Introduction
Recently, a Single Judge Bench of the Delhi High Court comprising of Mr Justice C. Hari Shankar. The judgement dwells into the complexities of trademark law, weighing the need of maintaining a brand’s identity while still allowing for healthy market competition. It emphasizes the importance of a trademark’s distinctiveness and the possibility for customer misunderstanding when similar marks are utilized. The case is a dispute between two companies, PhonePe Private Limited (plaintiff) V. Ezy Services & Anr. (defendants)[i], over the use of online payment service trademarks. The plaintiff claims that the defendants’ use of the mark “BharatPe” violates their registered trademark “PhonePe” and constitutes passing off.
Trademarks in question are depicted as below:
Facts of the Case
The facts includes about the key information of PhonePe and BharatPe.
PhonePe: PhonePe has registered trademarks for its name and logos, dating back to March 29, 2016, for a variety of electronic payment and telecommunications services. The “Pe” suffix in “PhonePe” is regarded as a vital, dominating, and distinguishing characteristic of the brand’s trademarks.
PhonePe’s transliteration of “Pe” from the Devanagari script is a creative adaption, as it is not a direct translation of the Devanagari “पे”, which would generally be interpreted as “Pay”. The visual components of PhonePe’s trademarks, such as the color scheme and font, add to the company’s distinctive character and are protected by trademark law to avoid confusion with other brands. It has been registered under several distinct categories.
- Class 38: Communications and telecommunications services related to electronic bill payment systems and online message transmission.
- Class 35 & 9: Business consulting services in payment processing and computer software for online transactions and electronic payments.
- Class 36: Financial services, including electronic funds transfer and credit card services.
- Class 42: Providing a website featuring temporary use of non-downloadable software for payment processing.
BharatPe: BharatPe’s services are intended to facilitate payments across various consumer UPI-based applications, as well as to provide a platform for merchants to accept payments via a single QR code that is compatible with a variety of UPI-based applications, including GooglePay, Paytm, WhatsApp Pay, AmazonPay, SamsungPay, and PhonePe. For this reason, the defendants utilized the tagline “Bharat Pe Sab Chalta Hai”. The domain name www.bharatpe.com was registered in the name of its founder on November 15, 2017, and online payment services under the same mark began in August 2018.
Arguments
Plaintiff: The plaintiff, PhonePe Private Limited, raised several issues against the defendants, Ezy Services, regarding trademark infringement and passing off. Here are the key issues:
The plaintiff and defendants employ the trademarks “PhonePe” and “BharatPe” respectively. The plaintiff alleges that the mark used by the defendants, as well as the use of the word “BharatPe” itself, infringes the plaintiff’s registered trademark and amounts to passing off, by the defendants, of the services provided by them as those of the plaintiff. They also claimed that the defendants were passing off their services as those of the plaintiff by using a deceptively similar mark, which could confuse consumers and lead them to believe there was an association.
They also contended that “Pe” was the dominant and distinguishing feature of their trademark, and that they were the first to use this feature in the market, establishing substantial goodwill and reputation, and that “Pe” was an invented word, not found in the English dictionary, with no obvious meaning, making it the dominant feature of their trademark when combined with the common word “phone.”
Defendant: The defendants claim that the suffix ‘Pe’ is not a unique or distinguishing element of the plaintiff’s trademark. They argue that ‘Pe’ is a widespread phrase that does not refer directly to the plaintiff’s services. The defendants allege that they have been using the ‘BharatPe’ mark since 2018 and have built their own goodwill and reputation apart from the plaintiff’s trademark.
They underline the differences between their trademark ‘BharatPe’ and the plaintiff’s ‘PhonePe’, claiming that the two marks are physically, architecturally, and phonetically unique, decreasing the possibility of misunderstanding. The defendants argue that the word ‘Bharat’ is publici juris (of public right) and cannot be monopolized by a single entity, rendering the combination with ‘Pe’ non-infringing.
