Hong Kong ( CNN ) -- They 're known as trademark `` squatters '' and they 've long caused headaches for foreign companies entering the Chinese market . Savvy to China 's complex trademark laws , these individuals target valuable foreign brands and register them as trademarks in China . When international companies want to launch their products on the Chinese market , they 're often left with little choice but to cough up huge sums to buy back the trademark , rebrand their product or fight for the right to use the brand through lengthy legal battles . One of Australia 's most popular wine brands , Penfolds , is currently at the center of a legal dispute over the use of its own name in China . Treasury Wine Estates , the owner of the wine , said this week that someone in China has claimed ownership of the Chinese name for Penfolds -- Ben Fu -- a transliteration that means `` chasing prosperity . '' The company is engaged in legal action with the individual to `` ensure the integrity of the brand is protected , '' a spokesperson for Treasury told CNN in an emailed statement . Notorious squatter . That individual , according to the Australian Financial Review , which first broke the story , is a `` notorious trademark squatter '' named Li Daozhi . A Spanish-Chinese wine distributor , Li won a similar case against a French winemaker last year . Treasury is confident it is the lawful owner of the trademark , the company 's spokesperson said , and the Australian winemaker did initially win a court case allowing it to use the Chinese name for its wine in China . But Li is now appealing the decision , according to the AFR . `` It will take some time for the Chinese legal system to process this matter , '' Treasury said . Treasury 's case and the many others that have made headlines in recent years should be a warning to foreign companies of the risks they can be exposed to if they fail to familiarize themselves with trademark laws in one of the world 's largest consumer markets , legal experts say . 'First to file ' wins . Many foreign businesses have come unstuck because China 's trademark laws follow a `` first to file '' principle . That means whoever has a trademark registration approved first in China , owns the rights to that trademark . This differs from countries like the United States and many Commonwealth countries that follow a common law system , where a person registering a trademark also has to show they 've used , or plan to use the mark in business . But companies do have opportunities to challenge trademarks already registered in China . One option is to prove the individual deliberately claimed ownership of the brand with the intention of blackmailing a foreign brand entering the market . Another is to show that the brand was already well-known when the trademark was registered . In practice , convincing a court on these points has proved difficult for many companies , but legal experts believe recent amendments to China 's trademark laws , among other factors , could improve trademark protection for foreign brands . Here are some of the most recent , prominent cases . Tesla . Earlier this month , Chinese businessman Zhan Baosheng reportedly sued U.S. electric car manufacturer Tesla for illegally using its own name , and demanded that the company stop all car sales and marketing activities in China . Zhan , who has a history of filing trademarks for names used by foreign brands , is seeking 23.9 million yuan ( US $ 3.84 million ) from Tesla . He says he filed for the right to use the English name Telsa in 2006 , and planned to manufacture an electric car named after the inventor Nikola Tesla . He later applied to register related trademarks , including a Chinese transliteration of the name and the U.S. auto manufacturer 's logo . Tesla , which launched its Model S luxury electric car in China last year , says its claim to the name has already been upheld by other Chinese authorities and the lawsuit is without merit . A Beijing court is due to hold an appeal hearing on August 5 . Pfizer . Pharmaceutical giant Pfizer fought an 11-year trademark , patent and 3-D trademark battle over the Viagra brand after it failed to register the Chinese name for the erectile dysfunction drug before it introduced the product on the Chinese market in 2000 . It won the patent and 3-D trademark litigation but lost the trademark case because it could n't provide sufficient evidence to show it had become well-known among Chinese consumers under the name Weige ( meaning `` mighty brother '' ) . For similar reasons , luxury retailer HÃ¨rmes and whisky brand Chivas Regal have lost bids to stop clothing manufacturers from selling products under their names . Singers and sports stars . Celebrities are n't immune either . A man in Guangzhou owns the right to use the name of Canadian pop singer Justin Bieber , while the names of World Cup stars like Germany 's Philipp Lahm and Portugal 's Cristiano Ronaldo are used to promote