This article has been written by Purvi Mehta pursuing Diploma in US Corporate Law and Paralegal Studies and edited by Oishika Banerji (Team Lawsikho). 

This article has been published by Sneha Mahawar.      

This article provides us an insight to the generic battle between Phone Pe and Bharat Pe thereby highlighting the necessary aspects of it. It is necessary to be acknowledged with the fact that PhonePe is a company which provides services of digital payment and finance and is accepted as a payment medium, whereas, BharatPe is a fintech company which deals with small merchants in India by offering QR codes which are used for UPI payments, financing a small business and a swipe machine for accepting cards. It is available for free through the QR codes. PhonePe can be used by anyone as it is not targeted to a certain area of society, whereas BharatPe cannot be used by everyone. While there are many such differences between these two giant ‘Pes’, our article behaves as a case analysis for the readers to be aware about the interesting generic wordplay between two fintech setups. 

Facts of the case 

In the case of PhonePe Pvt. Ltd vs. Ezy Services & Anr (2021), a single-judge bench of the Delhi High Court delivered a judgement in a commercial suit that was filed to decide whether the plaintiff was in its legal powers to demand for a permanent injunction on BharatPe for using the suffix ‘Pe’ in their trademark ‘BharatPe’. 

In this case, the plaintiff had filed a suit against the defendant to seek a permanent injunction for using the suffix ‘Pe’ which was identical to the plaintiff’s trademark Phone Pe. Both the companies provide online payment services. Although, the plaintiff provides these services for individuals and merchants whereas the defendant provides these services to merchants only. 

The Delhi High Court refused to grant a permanent injunction against BharatPe and held that generic words or descriptive words like ‘Pe’ does not give the exclusive right to the owner to use the word as he wants. There is an exception to this rule. If there is any evidence to prove that such a generic word has acquired a secondary meaning in the commercial sphere through its continuous use, such a word can be denoted as distinctive. Therefore, this exception was held to be a substantial aspect by the Court in this case.

Issue involved in the case 

Can PhonePe demand a permanent injunction of BharatPe from using ‘Pe’ in its suffix?

Arguments on behalf of the plaintiff

• The Plaintiff had started using the mark ‘PhonePe’ since 2015 and ‘BharatPe’ had started using from 2018 which gave the plaintiff’s trademark ample time to establish their goodwill in the market.
• The app has been downloaded over ten crore times.
• Transliteration of the Devanagari “पे” as “Pe” is an innovative word to the brand name and would be translated as “Pay”.
• The word ‘phone’ is an ordinary word and adding ‘Pe’ to it makes it an advancement which makes it different from others and plays a major role in the name “PhonePe”.
• The trademark had over time gained goodwill and reputation which had also been seen in partnerships, advertisements and in VIVO IPL 2019 and was endorsed by several celebrities.
• The “BharatPe” app provides similar services as to what “PhonePe” provides and that they can be downloaded from the same platforms that is the Apple App Store and Google Play.
• The defendants purposely started using the mark “BharatPe” in 2018, and by that time the “PhonePe” brand was built and was very well established.
• The word ‘Pe” emphasises their brand and that being the common feature between the two trade marks amounts to the similarity between the two. 
• The use of the word “Pe” as a suffix is bound to come to a consumer’s mind while seeing the two on the same platforms and as an impression of the same connection.
• The plaintiff had contended that their services are the same as that of the defendant and that they had copied their trademark ‘Pe’ which counts as infringement of trademark.

Arguments on behalf of the defendant

• The plaintiff was not the registered user of the words, “Pe”, the Devanagari “पे” or “Pay”. The registration had been acquired on the whole word i.e. “PhonePe”.
• “BharatPe” was acquired 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 the services began in 2018 with bona fide interest.
• The “BharatPe” mark was coined by the defendants and also the services that they provide are different from “PhonePe”. The ideology behind it was to provide a QR code for merchants to provide an easy payment method, which would work for all the customer unified payments interface (UPI)- based applications, such as Whatsapp Pay, Samsung Pay, Paytm, PhonePe and Google Pay.
• The defendants also used the tagline “Bharat pe sab chalta hai”.
• It had more than 50 lakhs downloads by the end of the year 2020.
• The Trade Marks Registry issued the first examination report for registration of the “BharatPe” marks and it did not cite any of the plaintiff’s marks, for raising issues under Section 11 of the Trade Marks Act, 1999, as the plaintiff had not filed a trademark for the specific word “Pe”. 
• They relied on the list of trademarks which were registered before the “PhonePe” mark of the plaintiff, such as “Phone Pe Store”, “Phone Pe Deal” and “Phone Pe Crore”, etc. These marks claimed user prior to the plaintiff and hence, the plaintiff could not claim exclusivity on the suffix ‘Pe’.
• The suffix was merely a spelling mistake of the word ‘Pay’, and that it is an invented word. They do not give any enforceable rights.
• The suffix ‘Pe’ was similar to the services and trade and was also laudatory to the services provided by the plaintiff so as to enable the customer to make payments through the plaintiff’s application.

