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BharatPE v. PhonePE DISPUTE: - SUFFER DUE TO SUFFIX

Introduction

The Trademark Act, 1999 under Section 2 (zb) defines “trade mark” as a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours…”

With the globalization of trade, brand names, trade names, marks, and other intellectual property have grown in value, it necessitates to have consistent minimum standards of protection and efficient enforcement mechanisms, as recognized by the TRIPS. As a result, the previous Indian Trade and Merchandise Marks Act, 1958 was thoroughly reviewed and amended, and the new Trade Marks Act, 1999 was enacted.

India, as a common law country, also observes common law principles, and as a result along with the codified law, provides for trademark infringement and passing off actions. Both infringement and passing off proceedings are recognized under Section 135 of the Trade Marks Act.

On April 15, Hon’ble Justice C. Hari Shankar of the Delhi High Court decided an interim judgement in a commercial suit between PhonePe and BharatPe titled as Phonepe Pvt. Ltd. v. EZY Services & Anr, which is regarding the issue whether use of the suffix "Pe" in the "BharatPe" mark constituted infringement of the registered mark "PhonePe" and passing off. The Plaintiff, PhonePe Pvt. Ltd., claimed that Defendant No. 2, Resilient Innovations Pvt. Ltd., had violated their trademark rights in the mark PHONEPE by adopting and using the mark BHARATPE. The Court found no infringement and established the criteria for making such a finding.

Bone of Contention: Identical Suffixes

Through their separate Applications, the plaintiff and defendants provide online payment services. Unlike the defendants'(EZY Services/BharatPe) services, which are only available to merchants, the Plaintiffs'(PhonePe) services are available to everyone who downloads the App. The marks 'PhonePe' and 'BharatPe' are used by the plaintiff and defendant, respectively. The plaintiff claimed that the defendant's mark and use of the term "BharatPe" infringed on its registered trademark and amounted to the defendant passing off their services as the plaintiff's. As a result, the plaintiff sought a permanent injunction, among other reliefs, prohibiting its use of ‘Pe' or any deceptive variant of ‘PhonePe,' which is identical and/or similar to the Plaintiff's trademarks ‘PhonePe,' in connection with payment services or in any other manner amounting to trademark infringement and passing off of the Plaintiff's trademarks. These proceedings concern an interim application for an interim injunction filed under the Civil Procedure Code's Order XXXIX Rules 1 and 2.

The Defendants are a near-billion-dollar firm with a recent valuation of close to a billion dollars, whereas the Plaintiff is a startup funded by Flipkart which has already surpassed the billion-dollar mark. Both companies are industry leaders. According to industry sources, using the word "Pe" instead of "Pay" in an app or website generates a high level of recall value among consumers and merchants as the word is translated into Hindi, which in the case of PhonePe would indicate "on the phone." This may cause users to believe that both apps are owned by the same company.

Arguments of Both the Parties

Both the parties presented their arguments before the Court as-

On behalf of the Plaintiff (PhonePe)

1) Being the earliest date of registration of the mark ‘PhonePe’ with effect from the month March 2016, it holds the power to claim it’s right on the mark.

2) Trademarks of PhonePe in English as well as in Devanagari script are used since 2015 and the app having more than 100 million downloads.

3) The use of “पे” by PhonePe is an interesting innovation by them and having translation of it as English word ‘Pay’. Further in English language “Pe” word does not have any meaning and it’s a pure invention by the plaintiff.

4) By combining the word ‘Pe’ with ‘Phone’ it becomes a logical and an essential part of the plaintiff’s trademark. Here the capital ‘P’ in ‘Pe’ refers that it is a Suffix.

5) Plaintiff’s reputation and goodwill can be seen by lots of advertisement, sponsorship, articles and involvement in public Activities like sponsoring Indian premier league teams etc.

6) Defendant’s app “BharatPe” started the use of mark in 2018 which majorly affected the plaintiff’s reputation and goodwill, because defendant’s app is also operating similar operations as plaintiff’s app and those having identical mark is wrongful and a breach of Trademark laws.

On behalf of the Defendants (BharatPe)

1) Plaintiff was not a permitted user of the word “Pe” or “पे” the registration acquired by the plaintiff is of entire word “PhonePe” and its different variants.

2) The word “BharatPe” is used by the defendant in Bonafide intention since 2018 having more than 5 million downloads.

3) The word “Pe” or “पे” is not used by defendant as a standalone mark and it’s always used by a combining word “Bharat”. Same in the case of plaintiff. Compare as a whole, marks of plaintiff and defendant are Completely different.

4) No objection was being raised by the Trade Mark Act, 1999 under section 11 while registering defendant’s mark.

5) The Suffix “Pay” was also used by many other apps like Google Pay, Amazon Pay etc. Having the same meaning of “Pe”, therefore using word “Pe” is common to trade and descriptive to the services provided by the app.

6) Having an evident difference between the marks of plaintiff and defendant, defendant therefore is not damaging the goodwill or reputation of the plaintiff and it is working to provide customers it’s services with bona fide intentions and not defaming or using any kind of reputation of its competitors in the market.

Anti-Dissection Rule: Are these Suffixes really Conflicting?

