Bombay High Court Frowns upon ‘Phonepe’ Contradictory Claims

‘Phonepe’ and ‘Postpe’ are the marks involved in the latest round of litigation between PhonePe Private Limited (PPL) and Resilient Innovations Private Limited (Resilient) at the Bombay High Court. The parties have had several rounds of litigation in the past before various Courts. In this round, PPL has sought an injunction against Resilient from using the mark ‘Postpe’ in their business.

Past Disputes between the parties

PPL, in the year 2019, based on its rights in the registered mark ‘Phonepe’, had filed a suit against Resilient before the Delhi High Court to restrain them from using the mark ‘Bharatpe’. The injunction application filed by PPL was dismissed, against which an appeal was filed, which also met the same fate. This lawsuit is pending before the Delhi High Court.

In 2021, PPL filed a suit before the Bombay High Court to restrain Resilient from using the mark ‘Postpe’ in relation to its business. PPL withdrew the said suit with conditional liberty granted by the Court. The High Court, while giving liberty, observed that the contentions raised by Resilient would be kept open, and they could rely on the same in case PPL files a fresh suit.

PPL sought an injunction in the instant suit on the following:

  1. PPL adopted the trademark ‘PhonePe’ in the year 2014. The ‘PhonePe’ mark and its variants have been registered since March 2016, including those written in the Devanagari script.
  2. They provide financial services through mobile phone applications, facilitating financial transactions amongst consumers and merchants on online and offline payment modes like Unified Payment Interface (UPI), QR Codes, or debit and credit cards.
  3. On account of the ease of using the services provided by PPL, the ‘PhonePe’ app has become immensely popular and holds a large market share.
  4. They have registered the website www.phonepe.com and a blog www.blog.phonepe.com. The mark ‘PhonePe’ and its variants have acquired immense goodwill, and they have proprietary rights over the same, and the term ‘Pe’ has become synonymous with them.
  5. Pursuant to the dismissal of the injunction application by the Delhi High Court, Resilient has made every effort to come as close as possible to PPL’s registered trademark ‘Phonepe’ by adopting the mark ‘Postpe.’
  6. ‘PhonePe’ is a distinctive and coined trademark and, when used as a colloquial term in Hindi, means ‘on’, indicating that PPL’s services are ‘on’ the mobile phone through an app.
  7. The rival marks ‘Phonepe’ and ‘Postpe’ compared as a whole are similar, and adoption by Resilient of the impugned mark amounts to trademark infringement and passing off.

Resilient countered the injunction application on the following grounds:

  • PPL has taken contradictory and mutually destructive stands in the proceedings; thus, on this ground alone, the application deserves to be rejected. The Delhi High Court, while dismissing the injunction application, had held that PPL could not claim exclusivity on the part of its trademark ‘pe’ (akin to Pay), and the question as to whether ‘pe’ has become synonymous with their business is a matter for trial. The findings above also apply to the facts and circumstances of the instant case.
  • Several entities are using ‘Pe’ as part of their trademarks. Moreover, the Trademark Registry had cited trademarks such as ‘Phone Pe Deal,’ ‘Phone Pe Store,’ ‘Phone Pe Crore’, and other marks using ‘pe’ at the time of examination of PPL’s application for the mark ‘Phonepe.’ In response to the examination report, PPL had contended that ‘PhonePe,’ taken as a whole, was distinguishable even when compared to such marks. In the circumstances, there was no question of similarity, let alone the deceptive similarity between the two marks ‘PhonePe’ and ‘Postpe.’
  • The mark ‘PhonePe’ is not distinctive as PPL cannot claim any exclusivity in using ‘pe’, and the remaining part of the trademark i.e., the word ‘phone’, is a dictionary word.

Court’s analysis and findings:

  1. Admittedly, PPL had earlier initiated action at the Delhi High Court against the mark ‘Bharatpe.’ In the said proceedings, PPL had asserted that ‘pe’ indicated the action of payment and that ‘pe’ used as a suffix to the word ‘phone’ had acquired distinctiveness and secondary meaning. However, the Delhi High Court concluded that such an assertion by PPL would essentially be a matter for trial. Although the said finding was in the context of the trademark ‘BharatPe,’ the Delhi High Court considered the contentions raised on behalf of PPL in the context of its registered trademark ‘PhonePe.’
  2. The Delhi High Court also considered whether PPL could claim exclusivity only in respect of ‘pe,’ which forms part of its registered trademark ‘PhonePe.’ By applying Section 17 of the Trademark Act, the Court held that if the said contention were to be accepted at the interlocutory stage, it would amount to granting exclusivity in respect of part of its trademark, which is impermissible under Section 17 of the Act.
  3. In the instant case, it has to be considered that PPL had claimed before the Registrar of Trademarks that its mark ‘PhonePe,’ taken as a whole, is not similar to marks like ‘Phone Pe Deal,’ ‘Phone Pe Store,’ ‘Phone Pe Crore’, etc., Resilient is justified in referring to the said earlier legal proceedings between the parties to consider whether PPL has been shifting its stands and what effect it has on grant or refusal of discretionary relief at the interlocutory stage.
  4. In this regard, the aspect of prosecution history estoppel assumes significance. PPL is not justified in contending that once it has obtained registration for its trademark, the stand taken in proceedings leading up to the grant of such registration has no relevance in subsequent legal proceedings.
  5. Considering the specific stand of PPL before the Delhi and Bombay High Courts, it is evident that they are taking contradictory pleadings to obtain an injunction. This evidences that PPL has tried to obtain interim reliefs by shifting its mutually inconsistent stands.

In light of the above, the Court held that PPL has failed to make out a prima facie case, and the balance of convenience is also not in their favour, and accordingly dismissed the injunction application.

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