Trademark Risks for Online Sellers: Is Your Amazon Brand Protected Where It Actually Matters?
- GOMAXGROUP
- Jun 10
- 8 min read
Many sellers fall into a fatal cognitive misconception: since their products are entirely OEM-manufactured in China and directly exported overseas, without being sold in the domestic market, they believe there is no need to register a Chinese trademark. However, under China’s "first-to-file" principle for trademark registration and the increasingly stringent customs supervision over intellectual property rights, this misconception can trigger a series of cascading risks.
In this article, TMregisterchina will break down four hidden trademark risks faced by Amazon OEM sellers, drawing on real-life cases of small and medium-sized sellers who have stumbled into these traps.
Trademark risks for sellers: Overseas trademarks have no legal effect in China
Trademark protection is strictly territorial. Trademarks registered in the United States or the European Union are only effective within their respective jurisdictions and have no legal protection in China.
Within China's mature cross-border e-commerce OEM supply chain, partner factories and sourcing intermediaries constantly monitor newly emerging best-selling private-mold brands on the Amazon platform. Once a product gains stable sales volume and shows clear profitability, these entities move quickly to register identical or highly similar English trademarks with the China National Intellectual Property Administration (CNIPA), covering the corresponding product categories.
After obtaining the Chinese trademark registration certificate, the squatter immediately records the trademark with Chinese Customs for IP protection. From that point onward, all OEM finished products shipped from domestic ports to Amazon FBA overseas warehouses will be automatically identified by the customs system as "suspected infringing goods.
Customs Seizure — Shenzhen Home Storage Seller
A Shenzhen-based Amazon seller specializing in home storage products for the U.S. market had a long-term OEM partner factory in Dongguan. The factory secretly registered the same English trademark in China and completed customs recordation—all without notifying the brand owner. In October 2024, two containers of finished goods were shipped from Shenzhen Shekou port to an FBA warehouse in Los Angeles. The shipment was fully seized by Chinese customs due to trademark infringement. The seller was forced to choose between abandoning the goods or buying back the trademark rights. In the end, the seller paid a substantial transfer fee and customs penalties to recover the goods. The core ASIN was out of stock for an extended period, causing its listing weight to collapse. Subsequently, the seller had to invest heavily in advertising to gradually restore traffic.
This case clearly illustrates the huge risks of trademark territoriality for cross-border sellers. Overseas trademark registrations cannot protect brands in China, and malicious trademark squatting by cooperative factories may lead to cargo detention, economic losses and severe damage to store operations.
Trademark risks for sellers: Lack of control over OEM surplus stock
In conventional OEM manufacturing, factories typically produce extra units beyond the ordered quantity to compensate for production waste and defective product write-offs. However, most Amazon sellers focus solely on product quality and delivery lead times, completely overlooking the contractual provisions regarding "ownership and disposal rights of surplus stock and defective products" in the OEM agreement.
If the contract lacks clear trademark ownership restrictions and a mechanism for destroying surplus stock, the OEM factory may have the opportunity to privately dispose of branded excess inventory without authorization. These diverted surplus goods are completely identical in appearance and brand logo to authentic products, but they have not gone through standardized quality control, inspection procedures, or after-sales service systems. Factories typically sell such goods in bulk at extremely low prices to cross-border trading companies, which then list them on European and U.S. marketplaces at low prices under new, unregistered Amazon seller accounts.
Surplus Stock Diversion — Zhejiang Facial Puff OEM
A Zhejiang-based OEM factory producing cosmetic facial puff products for an overseas brand manufactured a small surplus quantity beyond the regular order quantity, as is common practice. However, the OEM contract did not include any provisions regarding the ownership or disposal of surplus stock. The factory retained the original brand packaging, bundled the surplus goods, and handed them over to a cross-border intermediary. The intermediary then listed the products on Amazon UK using a new, unregistered seller account, selling them at prices lower than those of the official brand store.