The Anti-Dissection Rule is a kind of principle in trademark law, it’s basic function is to compare the conflicting trademarks as a whole and not to divide the trademark in parts because it based on customer’s view point. In the present case, the plaintiff argument is that the word “Pe” and same in Devanagari script is being copied by the defendant. Here important to note is that the whole trademark of plaintiff is “PhonePe” and they are blaming the defendant for infringement of trademark for only the Suffix i.e., ‘Pe’. Now according to Anti-Dissection Rule, the word that is conflicting is “Pe” only, which is a part of the trademark owned by the plaintiff and not the whole trademark because plaintiff has a trademark owned as “PhonePe” and Defendant has a trademark owned as “BharatPe”. Both trademarks when compared as a whole under the Anti-Dissection Rule of Trademark law are completely contrasting and there is no point arising of any breach of trademark under the Rule. The simple reasoning behind this rule is that when a customer uses any service, they have a common sense of what they are using. If any service is provided by PhonePe to a customer, then the customer knows the reputation of that service provider by knowing its name as a whole i.e., ‘PhonePe' not by the word ‘Pe’ only, same with the Defendant’s application. Therefore, by taking the name as whole sufficient dissimilarities are evident and a suffix in any trademark cannot prohibit another from using that same suffix again.

Thus, it held that conflicting marks must be examined and compared in their entireties and even if a dissected part of a trademark is identical, it cannot hold the defendant liable for infringement of trademark nonetheless the conflicting part is essential feature or the dominant part of the plaintiff.

Observations and Final Remarks of the Court

The Court addressed the problem of similarities between the two marks, comparison of the marks as a whole, and comparison of the ‘dominant' portions of the mark in deciding whether or not the defendants should be barred from using the ‘BharatPe' mark.

The plaintiff had not individually registered parts of the ‘PhonePe' mark, according to Section 17 of the Trade Mark Act. Therefore, the Court ruled that ‘PhonePe' and ‘BharatPe' were composite marks, and that the plaintiff could not claim monopoly on the suffix “Pe” because it connoted pay and was descriptive of the plaintiff's payment service. The Court cited the Supreme Court's decision in Kaviraj Pandit Durga Dutt Sharma v. Navaratna Pharmaceutical Laboratories, which said that trademarks must be compared as a whole which is sometimes referred to as the "anti-dissection" rule. The Court decided that simply misspelling pay as ‘Pe' would not entitle the plaintiff to exclusivity. The Court did, however, make an exception in cases where the descriptive or generic mark had gained distinctiveness or secondary meaning. The Court cited the Marico decision of the Delhi High Court as well as Section 9 of the Act to hold that trademark protection could not be sought over descriptive marks unless they acquired distinctiveness or secondary meaning. As a result, the Court stated that the plaintiff may build a case for infringement if it could show that the ‘Pe' suffix had gained distinctiveness and a secondary meaning. However, the court determined that the marks were completely different because the phrases "Phone" and "Bharat" were phonetically dissimilar, and the triangular device in defendant’s mark was original and not used by the plaintiff. The Court also dismissed claims of similarity based on the fact that both marks were written in the same font and were purple in color. The plaintiff was an online payment portal, whereas the defendants supplied a single QR code foundation through which clients could interact with consumer-facing UPI-based apps, including the plaintiff's app. Thus, according to the Court customers who interact with the apps should be able to tell the difference. As a result, the Court denied to award an injunction stating that the alleged similarity between the non-essential, unregistered component of the composite mark did not raise the issue of infringement.

The Court also looked into the law surrounding the "dominant mark" test. The Court cited a decision by a Division Bench of the Delhi High Court in South India Beverages, which stated that while a mark must be regarded as a whole, components of a mark can be given importance or "dominance" in the case of composite marks and if one aspect is more prominent than others then it would be considered as dominant mark. The plaintiff claimed that "PhonePe" was a combination of the terms "Phone" and "Pe," with "Phone" being a popular dictionary word and the suffix "Pe" not being a dictionary word, making it the trademark's dominating feature. Similarly, the word "Bharat" was publici juris in the defendant's trademark, and "Pe" was the dominant part of the mark "BharatPe." On the basis of the facts, the Court found that the assertion that ‘Pe' formed to be a dominant part or essential character of the marks, especially because it was written with a capital ‘P', the Court, however, was not persuaded by the argument and did not determine "Pe" to be the dominating portion, hence the marks could not be dissected for comparison.

Conclusion and Way Forward

We believe, Court followed the reasoning that the use of misspelt words referring to a generic word or a word of another language cannot be prohibited. There is also a difference in the operations of both the applications, because the method and services provided to customers are not identical. Although the difference in the services and methods of the applications are not that big but it is not identical. Lastly, we believe that the use of word “Pe” by the defendant is completely within the limits of trademark law in India and it’s a mere use of suffix only.

Need of concrete rules and regulations is must in dealing with the misspelt words in a trademark or in the use of Suffixes in a trademark. Currently, there is not any such kind of laws present in India and the observation of court in such matters is also vague, so it is must to regulate this area of trademark law to avoid future conflicts like this case.


Title Image: Law Street Journal


This article has been written by Nikita Goyal and Arjun Bohare. Both of them are second year student of law studying in ILNU, Ahmedabad.