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 couldn'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 Hèrmes and whisky brand Chivas Regal have lost bids to stop clothing manufacturers from selling products under their names.

Singers and sports stars

Celebrities aren'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.