products ranging from shoes to pesticide , according to China Daily . Two years ago , U.S. basketball legend Michael Jordan filed a lawsuit against a sportswear company called Qiaodan Sports ( a transliteration of Jordan 's name ) . The multi-million dollar company even registered trademarks for the names of his two sons , Jeffrey and Markus ( Jiefuli Qiaodan and Makusi Qiaodan ) . And it 's not only foreign stars who have been affected . In 2006 , Chinese NBA star Yao Ming managed to block the trademarking of his name on a line of women 's sanitary products . Castel FrÃ¨res . In the largest trademark litigation case in China 's wine industry to date , French winemaker , Castel FrÃ¨res had to completely rebrand its wines in China after losing a four-year legal battle to Li Daozhi , the defendant in the Penfolds case . Li 's company reportedly registered `` Kasite '' to import Spanish wines , and later French wines , into China about 15 years ago . Around the same time , Castel began bottling wine in China and became known to Chinese consumers by the same Chinese name . ( In a market where many consumers do n't read Latin letters , Chinese characters hold much more sway when it comes to brand recognition . ) Li reportedly offered to sell the trademark to Castel for 1 million euros ( $ 1.3 million ) . Castel refused the offer and chose to sue Li in 2005 , arguing that his company had not used the Kasite name in three years . Li subsequently sued Castel for trademark infringement and was awarded 33.73 million yuan ( US $ 5 million ) by a Zhejiang court last year . But China 's supreme court overturned the verdict and has ordered a retrial , which is still pending . In the meantime , Castel has registered a new Chinese trademark , `` Kasidaile . '' Will things improve ? New amendments to China 's trademark laws that came into effect in May this year could make things easier for foreign companies . `` The extent of which we 're not sure , '' said Deanna Wong , a partner at law firm Hogan Lovells , because there have n't been any major decisions handed down subsequent to the changes . Stan Abrams , Asia legal counsel at Bentley Systems in Beijing , said the laws will make things easier , but the number one reason these kind of disputes are likely to decrease is that companies are better informed about navigating the Chinese market these days . `` A lot of ( these disputes ) originated years and years ago . It 's been a multi-year process of litigation , '' Abrams said . `` In some cases , when you 're talking about companies from common law countries , they came over here and were really unfamiliar with the legal system . They did n't realize it was a file-first system . '' `` A lot of them did n't do their homework and were making crazy mistakes when using their foreign names in the local market . '' Overseas companies better understand what evidence they need to make a good case these days , added Wong . What can foreign companies do ? For many companies it 's probably already too late to assert their rights over their brands , according to Abrams . `` For a lot of them , unfortunately the answer is invest in time travel technology because if you have a problem the chances are the roots of it are years old . '' Those companies should take steps to find out immediately where they stand right now , he added . It 's easy to do a free , informal search of China 's online trademark database . If the trademark has already been registered by someone else , companies will have to go through `` painful '' legal proceedings that could take several years . If the company loses , it faces the choice of shelling out a lot of money to buy the trademark or rebranding . Companies should make sure they have the right advice on the ground , that takes into consideration their long-term business strategy , such as any new markets the brand may enter in the future , said Wong . Even for companies that do n't have global or local help there 's a wealth of information that they can access on the internet these days , in ways that most businesses 15 or even 10 years ago could n't , said Abrams . While the cost of registering a trademark is miniscule compared to the amount a company could end up paying in legal fees , Abrams points out that not all companies , especially start-ups , have the financial flexibility to ensure all their brands have comprehensive trademark coverage . For those companies , he suggested getting minimal coverage for core brands and expanding from there . `` You just have to be smart about it , '' he said .
Many register trademarks of well-known foreign brands in China to sell them for large sums . Top Australian winemaker at center of legal dispute after failing to register Chinese name for its brand . China 's trademark laws tend to favor so-called `` trademark squatters '' over foreign companies . New amendments to laws and greater understanding of China 's system likely to make things easier for companies .