Court rulings and observations

While resolving the issue of trademark infringement, the Delhi High Court considered the issue of similarity between PhonePe and BharatPe for deciding whether to grant an injunction to the plaintiff by considering and analysing multiple judgements by various Courts:

1. The Anti- Dissection Rule:

The Anti- dissection rule says that a trademark should not be compared in part but as a whole. The Hon’ble High Court referred to a landmark judgment in the case of Kaviraj Pandit Durga Dutta Sharma v. Navaratna Pharmaceutical Laboratories  (1964) where the court upheld the Anti-dissection rule. The court observed that the registered mark should not be dissected with the intent to the conflicting mark. The Court was not convinced on the plaintiff’s argument that the word or the suffix ‘Pe’ made a dominant feature of the plaintiff’s trademark and hence, the court ruled that “Phone Pe” and “BharatPe” were composite marks and such comparison should not be done by keeping the trademark separate, in fact the mark should be considered as a whole and the plaintiff could not claim rights over the suffix ‘Pe’, as it was a spelling error of the word ‘Pay’, therefore no infringement could be claimed over this. 

2. Does the dominant mark test apply in this case? 

The court had observed that there was no separate registration on the word ‘Pe’, hence, it could not claim trademark infringement on the same. The infringement in this case does not come in the picture merely because of the similarity between the non-essential, and the composite mark which is unregistered. This principle of separate registration was mentioned in the case of South India Beverages (2014) by the Delhi High Court and the relation between the two principles were explained. The division bench relied on a passage from McCarthy on trademarks and unfair competition, which was cited in the case of Stiefel Laboratories (2014), which stated that “the rationale for the rule is that the commercial impression of a composite trademark on an ordinary prospective buyer is created by the mark as a whole, not by its component parts. However, it is not a violation of the anti-dissection rule to view the component parts of conflicting composite marks as a preliminary step on the way to an ultimate determination of probable customer reaction to the conflicting composites as a whole”. 

3. Non-exclusivity of descriptive or generic marks:

It was observed that the party could not claim exclusivity over a mere descriptive or generic mark which was in fact not filed for a trademark. Although, the Court agreed on the exception to this principle in cases where the generic or descriptive mark had acquired secondary or peculiar meaning. The Court had dived into the case of Marico Limited (2020), wherein the court had clearly explained the idea of the acquired secondary meaning of a descriptive mark. This case also discussed the nature and character of a misspelt word when used as a trademark.

Conclusion

In 2021, “PhonePe” had filed an Intellectual Property infringement suit against “BharatPe” for registration of the trademark “PostPe” and other variations. The judgement was apparently in the favour of “BharatPe” which has spent a lot of money for marketing and publicising its BNPL product. Recently, “BharatPe” MD Ashneer Grover launched a gaming platform “CricPe” which also uses the suffix ‘Pe’ and contended that there is no monopoly on the suffix ‘Pe’ which also includes “PhonePe”. This gaming platform will pay cricketers and that is a whole different service. Thus, it was held that no exclusivity could be claimed by the plaintiff merely over the suffix ‘Pe’. Hence, from the judgement it can be deciphered that permanent injunction cannot be granted against the defendant for trademark infringement. This judgement provides a primer on the trademark infringement and its legal principles and provides a detailed understanding of the trademark laws and legal principles.   

References

1. https://lawessential.com/ip-case-laws/f/bharatpe-v-phonepe-who-owns-pe?blogcategory=IP+-+Case+Laws
2. https://www.lakshmisri.com/insights/articles/rule-of-anti-dissection-v-rule-of-dominant-feature-a-legal-conundrum/#

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