This low-priced surplus stock diverted a significant number of genuine customers. At the same time, the quality control of the factory's surplus goods was inconsistent, resulting in issues such as deformation and failure to meet water absorption standards. Amazon's risk control system flagged the brand for quality irregularities and restricted the organic ranking of its keywords.
After the brand owner filed a complaint, the local prosecutor's office launched an investigation. The court ultimately ruled that the factory must compensate the brand owner for economic losses. The platform removed all surplus stock listings, and the involved surplus goods were uniformly destroyed as waste.
This case reveals the hidden risks posed by unregulated OEM surplus inventory. Without explicit contractual clauses to restrict the disposal of excess goods, sellers may face parallel sales of unqualified products, leading to customer loss, brand reputation damage and platform penalties. Therefore, it is vital to clarify relevant terms in OEM agreements.
Trademark risks for sellers: Incomplete trademark registration classes
To save upfront costs, most new Amazon sellers only register trademarks for their core sub-category of products, completely overlooking defensive protection for extended products, accessories, and peripheral derivatives. Professional squatters and partner factories precisely exploit this loophole, preemptively registering the same brand in related vacant categories, thereby creating a category blockade.
After the core product gains traction, when sellers plan to expand into accessories, bundled kits, or derivative SKUs to increase average order value and market share, they discover that trademarks for those peripheral categories already belong to someone else. At that point, sellers are unable to conduct OEM manufacturing for those categories within China, nor can they list new product links under the same brand. Their brand expansion path is effectively blocked entirely.
Category Blockade — Yiwu Kitchenware Brand
An Amazon kitchenware seller in Yiwu registered only the core Class 21 trademark for cookware in China, without making any defensive filings in peripheral categories. The supplier partner precisely exploited this gap by preemptively registering the same English trademark in surrounding categories a full year in advance.
In early 2024, the seller's main cookware product rose to the top 15 in its subcategory in the EU. When the seller planned to launch accessories to increase average order value, they discovered that the trademark rights for all peripheral accessories belonged entirely to the factory. Citing legal ownership, the factory refused to produce OEM products for the seller. As a result, the seller was unable to compliantly manufacture new products in China and was forced to switch to a new brand and new listings, missing the optimal annual sales cycle.
This case shows that incomplete trademark class registration will leave brands exposed to category blockades. Squatters or suppliers will seize unregistered classes in advance, blocking product expansion and bringing huge losses to sellers. It is essential to complete full-category trademark protection at the early stage.
Trademark risks for sellers: Purely for export, with no record of use within China
Under Chinese law, if a registered trademark has not been used without legitimate reason for three consecutive years, any third party may file a petition to cancel the trademark. Industry competitors, former partner factories, and professional squatting teams continuously monitor the domestic trademark status of cross-border sellers. Once they verify that no valid evidence of domestic use exists, they will file cancellation requests in bulk.
Once a trademark is cancelled, it immediately enters the public domain, and anyone can re-squat it, completely stripping the brand of its ownership rights in China. However, the vast majority of Amazon sellers engaged purely in export sales are unable to provide valid evidence of use, such as domestic sales records, e-commerce listing records, or authorized distribution proofs. As a result, their painstakingly registered domestic trademarks become entirely invalid.
Non-Use Cancellation — Xiamen Pet Toy Exporter
A pet toy seller in Xiamen registered a Chinese Class 28 trademark in early 2021 but made no use of it domestically, assuming export-only operations were sufficient. By 2024, competitors had monitored the inactive status and filed for non-use cancellation. Unable to produce domestic sales invoices, listing records, or authorized distribution proofs, the seller lost the case. CNIPA formally cancelled the trademark in early 2025. A third party immediately re-registered the same mark and completed customs recordation. When the seller attempted to export a subsequent FBA shipment, Chinese customs seized the entire container for trademark infringement. The buyback cost far exceeded the goods' value, forcing the seller to abandon the container entirely
This case warns export-focused sellers of the risk of trademark cancellation for non-use. Trademarks registered in China must be properly used domestically; otherwise, they may be revoked after three years of inactivity. Sellers will lose brand rights and face cargo seizure and heavy losses.
