registered logos or trademarks in promotional material related to EVs.

Tesla Inc, however, sought a complete ban on Tesla Power using the Tesla trademark. The Delhi High Court has responded by issuing a notice and restraining Tesla Power from publishing any promotional advertisements featuring EV products with the Tesla trademark. The next hearing is scheduled for 22 May.

What protection does Indian intellectual-property law offer Tesla?

According to legal experts, Tesla can receive trademark protection even without officially entering the market, thanks to the concept of “transborder reputation", which protects companies whose trademarks extend beyond local boundaries and enjoy global recognition.

The Indian legal system first encountered the concept in the case of NR Dongre vs Whirlpool Corporation in 1996, in which the Supreme Court held that a trademark could be protected on grounds of transborder reputation, even if the product was not being sold in India and was known only through media and advertisements.

Also read: Why Elon Musk priotitised China over India

Siddharth Mahajan, partner at Athena Legal, explained, “Since the Whirlpool case, Indian courts have recognised the concept of transborder reputation of trademarks and protected the rights of trademark owners in numerous cases. Courts have recognised the fact that a mark may not have been used in India by its foreign owner but the rights vesting in the trademark can be protected in India if people are aware of the brand or trademark here."

However, Mahajan noted that the Supreme Court diluted its position in a case involving Toyota’s Prius brand of hybrid cards in 2017. The defendant, Prius Auto Industries Ltd, began manufacturing spare parts and accessories for cars in India in 2001 and registered the trademark ‘Prius’ in 2002. The court held that advertisements in various magazines and information available online was not adequate to establish the reputation and the goodwill of Toyota’s mark in India.

How will the Tesla case affect future IP disputes in India’s EV sector?

Experts said the case could have a significant impact on similar cases in the future as it could establish precedents in intellectual property (IP) law related to the rapidly growing EV industry. "A verdict in favour of Tesla Inc may lead to stricter enforcement of IP rights, which would affect licensing negotiations and technology co-referencing businesses in this industry," said Amit Panigrahi, partner designate at Luthra and Luthra Law Offices India.

Also read: Elon Musk shows why India can't take China-plus-one narrative for granted

Panigrahi added that the outcome would also have an impact on investors’ confidence in India’s EV sector. "A fair process that upholds IP rights could lead to more investment and thus faster growth for the sector," he said. "The case could spark new legislation that addresses such technologies, strengthens enforcement, and creates a favourable environment for innovation and investment in EVs."

What are some of Tesla’s other trademark disputes worldwide?

Tesla was initially perceived as open in its IP strategy, particularly regarding sharing patents with other manufacturers. In 2014 the company introduced an open patent pledge, saying it wouldn't sue against any company that used its technology in good faith for sustainable transportation.

However, Tesla soon ditched this for a more aggressive stance, and filed several lawsuits for patent and trademark violations worldwide.

A recent case in northern England exemplifies this shift. The owner of a small chicken shop, Amanj Ali, found himself in a long legal dispute with Tesla after naming his business after Nikola Tesla. 

Also read: Tesla needs India more than India needs Tesla

Initially, the EV company didn't object to the trademark. But when Tesla Inc registered its trademark in the UK it took legal action against Ali, saying his use of the Tesla name would unfairly capitalise on the company's reputation. After spending £8,000 in legal fees to fight Tesla, Ali lost the case and was ordered to pay the US company £4,000.

Tesla also emerged victorious in a trademark-infringement lawsuit against a Chinese food and beverage maker that was selling products with names similar to Tesla's brand. A Shanghai court ruled in Tesla's favour, ordering the infringing company to cease its activities, compensate Tesla, and issue a public statement.

Recently the US company settled a patent-infringement dispute with Cap-XX Ltd, an Australian supercapacitor firm. The conflict stemmed from allegations of patent infringement against Maxwell Technologies, which was later acquired by Tesla. While Cap-XX initially planned to appeal, it ultimately decided to settle the case, ending a prolonged legal battle.

Tesla was also sued for patent infringement by Sharp Corp in 2020. The Japanese electronics firm filed a lawsuit alleging that mobile communications equipment installed in some Tesla models violated patents owned by Sharp.

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