CASE ANALYSIS OF PHONEPE V/S BHARATPE
Author: Adina Evangeline G, III year of B.A.,LL,B. from Kristu Jayanti College of Law
FACTS OF THE CASE
PhonePe is an online payment app that lets anyone who downloads the app use it. BharatPe is also an online payment app but is only for merchants and it also grants loans to them. Some time back, a Single Judge Bench of the Delhi High Court comprising of Mr Justice C. Hari Shankar, pronounced a notable judgment in a marketable suit filed between Phonepe(P)Ltd. v. Ezy Services on 15th April, 2021, the complainant sued the defendant for the use of the suffix ‘Pe’ in mark as it amounted to violation of the registered mark ‘PhonePe’ and passing off
In respect of payment services ordinary or in any other manner which may amount to the violation of the complainant’s trade mark. It is important to note that the defendants’ services are available simply to merchandisers whereas the plaintiff’s services are available to anyone who downloads their app. The court dismissed the petition and denied to grant injunction against the defendant. The court held that the parties cannot misspell general words and hold exclusivity over them especially at the prima facie stage unless they have acquired a secondary meaning through nonstop marketable use, which the Honourable High Court has held to be a matter of trial and substantiation when the case is to be eventually heard and decided. The defendants were still directed to show the accounts of the profit earned using the ‘Bharatpe’ mark and to present the audit statements of six months before the court. In this case study, we will be looking at the interim order issued by the Delhi High Court in a trademark violation and passing off disagreement between online payment apps PhonePe and BharatPe, arguments by complainant and defendants, and crucial compliances of court.
Can PhonePe demand the permanent injunction of BharatPe from using ‘Pe’ in its suffix?
ARGUMENTS BEHALF OF THE PLAINTIFF
The complainant pled before the Delhi High Court that an ordinary person on coming across the mark ‘bharatpe’ would associate it with the mark of ‘PhonePe.’
The plaintiff had started using the mark ‘PhonePe’ by 2015 whereas ‘BharatPe’ was used only from 2018 which clearly gave enough time for the plaintiff’s trademark to establish their goodwill and reputation in the market.
The plaintiff’s trademark was registered prior to the defendant’s and ever since then the plaintiff’s app has been downloaded more than 10 crore time.
The ‘pe’ in the plaintiff’s trademark is an important and relevant feature is what was claimed by the plaintiff.
Along with it the plaintiff also claimed that the word ‘phone’ was a normal dictionary word whereas the ‘pe’ is an invented word which distinguishes it from others and thus plays the bigger role in the trademark ‘phonepe.’
Over the years the plaintiff’s trademark has gained sufficient goodwill and reputation which is seen in advertisements, partnerships, articles and by their active involvement in IPL 2019 and are endorsed by various celebrities.
The services provided by the defendant are same as that of the plaintiff and it has also copied the distinguishing trademark suffix ‘pe’ of the plaintiff’s trademark ‘PhonePe’ which amounts to infringement and passing off.
ARGUMENTS BEHALF OF THE DEFENDANT
“पे” or “Pe” as standalone marks were never used by neither the plaintiff nor the defendant in their business.
The mark ‘BharatPe’ was adopted and used from 2016 and later the domain name <www.bharatpe.com> was registered on 15-11-2017 in the name of its founder and in 2018 the online payment services began with a bona fide interest.
The ‘BharatPe’ trademark was invented by the defendants and is inherently different from the services which the plaintiff provides, also many companies use the suffix ‘pay’ in their names such as Google Pay, Amazon Pay, Samsung Pay etc.
The tagline “Bharat pe sab chalta hai” was used by the defendants as the idea behind this was to start a single quick response (QR) code for merchants which would work across all consumer unified payments interface (UPI)-based applications, such as Google Pay, Paytm, WhatsApp Pay, Amazon Pay etc.
The “BharatPe” app had been downloaded more than 50 lakh times till the end 2020.
In order to raise objections under Section 11 of the Trademarks Act, 1999, while examining the defendants “BharatPe” marks, did not cite any of the plaintiff’s marks as an earlier trademark in the first examination report, issued by the Trademarks Registry.
Prior to the “PhonePe” marks of the plaintiff, involving “Pe”, such as “Phone Pe Deal” “Phone Pe Store” etc, these earlier marks claimed that there were users prior to the plaintiff in registered trademarks. Therefore, the plaintiff could not claim to be the first one to use the “Pe”mark.
