By SupplierVerify Team | Published: May 16, 2026
A Chinese OEM manufacturer — let's call them Senci — was contracted by a major U.S. retailer (Harbor Freight Tools) to produce gas generators. The U.S. client owned the "PREDATOR" trademark for generators in the United States — a legitimate, legally registered trademark. Senci produced a single sample unit, marked "PREDATOR" per the client's specifications, and shipped it to a U.S. laboratory for compliance testing. Chinese customs seized the shipment at the port. The reason: a completely different Chinese company had registered the "PREDATOR" trademark in China — a classic case of trademark squatting — and had filed an IP complaint with customs. Senci spent the next three years fighting through China's court system to get the seizure overturned. They won — eventually. At enormous cost.
China operates a "first-to-file" trademark system — whoever registers a trademark first in China owns it in China, regardless of who uses it elsewhere in the world. This creates an opportunity for "trademark squatters": individuals or companies that register well-known foreign brand names as Chinese trademarks, then use those registrations to extract settlements from the legitimate brand owner or block their exports. The squatter files a trademark for "PREDATOR" (or any foreign brand) in China. They record that trademark with China Customs' IP protection system. When the legitimate OEM manufacturer tries to export products bearing that brand — even though the brand is legally owned by the U.S. client in the U.S. — Chinese customs sees a trademark violation and seizes the goods. The exporter now faces a choice: pay the squatter to release the goods, fight through the courts (expensive, slow, uncertain), or abandon the shipment entirely.
Senci's case illustrates how devastating the trademark trap can be — and how hard it is to escape. In 2021, Senci exported a single sample gas generator marked "PREDATOR" to the U.S. for laboratory compliance testing. Yangshan Customs in Shanghai seized the shipment after Yama Electromechanical (Fuzhou Yama), which had registered "PREDATOR" as a trademark in China, filed an IP complaint. Senci's U.S. client, Harbor Freight Tools, legally owned the PREDATOR mark in the United States for generators. But Yama owned it in China. Senci fought the case through three levels of China's court system. At the first level (Pudong District Court), they nearly lost due to a catastrophic translation error — their original law firm translated "gas" as the wrong type of fuel, which nearly destroyed their argument that the product was destined for the U.S. market, not China's. After switching to a top-tier law firm (King & Wood Mallesons), Senci won at all three levels — district court, Shanghai IP Court, and the Supreme People's Court — with the final ruling in 2024. The courts ultimately held that OEM production for export does not constitute trademark infringement in China if the goods never enter the Chinese market. But this legal victory took three years and massive legal fees. For a single sample unit.
Trademark disputes are the most common cause of customs seizures, but they're not the only one. Importers sourcing from China face a range of customs-related risks that can result in seized shipments, destroyed goods, fines, and legal liability:
| Risk | What Happens | Real Case | Potential Cost |
|---|---|---|---|
| Trademark squatting | A squatter registers your client's brand in China, blocks your export | Predator generator case (2021-2024) | 3 years litigation + legal fees |
| Counterfeit goods | Your supplier added fake branding without telling you | 20,000 fake sports shoes seized (2024) | Goods destroyed + fines + lawsuit |
| Customs IP recordation | Competitor records their trademark and uses customs to block your shipment | Aidacheng vs Jialianheng footwear (2024) | Shipment delayed/detained, legal costs |
| Misclassified goods | Wrong HS code → wrong tariff rate → customs penalty | Common across all importers | Back duties + penalties + interest |
"I designed a unique handbag clasp and had it manufactured in Guangdong. Six months later, my supplier listed the exact same clasp on Alibaba under their own brand. When I complained, they said: 'You didn't register the design patent in China. It's legal here.' They were right. My U.S. design patent meant nothing in China. I had to compete against my own design."
— Fashion accessories brand founder, USA (IP law forum, 2024)
"We ordered promotional keychains with a client's logo for a corporate event. The shipment was held at the port because the logo allegedly resembled a registered Chinese trademark we'd never heard of. The goods were detained for six weeks while we proved the logo was our client's original design. We missed the event deadline entirely. The client canceled the contract."
— Promotional products distributor, Australia (industry conference, 2025)
The Predator case teaches several hard lessons. Before manufacturing anything in China that bears a brand or logo — even your own brand, even for export only — search the China Trademark Office (CTMO) database for conflicting registrations. Register your trademark in China before your supplier does — or before a squatter beats you to it. Make sure your OEM contract explicitly states that the goods are for export only and will not be sold or distributed in China — this is the legal basis the courts used to rule in Senci's favor. And verify that your supplier hasn't already registered your brand as their own trademark — a practice that is shockingly common and perfectly legal under China's first-to-file system. If your supplier registers your brand in China before you do, they — not you — own the right to use that brand on Chinese-manufactured goods. The cost of a Chinese trademark registration is approximately $500-1,500 depending on the number of classes. The cost of not registering it, as Senci and Harbor Freight discovered, can be a three-year legal battle over a single sample unit.
Protect your intellectual property before production starts: