[Title] Plaintiff A Company’s Dispute over Administrative Review Against Defendant B Government and Third Party C Company 
[Keywords] Administrative/Disagreement with Administrative Review/Infringement of Trademark Rights/Proper Use/Generic Name/Product Model/Public Confusion 
【Key Points of the Ruling】1. Has the plaintiff’s “VEP” trademark lost its distinctiveness and been transformed into a generic term for goods or a product model? 2. Does the third party’s use of “VEP1-12” constitute fair use, and does it infringe upon the plaintiff’s exclusive right to the trademark? 3. Is the third party’s use of the “VEP1-12” mark similar enough to the plaintiff’s “VEP” mark to easily cause confusion among the relevant public? 4. Is the reconsideration decision made by the defendant B government lawful? 
[Basic Facts of the Case] In July 2003, Company D (the predecessor of the plaintiff) collaborated with Research Institute E to complete the development of the ZN96-12(VBP)/T1250-31.5 vacuum circuit breaker and jointly applied for a technical appraisal. On July 26, 2003, the appraisal committee—comprising representatives from the China National Machinery Industry Federation and the State Power Corporation—unanimously approved the technical appraisal of the ZN96-12(VEP)/T1250-31.5 vacuum circuit breaker developed by Research Institute E and Company D. 
On December 7, 2004, Company D obtained the exclusive right to use the “VEP” trademark after approval by the State Trademark Office. The trademark’s validity period ran from December 7, 2004, to December 6, 2014, with registration number 3563910. The goods approved for use under this trademark include electrical switches, circuit breakers, relays, distribution boxes, and similar items. In 2010, following a corporate merger, Company D was reorganized into Company F. On July 12, 2012, the registrant of the “VEP” trademark was changed to Company F. On December 12, 2014, the registered “VEP” trademark was renewed, with the renewed registration valid until December 6, 2024. In 2015, Company F’s name was changed to Company A, and on July 27, 2016, the “VEP” registered trademark was transferred to A Company Switch Co., Ltd. 
The product label for the vacuum circuit breakers manufactured by Company A features the registered trademark “Huatech” in the upper-left corner and the registered trademark “VEP” in the upper-right corner. In Company A’s “Instruction Manual for VEP Indoor Medium-Voltage Solid-Encapsulated Vacuum Circuit Breakers,” the product model, name, and their meanings are presented as: VEPT D PW, with “VEP” explicitly designated as the “basic model.” 
In 2007, Company C began producing prototype vacuum circuit breakers marked with the designation “VEP1-12.” On the vacuum circuit breakers manufactured by Company C, the applicant’s parent company’s registered trademark was displayed on the left side of the front sealing strip, while the italicized designation “VEP1-12” was shown on the right side of the sealing strip. At the lower-right corner of the front panel of each circuit breaker, a black aluminum nameplate provided information including the product model, technical specifications, manufacturer, and date of manufacture. In both the product manuals and the company’s website, the applicant consistently used the designation “VEP1-12” alongside other markings and promoted “VEP1-12” as the product’s model number. From January to April 2014, Company C sold a total of 111 vacuum circuit breakers to external customers, with a total sales value of 2,602,000.00 yuan. 
On August 14, 2014, Company C filed a request for invalidation of the “VEP” trademark with the Trademark Review Board of the State Administration for Industry and Commerce (hereinafter referred to as the TRB). On March 27, 2015, the TRB issued the “Decision on the Request for Declaration of Invalidity of Trademark No. 3563910 ‘VEP’” (TRB Decision No. [2015] No. 0000027472), in which the TRB held that the disputed trademark “VEP,” when used as a trademark on goods such as electrical switches and relays, did not fall into the category of merely consisting of the generic name, graphic, or model of the goods themselves. Furthermore, the evidence submitted by the applicant was insufficient to prove that “VEP” had become a commonly accepted trade mark model among the relevant public. Therefore, the TRB ruled to uphold the validity of the disputed trademark. On May 15, 2015, the applicant, dissatisfied with the TRB’s decision, filed an administrative lawsuit with the Beijing Intellectual Property Court. On December 4, 2015, the applicant submitted a request to withdraw the lawsuit to the court. On December 17, 2015, the court issued the Administrative Ruling No. (2015) Jing Zhi Xing Chu Zi No. 2942, granting Company C’s request to withdraw the lawsuit. 
On July 23, 2014, Company A filed a complaint with the Provincial Administration for Industry and Commerce, alleging that Company C had infringed upon its exclusive rights to the “VEP” trademark and requesting that Company C be investigated and penalized. On January 27, 2015, the Provincial Administration for Industry and Commerce ruled that Company C’s unauthorized production and sale of vacuum circuit breakers bearing the mark “VEP1-12,” without obtaining permission from Company A, constituted trademark infringement. Consequently, the Administration ordered Company C to immediately cease its infringing activities and imposed a fine of 3,903,000.00 yuan. On March 23, 2015, Company C, dissatisfied with the penalty decision issued by the Provincial Administration for Industry and Commerce, filed an application for reconsideration with the B Government. On January 8, 2016, the B Government issued Reconsideration Decision No. [2015]84 of the Liaoning Administrative Reconsideration, revoking the penalty decision No. [2015]1 issued by the Provincial Administration for Industry and Commerce. On February 4, 2016, Company A, also dissatisfied with the reconsideration decision made by the B Government, filed a lawsuit against the B Government as the defendant in the Shenyang Intermediate People's Court. 
The naming standards for the sealed-pole vacuum circuit breakers involved in this case primarily include: “High-Voltage AC Circuit Breakers” (GB1984-2003), “Solid-Insulated Embedded Poles for High-Voltage AC Vacuum Switchgear” (GB/T1102-2011), and “Methods for Coding Models of High-Voltage Switchgear and Control Equipment” (JB/T8754-2007). Among these, Chapter 3, Terms and Definitions, Clause 3.4.108 of “High-Voltage AC Circuit Breakers” defines “vacuum circuit-breaker” as “vacuum circuit-breaker” in English; and Chapter 3, Terms and Definitions, Clause 3.1 of “Solid-Insulated Embedded Poles for High-Voltage AC Vacuum Switchgear” defines “solid-insulation-embedded pole” as “solid-insulation-embedded pole” in English. The prefaces of the above-mentioned standards all state that they are under the jurisdiction of the National Committee for Standardization of High-Voltage Switchgear and are interpreted by the same committee. 
During the handling of the dispute in this case by the Provincial Administration for Industry and Commerce and Government B, Company C, the Provincial Administration for Industry and Commerce, and Government B all sought clarification from the National Technical Committee for Standardization of High-Voltage Switchgear Equipment regarding the meaning of “VEP.” On December 11, 2014, January 9, 2015, and October 9, 2015, the Secretariat of the Technical Committee replied three times to the inquirers. The main contents of these replies were as follows: The common Chinese name for “VEP” is “Solid-Encapsulated Pole-Type Vacuum Circuit Breaker.” The letter “V” stands for vacuum circuit breaker, and “EP” stands for solid-encapsulated pole. The English abbreviation “V” derives from “Vacuum Circuit-Breaker,” while “EP” comes from “Solid-Insulation-Embedded Pole.” On October 23, 2015, the Technical Committee replied to Government B, stating primarily that the Committee has the authority to interpret the content of standards under its jurisdiction. Under the Committee’s jurisdiction, no explicit interpretation was provided for the abbreviation “VEP.” Therefore, the interpretation of “VEP” issued by the Secretariat of the Technical Committee contradicts the Committee’s official interpretation; hence, the Committee’s interpretation shall prevail. 
[Judgment Result] First-instance judgment: Dismiss the plaintiff’s claim. 
Second-instance judgment: Case settled through mediation. 
【Reasons for the Ruling】The court holds that, pursuant to Article 12 of the Administrative Reconsideration Law of the People’s Republic of China, the B Government possesses the statutory authority to issue the challenged reconsideration decision. The defendant based its challenged reconsideration decision primarily on the following grounds: First, the trademark “VEP” has lost its distinctiveness in the high-voltage switch industry and has instead become a generic model or generic name for the product; second, the C company’s simultaneous use of a registered trademark and the mark “VEP1-12” on its product labels is not similar to the “Huatech” and “VEP” marks used by the plaintiff on its products, and therefore is unlikely to cause confusion among the relevant public. 
Regarding whether the trademark “VEP” has lost its distinctiveness and been transformed into a generic model or common name for goods, the court held that although the plaintiff obtained exclusive rights to the “VEP” trademark through registration on December 7, 2004, over time—and particularly due to widespread use by producers, including the rights holder, and consumers—the registered trademark “VEP” has lost its distinctiveness and has become a generic model or common name within the high-voltage switchgear industry. The specific reasons are as follows: First, the rights holder has consistently used “VEP” internally as the basic model designation for its products; this is clearly evidenced by the more than 30 purchase orders (sales contracts) entered into by the plaintiff with other enterprises, all of which list “VEP” as the standard order model. Second, numerous domestic competitors producing similar products, aside from the rights holder, have also extensively used “VEP” as a product model in promotional materials, order contracts, and product descriptions. For instance, C Company provided 17 sales contracts from six domestic enterprises, along with supporting documentation from 93 companies—including Shandong Taishan Hengxin Switchgear Group Co., Ltd., Yihe Electric Group Co., Ltd., Anshan Kaijidé Automation Electrical Equipment Manufacturing Co., Ltd., and others—as well as data recorded in the specialized publication “Annual Handbook of the High-Voltage Switchgear Industry,” all of which confirm that these companies have used “VEP” and treated it as a generic model. Third, the customary practice of labeling products with “VEP” further demonstrates its widespread use as a generic model within the industry. In practice, many domestic manufacturers of solid-insulated vacuum circuit breakers mark their product models on the upper-right side of the product. As shown in the images provided by C Company of 17 domestic electrical enterprises selling indoor high-voltage vacuum circuit breakers, the labels affixed to the right side of these products invariably bear the company’s trademark on the left and the product model number on the right. This practice stems from the industry’s recognition of the higher level of risk associated with operating high-voltage switchgear cabinets, and it facilitates easy identification of the product model for maintenance purposes. This industry-wide, established practice underscores that “VEP” is widely adopted by numerous manufacturers as a generic model. 
As shown above, the commonly used Chinese name for “VEP” within the industry is “Solid-Encapsulated Pole Vacuum Circuit Breaker.” The view that the letter combination “VEP” has been recognized and accepted by both manufacturers and consumers as a generic term and model designation in the national high-voltage switchgear industry is well-established. “VEP” stands for solid-encapsulated pole-type vacuum circuit breaker and is a widely adopted, generic product model within the industry. Therefore, the defendant B government’s conclusion—that due to the widespread use by manufacturers and consumers, the registered trademark “VEP has become a product model or generic term in the high-voltage switchgear industry—is entirely reasonable. 
Regarding the question of whether the simultaneous use by Company C on its product labels of both a registered trademark and the mark “VEP1-12” is likely to cause confusion among the relevant public, given that the plaintiff uses the marks “Huatech” and “VEP” on its own products, the court holds as follows: First, in accordance with the principle for determining whether trademarks are identical or similar set forth in Article 10 of the “Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Civil Disputes Involving Trademarks” (Fa Shi [2002] No. 32), the comparison must take into account not only the main elements of the trademarks but also their overall appearance; the trademarks should not be compared in a fragmented or isolated manner. Company C uses the mark “VEP1-12” on its products simultaneously with another mark that indicates the product’s characteristics. There is no instance where the “VEP” mark alone appears separately. Upon seeing these products, the relevant public first notices two distinct marks: on the vacuum circuit breaker rubber strips manufactured by Company C, the registered trademark is located in the upper-left corner, while the “VEP1-12” mark is positioned in the upper-right corner. Both marks feature white letters within blue frames, and their stroke thickness and font size are identical. On the black aluminum label at the lower-right corner, the manufacturer’s name, model number, and other technical specifications are clearly indicated. By contrast, on the vacuum circuit breaker rubber strips produced by the plaintiff, the registered trademark “Huatech” is marked in the upper-left corner, and the registered trademark “VEP” is placed in the upper-right corner. From a comparative perspective, the trademarks on the left sides of both products are clearly distinguishable. Although the right-side marks—“VEP” and “VEP1-12”—share certain similarities in terms of their constituent elements, when viewed as a whole, these two sets of marks do not appear similar enough to cause confusion regarding the source of the plaintiff’s products. Second, since vacuum circuit breakers are mass-produced commodities widely used in the power industry—primarily in power plants, substations, and mines—their consumers are mainly professional and rational buyers who pay close attention to the products they purchase and have a relatively comprehensive understanding of them, thus possessing a high degree of discernment. Moreover, vacuum circuit breakers are expensive, with each unit costing between 20,000 and 30,000 yuan, which makes buyers even more cautious and meticulous during the purchasing process. The complexity of the procurement procedures further ensures that buyers are unlikely to confuse the sources of the two companies’ products. These devices are large-scale equipment typically purchased in bulk through a series of complex procedures involving bidding and tendering processes. Before reaching an agreement, both parties must engage in multiple rounds of negotiations and sign customized contracts. Furthermore, the contract-signing process itself involves an additional layer of rigorous review designed precisely to prevent any potential confusion. As a result, the likelihood of confusion is significantly reduced, and buyers are clearly reminded that they are entering into a transaction not with Company A but with Company C. 
