INFRINGEMENT BY PARTS: DELHI HIGH COURT SAYS NO PROTECTION FOR “PE” IN PHONEPE

BEHIND THE DISPUTE

The Plaintiff (PhonePe Pvt. Ltd.) and the Defendants (EZY Services and Resilient Innovations Pvt. Ltd.)  provide online payment services to the users. While the plaintiff’s service can be used by both merchants and the consumers, the Defendants’ service is a merchant exclusive service that intends to accept payments from multiple online payment apps. The plaintiff has registered trademarks that include variants of marks “PhonePE”, “Phoneपे” and . The plaintiff contended that the transliteration of  as “Pe” was an ‘innovative and fanciful adaptation’ since otherwise  would have been translated into “Pay” and hence it was an ‘essential, dominant and distinguishing feature’ of the plaintiff’s marks. 

In an application dated 05.01.2018 filed before the Trademarks Registry (TMR), the Defendant No. 1 applied for the registration of mark  transliterated as BharatPe, i.e., “पे” was transliterated as “Pe” just like the Plaintiff. In the response of the filing, the plaintiff served a cease-and-desist notice to the defendant. In response to the notice, the defendant replied that it had decided to use the mark  and abandon the existing renditions of defendant’s mark. This abandoning of marks was contended by the plaintiff as giving up rights to “पे” or “Pe”. 

The plaintiff alleged that even after the alleged waiving of rights, the proposed use of the mark  and the wordmark “BharatPe” (vide TM application dated 15.11.2018) by the defendants, would infringe the plaintiff’s registered trademarks and also amounted to passing off by the defendants as the marks used similar colours and fonts. Accordingly, the plaintiff sued the defendants, for permanent injunction, against the use of ‘Pe’ or any deceptive variant of ‘PhonePe’ in respect of payment services or in any other manner amounting to infringement of the plaintiff’s trademark, or of passing off, by the defendants. 

MAIN ISSUES BEFORE THE HIGH COURT

1. Whether trademarks must be compared as a whole or compared after dissection? 
2. Whether a part of trademark be considered dominant and hence be the basis of an infringement suit?  
3. Is transliteration of “पे” as “Pe” by the plaintiff innovative and fanciful and therefore essential, dominant and distinguishing feature of Plaintiff’s marks? 
4. Were the defendant’s marks deceptively similar to the plaintiff’s marks? 

LEGAL POSITIONS OBSERVED BY HIGH COURT W.R.T TRADEMARK INFRINGEMENT

Firstly, Section 17 of the Trade Marks Act, 1999 (the Act) deals with the effects of registration of parts of a mark. Section 17(1) confers the right, to the proprietor of a registered trademark “consisting of several matters”, the exclusive rights “to the use of the trademark taken as a whole”. Section 17(2) further states that the registration of such a “composite trademarki” shall not confer, on the proprietor, exclusive right over any part of the registered trademark, where the part:  

1. is not subject of a separate application for registration as a trademark or is not so separately registered as a trademark [Section 17(2)(a)] and 
2. where the part contains any matter, which is common to the trade or is of a non-distinctive character [Section 17(2)(b)]. 

Secondly, the Court referred to principles enunciated in variety of its judgementsii iii iv, and pronounced following principles:  

1. Neither registered trade mark be dissected, nor exclusivity can be claimed in respect of a part. 
2. If, however, a part of the registered trade mark is dominant, or is its essential feature, its imitation can be considered infringement. 
3. Exclusivity cannot be claimed of a descriptivev or genericvi marks or parts of marks. 
4. This principle cannot be avoided by merely misspelling the descriptive word or part of the mark. 
5. This principle would, however, not apply where the descriptive, or generic, mark, or part of the mark, has acquired distinctiveness, or a secondary meaning, invariably identifying the mark as belonging to the plaintiff. 

OBSERVATIONS OF THE DELHI HIGH COURT

The Court observed that to determine the deceptive similarity, the ultimate analysis is whether the mark used by the defendant as a whole is deceptively similar to that of the registered markvii. It was noted that the Supreme Court while deciding a conflict between the marks MICROTEL and MICRONIX, where infringement of MICRO was alleged by the appellant, held that no exclusivity could be claimed on “MICRO” as it was a descriptive of the parties’ business, the difference could be made out between “NIX” and “TEL” and as such both were wholly dissimilar.viii  

The Court further observed that that while a trademark cannot be dissected into parts to compare similarity with corresponding parts of competing mark, if a “dominant part” or essential feature” of the plaintiff’s mark is imitated by the defendant, only then it might lead to infringement.ix x The Court noted that a descriptive trademark may be entitled to protection only if it has assumed a secondary meaning that identifies it with a particular product or is being of a particular provenance.xi  xii 

JUDGEMENT 

Relying on section 17 of the Act, and rules pronounced by various judgements by Courts, the Delhi High Court finally held that prima facie 

1. “PhonePe” and “BharatPe” were both composite marks.  
2. Ordinarily, these marks could not be dissected into “Phone” & “Pe” and “Bharat” & “Pe” in the case of the defendants. 
3. The plaintiff couldn’t claim exclusivity solely over the “Pe” suffix, as no infringement could be claimed on the basis of a part of a registered trademark. 
4. The word “Pe” was not the dominant/essential feature of the marks in dispute and connoted the meaning “pay”, hence it was descriptive of the services provided by the plaintiff and the defendants.  
5. By misspelling “Pay” as “Pe”, the legal position could not change. Exclusivity could only be granted if the “Pe” suffix would have acquired distinctiveness; and as such, the secondary meaning is subject to evidence and trial. The evidence at hand was insufficient to conclude as such. 
6. Barring the common “Pe” suffix, it cannot be said that “PhonePe” and “BharatPe” are confusingly or deceptively similar. They are entirely different, except for the “Pe” suffix. “Phone” and “Bharat” are not even phonetically similar. Further the triangular device is unique to the defendants. 

CONCLUSION

The judgement makes it clear that one cannot dissect a trademark and claim infringement in parts. The only exception to this rule is the ‘Dominant Part test’. If the said part is found to be the dominant and essential part of the registered mark, only then a case for infringement may be made. The Court noted that the parts which were descriptive/generic could only be protected if in the due course they have acquired a secondary meaning and became distinct. 

While the majority of judgement hold a very high precedence value, one of the areas where it lacks is that the judgement does not takes into account the point of view of an “unwary purchaser of average intelligence”. It is noted in Court’s observation but does not seem to influence the judgement, in a mentioned Supreme Court verdictxiii, it was held that “an unwary purchaser of average intelligence and imperfect recollection would not split the name into its component parts and consider the etymological meaning thereof…”