What If Your Brand Has Already Been Squatted in China?
In such cases, the following legal remedies are available, though each carries significant limitations:
Remedy | How It Works |
1. File an Invalidation Petition | Under Article 32 of the Chinese Trademark Law, argue that the squatter registered the mark in bad faith (e.g., with prior knowledge of your use). |
2. File a Non-Use Cancellation | Under Article 49 of the Chinese Trademark Law, if the squatter has not used the mark in China for three consecutive years, file a cancellation petition. |
3. Negotiate a Buy-Back | Contact the squatter directly or through a local agent to purchase the trademark rights. |
4. Rebrand | Abandon the squatted trademark and register an entirely new brand in China. |
All post-dispute remedies are time-consuming, costly, and uncertain in outcome. In contrast, a proactive China trademark registration (as detailed in the Pro Tips below) requires only a modest investment and typically takes just 6–8 months to complete. For Amazon sellers, prevention remains the only reliable strategy.
Pro Tips from TMregisterchina
-Prevent factory trademark squatting and customs cargo seizure
Complete China trademark registration and customs IP recordation before placing OEM orders and making deposits. Add ownership clauses in contracts to prohibit manufacturers from registering your brand without authorization.
-Stop leftover goods outflow and parallel resale on Amazon
Specify leftover & defective product disposal terms in OEM contracts; require excess goods to be destroyed under your supervision and set heavy liquidated damages for unauthorized resale. Strictly check quantity upon delivery.
-Avoid incomplete trademark classes blocking product expansion
File core product classes plus defensive related subclasses (accessories, peripherals) at the initial trademark application according to future product planning. Regularly monitor suppliers’ trademark application records.
-Defend trademarks against three-year non-use cancellation
Arrange small-scale domestic consignment or sample sales every year to preserve valid use evidence such as invoices and sales records; conduct quarterly trademark status monitoring.
-Ensure legal entity consistency
Make sure the owner of your Chinese trademark is legally identical to, or has a clear licensing relationship with, your Amazon seller account entity. Otherwise, customs complaints and platform infringement claims may be rejected.
In summary, relying solely on overseas trademark registration and Amazon’s brand registry is far from sufficient for effective Amazon brand protection. China operates under a first-to-file trademark system, and coupled with widespread management vulnerabilities in the cross-border OEM supply chain, intellectual property risks lurk throughout the entire process—from manufacturing to customs clearance.
Sellers must proactively plan and implement a comprehensive trademark strategy in China, refine contractual clauses in OEM agreements regarding trademark use, disposal of surplus stock, and ownership of goods, while also maintaining long-term, standardized records of trademark use within China. These combined measures serve as a powerful defense against risks such as malicious trademark squatting, low-price unauthorized selling of factory surplus inventory, and customs seizures due to infringement.
Rather than suffering severe losses from trademark disputes—such as goods being detained, hefty compensation payments, and damage to store rankings—it is far wiser to implement intellectual property risk controls in advance. A modest upfront investment in compliance is the most effective way to avoid substantial losses down the road.
Professional China Trademark Registration Support
At TMRegisterChina, powered by Gomax Group — a registered CNIPA IP agent — we specialize in helping foreign businesses navigate China trademark registration without costly rejections.
Our services include: Professional localized translation of brand names, product titles, and marketing terminologyCultural appropriateness review to ensure your Chinese brand name resonates with local consumers Seamless CNIPA coordination through our licensed agent status Tailored market entry strategies based on current examination practices.
Our qualified translators combine linguistic accuracy with deep knowledge of Chinese market norms and consumer preferences, helping your brand build recognition and achieve sustainable growth in China's dynamic marketplace.
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