Trademark Dispute Between PhonePe and BharatPe – An Overview

Trademark Dispute
Karan Singh
| Updated: Jun 26, 2021 | Category: Trademark

In a recent Trademark dispute between PhonePe Pvt. Ltd. (Petitioner) and Ezy Services & Anr. (Defendant) on April 15, 2021, the judge of the Delhi High Court comprising of Hon’ble Justice C. Hari Shankar, pronounced a prominent judgement in a commercial suit filed decided a provisional application between BharatPe and PhonePe regarding whether the use of the suffix ‘Pe’ in BharatPe mark amounted to a violation of the registered mark PhonePe & passing off. The procedures of this case emphasise a provisional application seeking a provisional injunction under Order XXXIX temporary injunctions and interlocutory orders Rule 1 & 2 of the Civil Procedure Code. In this write-up, we are going to discuss the recent Trademark dispute between PhoenPe and BharatPe. But before we discuss the Trademark dispute between PhonePe and BharatPe, let us first understand the meaning of Trademark Registration?

What is Trademark Registration?

A Trademark can be defined as the distinctive identity that makes your company or business, product or service stand out from the rest in the marketplace. A registered Trademark is your company’s Intellectual Property (IP). It safeguards the investment made into creating loyalty & trust among your consumers. The Trademark Registration provides the right to sue against others who try to imitate or copy your Trademark & avoid others from using an identical Trademark to the one registered by you.

An Overview of Trademark Dispute (PhonePe Vs BharatPe)

The petitioner (PhonePe) has filed a suit against the defendant (BharatPe), seeking a permanent injunction & other remedies against the use of the defendant of “Pe” or any similar deceptive mark to the Trademark of the plaintiff (PhoenPe) before the High Court of Delhi. Regarding the payment services or in any other manner amounting to the Trademark Infringement of the petitioner, or passing off, by the defendants of their services as those of the petitioner. Both PhonePe and BharatPe are online payment service providers. In contrast, PhonePe works with customer and merchants, both and BharatPe or EZY Services has a limited merchant business.

The Court dispersed the application and rejected to permit a provisional injunction against the defendants and correctly held the parties cannot miswrite illustrative or generic works to claim exclusivity over them, particularly at the apparent stage unless there is wide-ranging evidence that such incorrect spelling has acquired secondary meaning via continuous commercial use, i.e., different from the literal meaning which is an element of the High Court has held to be a matter of evidence & trial when the suit is finally heard and decided.

What are the Key Interpretations of the Court Concerning Infringement under the Trademarks Act? – Trademark Dispute

The Delhi High Court’s decision in this Trademark dispute seems to be premised based on the following three different principles. In determining this Trademark dispute whether or not the defendants must be ordered from using the “BharatPe” mark, the Court considered the grant of similarity between two marks. In this context, the evaluation of the marks as an entire and comparison of “Dominant” parts of the mark was especially considered by the Court, as described below.

Infringement under the Trademarks Act
  • The Anti-Dissection Rule:

A question arises whether Trademarks should be compared ultimately? The Court noted that the petitioner has not individually registered the parts of the “PhonePe” mark.

Trade Marks Act, 1999[1] (Section 17 (1)), specially confers the rights to use the complete Trademark and Section 17 (2) clarifies that such a composite Trademark Registration wouldn’t give exclusive rights over any part of the registered Trademark where the part was not subject of a separate application or where the part hold any term/word which was familiar to the Trade or identical.

The Court cited the case of Kaviraj Pandit Durga Dutt Sharma, where the Supreme Court had held that Trademarks were to be compared as an entire. This is called the “Anti-Dissection” Rule. The Court cited a series of decisions permitting this principle, like Ashoka Chandra Rakhit Ltd vs Registrar of Trademarks and Ajanta Pharma Ltd. Vs Stiefel Laboratories, Inc & Anr. Conflicting combined marks are to be compared by seeking them as an entire, rather than dividing the marks into their component parts for comparison. This is the “Anti-Dissection” Rule. The grounds for the rule is that the marks create the business-related impression of a composite Trademark on a general prospective buyer as an entire, not by its parts. Hence, conflicting marks should be compared in their total.

The Court ruled that while applying the principles as mentioned above to the facts in hand, the following positions merged that is;

  1. BharatPe & PhonePe were both composite marks;
  2. The marks couldn’t be cleft into “Phone” & “Pe” in the matter of petitioner and “Bharat” & “Pe” in the matter of the defendant;
  3. The petitioner couldn’t claim exclusivity over the term “Pe” as it was simply an incorrect spelling of the word “PAY”; therefore, no violation of infringement could be claimed on the origin part of a registered Trademark.
  • The Dominant Mark Test:

At this point, the Court examined the law on the prevailing mark test. The Court referred to a judgment of a Division Bench of the Delhi High Court in South India Beverages. In these beverages, the Court had explained the test of “Dominant Mark”. The Court held that while a mark is to be considered as a complete, significance or supremacy could be granted to mark parts in the matter of composite marks and where a specific aspect enjoys importance concerning other elements or aspects, it would be a “Dominant Mark”. The Court has ruled that while the general rule under Section 17 of the Trademarks Act was that marks should be measured as complete, courts were required to remember the comparative supremacy of mark parts. The test was whether any mark part of the petitioner was dominant or was a vital feature and, if so, whether such dominant part was violated by the defendant. The Court ruled that there might be substance to the claim that “Pe” constituted a foremost part or vital feature of the marks, especially as it was a writer with a capital “P”.

It held that even though a Trademark is not to be cleft into parts and the parts compared with equivalent parts of the allegedly violating Trademark to assess the existence of a violation, nevertheless, if a “dominant part” or “vital aspect” of the petitioner’s mark is copied by the defendant, the Court may legitimately inspect whether, by such replication, the violation has taken place.

  • Generic or Inclusive of Descriptive Words or Parts of Marks:

A query arises on a deceptive similarity of the marks of the defendant. The Court observed that while selectiveness couldn’t be claimed in parts of a registered mark, copying of the vital or prevailing features of such marks could constitute infringement. It also simplified that generic marks or illustrative marks are not misspellings & exclusive of descriptive words would not grant exclusivity. Further, the Court observed that the petitioner been able to create the word “Pe” had acquired uniqueness and secondary meaning; it might have been capable of making out an infringement case.

The Court held that such elements were not enough to comprise a case for deceptive similarity. Interestingly, the Court ruled that the nature of services delivered by the parties were different, as the petitioner was an online payment portal while the defendants offered a single QR code which consumers could work with consumer-facing UPI-based apps, comprising the app of the petitioner. The Court observed that such consumers who are using the apps could be expected to know the difference. Hence, the Court rejected the grant of injunction.

Conclusion

In the Trademark dispute between PhonePe and BharatPe, as we discussed above, the Court ruled that there was no case for permit of provisional injunction against the defendants. The Court observed that except for the common word “Pe”, it cannot be established that the marks “BharatPe” and “PhonePe” are confusingly similar. Excluding the word “Pe”, these are two different words altogether with no commonality whatsoever. This judgment gives out as a primer on all things on Trademark Law and demonstrates other legal principles, especially on Trademark Laws.

Read our article:Drawbacks Associated with Trademark Hearing through Video Conferencing

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Karan Singh

A legal writing enthusiast, a wanderer, and a zealous reader. After gaining a lot of knowledge about the diverse legal topics and developing research skills, Karan joined the league of legal content writers to deliver quality-rich blogs.

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