The suffix “Pe” was already the subject of prior use as part of the registered trademark “CardPe”, third-party rights are irrelevant in infringement and passing off actions. Furthermore, the plaintiff has secured the trademark of “CardPe” along with goodwill. Assignment Deed dated September 19th, 2019. Acquisition of a secondary meaning is a matter of evidence and trial, and it cannot be pleaded based on three years of use. Several entities use the term “Pay” as a suffix, including Google Pay, Amazon Pay, Samsung Pay, and WhatsApp Pay.
Relevant Laws
- Principle of Acquiescence
Section 33[ii] expressly recognizes the principle of acquiescence in the matter of trademarks by providing [in subsection (1)] that a proprietor of an earlier trademark cannot seek a declaration that a later trademark of another person is invalid, or oppose the use of the later trademark, if he has acquiesced in such use for a continuous period of five years. This rule, however, is statutorily inapplicable where the subsequent trademark was not registered in good faith.
- The Pianotist Test
The Pianotist test, proposed well than a century ago, has been consistently endorsed by the Supreme Court as the ultimate criteria to be used when assessing rival trademarks. According to this test, the Court must appraise the rival trade marks by their sight and sound, and consider,
(a) the goods to which they are to be applied
(b) the nature and kind of customer who would be likely to buy those goods,
(c) all surrounding circumstances and
(d) the consequences which would follow if each of the marks is used in the normal way as the trade mark for the goods of the respective owners.
- The Anti-Dissection Rule
The anti-dissection rule is based on a common sense observation of customer behaviour: the normal shopper does not remember all of the particular elements of a composite mark, but rather the overall, general impression generated by the composite as a whole.
Para 29 of Kaviraj Pandit Durga Dutt Sharma[iii]:
- Where the two marks are identical no further questions arise; for them the infringement is made out. When the two marks are not identical, the plaintiff would have to establish that the mark used by the defendant so nearly resembles the plaintiff’s registered trade mark as is likely to deceive or cause confusion and in relation to goods in respect of which it is registered (Vide Section 21). But this apart, as the question arises in an action for infringement the onus would be on the plaintiff to establish that the trademark used by the defendant in the course of trade in the goods in respect of which his mark is registered, is deceptively similar. This has necessarily to be ascertained by a comparison of the two marks – the degree of resemblance which is necessary to exist to cause deception not being capable of definition by laying down objective standards. The resemblance maybe phonetic, visual or in the basic idea represented by the plaintiff’s mark. The purpose of the comparison is for determining whether the essential features of the plaintiff’s trademark are to be found in that used by the defendant.
- Dominant Mark Test
According to this, if any part of the plaintiff’s mark is determined to be dominant, the Court must investigate whether the defendant has infringed on that dominant part. It was recognized that the Court did not violate the anti-dissection rule by identifying a dominant component of the plaintiff’s mark and determining whether it was infringed by the dominant part of the defendant’s mark. As a result, the marks themselves were deconstructed. This principle was briefly, stated, in Para 19 of the report in South India Beverages[iv], thus:
- “Though it bears no reiteration that while a mark is to be considered in entirety, yet it is permissible to accord more or less importance or ‘dominance’ to a particular portion or element of a mark in cases of composite marks. Thus, a particular element of a composite mark which enjoys greater prominence vis-à-vis other constituent elements, may be termed as a ‘dominant mark’.”
Decision
The High Court of Delhi dismissed the application, stating that the facts and submissions provided by the plaintiff and defendants do not need to be addressed, particularly at this preliminary level. The defendants are, nevertheless, instructed to keep accounts of the amounts received as a result of using the disputed “BharatPe” mark and to file audited statements with this Court every six months.
[i] Phonepe (P) Ltd. v. Ezy Services.( IA No. 8084 of 2019 in CS (COMM) No. 292 of 2019, decided on 15-4-2021 (Del).
[ii] The Trademarks Act, 1999
[iii] Durga Dutt Sharma v. Navaratna Pharmaceutical Laboratories (1965 AIR 980 )
[iv] South India Beverages (P) Ltd. v. General Mills Mktg. Inc (2014 SCC OnLine Del 1953.)
AUTHOR: Mr. Shreyas Mehta, student of Dharamashatra National Law University, Jabalpur