As shown above, the specific nature of the consumer group for the products involved, their high price, and the complexity of the transaction procedures all indicate that the likelihood of confusion among the relevant public regarding the origin of these products is extremely low, and actual purchasers will not be misled. Therefore, the B government’s reconsideration decision—that the two sets of markings, “VEP1-12” used by Company C alongside the registered trademarks “Huatech” and “VEP” used by Xiamen Company, are not similar and are unlikely to cause confusion among the relevant public—is entirely justified. 
In summary, the use by Company C of its registered trademark and the mark “VEP1-12” on its products is unlikely to cause confusion. Therefore, it cannot be determined that Company C’s use of the registered trademark and the mark “VEP1-12” infringes upon the registered trademark rights of Company A in “VEP.” The challenged administrative reconsideration decision clearly established the facts and correctly applied the law; hence, the court does not support the plaintiff’s claims. In accordance with Article 69 of the Administrative Litigation Law of the People’s Republic of China, the court of first instance ruled against the plaintiff, Schneider Electric (Xiamen) Switchgear Co., Ltd. 
Guided by the principle of efficiency and taking into account the common interests of the two companies, the second-instance court reached a settlement through mediation. 
[Relevant Statutes] Article 12 and Article 28 of the Administrative Reconsideration Law; Article 52 and Article 59 of the Trademark Law; the Supreme People's Court’s Interpretation on Several Issues Concerning the Application of Laws in the Trial of Civil Disputes Involving Trademarks (Fa Shi [2002] No. 32); Article 10 of the Supreme People's Court’s Provisions on the Trial of Administrative Cases Relating to Trademark Grant and Confirmation of Rights (Fa Shi [2017] No. 2); Article 69 of the Administrative Litigation Law. 
[Lawyer’s Perspective] Our firm represents the third party, Company C, in this case. 
We believe: 
First, the term “VEP” has lost its distinctiveness and its function of identifying the source of goods. The relevant public generally, directly, and unintentionally perceives it as a product model or a generic name, and no longer associates it with any specific producer. 
1. Authoritative standards and authoritative bodies have listed “VEP” as a generic name. 
“VEP” is an acronym derived from English terms included in national and industry standards, and it constitutes a legally recognized generic term. In the national standard “High-Voltage AC Circuit Breakers” (GB 1984-2003) and the mechanical industry standard “Solid-Insulation Embedded Poles for High-Voltage AC Vacuum Switchgear” (JB/T 11203-2011), “V” stands for vacuum circuit breaker—vacuum circuit–breaker; “EP” stands for solid-insulation embedded pole—solid–insulation–embedded pole. The combination of “V” and “EP” refers to the solid-insulation embedded pole type vacuum circuit breaker, which is a legally recognized generic term. 
The Secretariat of the National Technical Committee for Standardization of High-Voltage Switchgear Equipment (hereinafter referred to as the “Standardization Committee”) has, through three replies, confirmed that both “VEP” and “VEP1-12” are widely recognized industry-standard terms among industry standard-setting bodies and authoritative experts in the high-voltage switchgear sector. 
2. In the general perception of the relevant public nationwide, “VEP” has been widely, directly, and unintentionally understood to specifically refer to a particular category of goods, becoming an industry-standard generic term and being used as a product model designation. 
Across the country, at least 100 or more relevant companies—covering more than 20 provinces (including municipalities directly under the central government) and over 30 cities—generally recognize that “VEP” is a commonly used industry term and serves as a product model designation. This understanding is not limited to any particular time or place; rather, it represents a long-standing, widespread recognition among relevant companies nationwide. The aforementioned companies all operate in the high-voltage switchgear industry, encompassing both manufacturers and sellers as well as buyers and users. This group thus constitutes the relevant public within the meaning of trademark law. 
3. The plaintiff’s own act of downplaying the “VEP” mark has caused the trademark to lose its distinctiveness and its ability to identify the source of the goods. 
The plaintiff, through its own years-long and continuous dilution of the trademark’s distinctiveness in the course of using “VEP,” has consistently employed “VEP” as a product model in commercial activities—including product application documents, product manuals, certificates of conformity, nameplates, industry-leading publications, and promotional materials—without paying adequate attention to affixing the ® symbol or emphasizing the trademark’s distinctive function. As a result, “VEP” has lost its distinctiveness and its ability to identify the source of the goods precisely because of its own repeated use. 