The suffix “Pe” was merely a misspelling of the word “Pay” and is an invented word which was admitted by the plaintiff. Phonetically, “Pe” and “Pay” are identical. The idea behind using the suffix “Pe” was to enable the consumer to phonetically pronounce the dictionary word ‘Pay’. Such misspellings, does not give any enforceable rights, where the original term is descriptive in nature. No exclusive rights can be enforced, in respect of such a misspelt word, unless the word has acquired a secondary meaning with respect to the plaintiff’s business.
The suffix “Pe” was common to the trade and services provided by the plaintiff which was to enable the consumer to pay using the plaintiff’s app.
(a) THE ANTI-DISSECTION RULE
Section 17(3) deals with the aftermath of the registration of parts of a mark. In the present case the complainant has not individually registered any allegedly infringed “PhonePe” mark which is why the provision assumes significance. Section 17 (1) specifically confers the right to the owner of a registered trade mark, “consisting of several matters”, the exclusive rights “to the use of the trade mark taken as a whole”.
The “anti- dissection” rule is that the conflicting composite marks are to be compared by looking at them, rather than breaking the marks up into their component parts for comparison. The reason behind this is the that an ordinary consumer looks at the mark as a whole and not in parts. Therefore, conflicting marks must be compared in their wholeness.
The anti-dissection rule is based upon an observation of customer behaviour that the the typical shopper does not retain all the individual details of a composite mark in his or her mind, but retains only an overall, general impression created by the composite mark as a whole. The overall impression created by the mark from the ordinary shopper’s observation in the marketplace is what may or may not lead to a likelihood of confusion and not the impression created from a neat and careful comparison as in legal analysis.
(b) DOMINANT TEST
Here the court referred to a judgment of the Delhi High Court in South India Beverages where the ‘dominant mark’ test was explained by the court.
The test was to see whether any part of the plaintiff’s mark was dominant or was an important feature, and if so, whether such dominant part was infringed by the defendant. The court ruled that there may be substance to the claim that ‘Pe’ constituted a dominant part or important feature of the marks, because it was written with a capital ‘P.’
Keeping in mind the Anti-Dissection Rule if a “dominant part” of the plaintiff’s mark is copied by the defendant, then the court shallintrospect ifinfringement has taken place by such imitation.
(c) NON-EXCLUSIVITY OF DESCRIPTIVE MARKS
The court held that though exclusivity cannot be claimed in parts of a registered mark, imitations of the dominant parts of such registered marks could be infringement. Misspelling descriptive words will not grant exclusivity and neither will descriptive marks.
The court held that if the plaintiff was able to prove that they had acquired second meaning then a case of infringement could have been made.
In the Marico case the court held that the descriptive mark should be given trademark only if it has been there for many years and even a descriptive word mark would be only associated with the same source.
The case of PhonePe vs BharatPe mentions that the plaintiff’s app was used to make online payments and used by customers whereas the defendant’s app was a QR based app for merchants and it had options for all UPI online payments within the app including the plaintiff’s app and thus both the apps differed in services. Additionally, the suffix ‘pe’ is the only thing similar in both the apps and apart from it there is nothing that is deceptive, similar, or confusing. The names of the apps ‘Phonepe’ and ‘Bharatpe’ are both composite words and thus cannot be separated into ‘Phone’ and ‘pe,’ ‘Bharat’ and ‘pe.’ The plaintiff cannot claim exclusivity or infringement solely on the suffix ‘pe’ as it has not been registered for trademark separately. ‘Pe’ is a misspelling of the English word ‘pay’ and is an invented word and thus is not eligible for exclusivity. “Phonepe” and “Bharatpe” are not even phonetically similar in order to claim infringement. For a part of the word to get exclusivity it should have been in use from a long period of time and the general public should be able to associate it with the same source but this is not the case here. From the judgement given that permanent injunction cannot be granted against the defendant for infringement by the single Judge Bench, took place after considering the case considering the anti-dissection rule, test of dominant mark and non-exclusivity of descriptive marks in the Indian Trademark law. Thus, permanent injunction will not be granted against BharatPe.This Judgement provides deep insight into the trademark laws, legal principles and serves as a precedent for the future cases to come.
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