IPR Newsletter: PhonePe vs. BharatPe- CONCEPT OF DECEPTIVE SIMILARITY-May-2021

PhonePe Private Limited (“e PhonePe”) and EZY Services and Anr (“ BharatPe”) provides online payment services via their respective mobile applications. While the BharatePe’s services are available exclusively to merchants, PhonePe’s services are available to anyone who downloads the application. PhonePe, a Flipkart-backed company, is in the billion-dollar club while BharatPe is a near billion-dollar company with a recent valuation of close to a billion dollars hence both entities are leaders in the industry.

Facts of the case:

PhonePe and BharatPe use the marks ‘PhonePe’ and ‘BharatPe’ respectively. PhonePe had alleged that the BharatPe’s mark and the use of the word ‘BharatPe’ infringed its registered trademark and amounted to passing off by BharatPe of their services as that of PhonePe. Consequently, PhonePe sought permanent injunction against such usage. Also, important point to be noted is, BharatPe had sought to register the word mark ‘BharatPe’ under Class 9, the Registry had objected to it for being non-distinctive and the application was consequently abandoned.

Arguments: Whether BharatPe should be injuncted from using the ‘BharatPe’ mark?

While analysing PhonePe’s claim for infringement the Court held that “PhonePe” and “BharatPe” are both composite marks and ordinarily, therefore, these marks cannot be dissected into “Phone” and “Pe”, and “Bharat” and “Pe”.

PhonePe cannot claim exclusivity solely over the “Pe” suffix, as no infringement can be claimed on the basis of part of a registered trademark. The Court held that “Pe”, as used by PhonePe, admittedly connotes the expression “pay” and in as much as PhonePe as well as the defendants provides services by which online payments can be made, the expression “pay” is clearly descriptive of the services provided by PhonePe and BharatPe. By misspelling “Pay” as “Pe”, the legal position cannot change. Therefore, PhonePe would be as entitled to claim exclusivity over the suffix “Pe”, as it would have been, had the suffix in its trademark been “Pay”. The Court held that barring the common “Pe” suffix, it cannot be said that the trademarks of PhonePe and BharatPe are confusingly or deceptively similar.

Secondly Court analysed the law on the dominant mark test and stated that while a mark is to be considered as a whole, importance or ‘dominance’ could be accorded to parts of a mark in the case of composite marks and where a particular element enjoys prominence with respect to other elements, it would be a ‘dominant mark’. The Court had ruled that while the general rule under Section 17 of the Trade Marks Act was that marks must be considered as a whole, Courts were required to keep in mind the relative dominance of parts of a mark. The test was whether any part of PhonePe’s mark was dominant or was an essential feature, and if so, whether such dominant part was infringed by BharatPe. On facts, the Court ruled that there may be substance to the claim that ‘Pe’ constituted a dominant part or essential feature of the marks, especially as it was written with a capital ‘P’. Indian Courts have used the dominant mark rule to protect parts of a trademark only when such portions were adopted arbitrarily. Therefore, when the Court has noticed that ‘Pe’ is a deliberate misspelling of a descriptive term, it is surprising that the Court proposes that capitalization could have overriding importance. While the Court ruled that PhonePe could not claim exclusivity over ‘Pe’. The Court stated that some sophisticated consumers of the services of both parties would be aware of the differences between the parties, that is not sufficient to rule that there was no similarity.

Observations:

“Exclusivity can be claimed and infringement or passing off alleged, only in respect of the entire mark of PhonePe, and not in respect of part thereof. The registration of the whole mark cannot confer any exclusive rights, on the holder thereof, to any part of such registered mark”. The Court also noted that according to the legal position no exclusivity can be claimed, over a descriptive mark, or a descriptive part of the mark. Holding this, the Court also observed that PhonePe cannot claim exclusivity solely over the “Pe” suffix, as no infringement can be claimed on the basis”.

Conclusion:

The doctrine of deceptive similarity is widely used in the Courts in matters of trademark infringement. Trademark being of vital importance in business and its goodwill it is of high need to protect it from misuse and infringement. Judiciary has taken a keen interest in matters of Intellectual Properties and several principles and guidelines have been provided through various judicial decisions in order to make adjudication of cases of trademark infringement much smooth.