II. The use of the letter combination “VEP1-12” by Company C is for the functional purpose of the product and falls within the scope where the “VEP” trademark has become generic. It is not intended to identify the source of the goods, will not cause confusion or misidentification among the relevant public, does not constitute trademark use under Article 48 of the Trademark Law, and therefore does not amount to infringement. 
1. Subjectively, Company C did not use “VEP1-12” for the purpose of identifying the source of goods, nor did it have any need to capitalize on the reputation of the plaintiff’s “VEP” trademark. 
First, Company C clearly marks its registered trademark on both the product and its packaging, using “VEP1-12” solely as the product model designation on adhesive strips, metal nameplates, and instruction manuals. Moreover, “VEP1-12” is used in conjunction with other elements and features a unified design aesthetic, distinctly different from the plaintiff’s trademark combination of “Huatech” plus “VEP,” and thus will not cause confusion or misidentification among the relevant public. Company C has never used the disputed mark in product promotion or commercial transactions; rather, it is employed exclusively in the usage and maintenance phases. The mark is not intended to identify the source of the goods but is instead designed to help technicians easily recognize equipment parameters during maintenance. Given that vacuum circuit breakers operate under high voltage, opening the cabinet doors during operation is strictly prohibited to prevent injury or death. Consequently, personnel can only identify the product model through a small glass window and perform appropriate maintenance accordingly. To facilitate this observation and maintenance process, Company C has placed the model designation “VEP1-12” on the right side of the product’s adhesive label, in compliance with safety standards and industry practice. 
Second, the parent company of Company C, Company G, is one of the top three transformer manufacturers in China. It holds a well-known Chinese trademark and has received 12 national-level honors and 38 provincial- and city-level honors. With over 50 patents to its credit, it occupies a leading position in the industry. In contrast, the “VEP” trademark has been recognized as a famous trademark only in a specific region—Xiamen, Fujian—and does not enjoy high visibility nationwide. Subjectively, Company C had no need to associate itself with the “VEP” trademark, and there was no motive for causing confusion regarding the source of the goods. 
2. Objectively speaking, the mark “VEP1-12” used by Company C is not similar to the mark “VEP” used by the plaintiff and will not cause confusion among the public regarding the source of the goods. Although “VEP1-12” includes the alphabetical elements of “VEP,” the two marks are in fact not similar at all. Vacuum circuit breakers are expensive, specialized equipment that is not commonly available on the general consumer market; they are typically procured through bidding processes, with the bidding party specifying the exact parameters and model. Unlike ordinary consumers, the relevant public for solid-insulated pole-type vacuum circuit breakers possesses specialized knowledge and exhibits a high level of cognitive ability and due diligence. With only ordinary attention, the public would directly associate “VEP1-12” with the product’s functional characteristics, such as its specification and model—namely, “a solid-insulated pole-type vacuum circuit breaker with design serial number ‘1’ and rated voltage of ‘12’ kV”—rather than linking it to the vacuum circuit breakers manufactured by the appellant. Consequently, objectively speaking, “VEP1-12” cannot possibly serve to indicate the source of the goods. 
In the context of infringement upon the exclusive rights to a registered trademark, trademark similarity refers to confusing similarity—that is, similarity sufficient to cause market confusion. A simple, mechanical comparison of the constituent elements of the trademarks is insufficient for making such a determination. The defendant, the B government, handled the matter appropriately based on the specific circumstances by conducting a holistic comparison between “Huatech + VEP” and “+ VEP1-12.” This approach is consistent with Article 52 of the Trademark Law and relevant judicial policies, enabling it to delineate the boundaries between the marks to the greatest extent possible—thus complying both with the law and with common sense. 
3. Company C’s use of the letter combination “VEP1-12” constitutes fair use. This use is for the functional purpose of the product and is not intended to identify the source of the goods. 
IV. The administrative reconsideration procedure conducted by the defendant B government was lawful. 
The respondent, Government B, strictly followed the "Administrative Reconsideration Law of the People's Republic of China" and its related provisions in accepting, reviewing, holding hearings, issuing reconsideration decisions, and serving such decisions to all parties involved in the reconsideration. The entire reconsideration procedure fully complied with legal requirements. 
In summary, we believe that the reconsideration decision made by Government B is factually clear, supported by sufficient and conclusive evidence, procedurally lawful, and correctly applies the relevant laws. Company C has not infringed upon the plaintiff’s exclusive rights to the VEP trademark.