Phone Pe fails to restrain DigiPe

This is an order passed by the Division Bench (two judge bench DB) of the Madras High Court in an appeal filed by the Appellant, Phonepe Private Limited.

Phonepe is a widely used mobile phone application in India for digital payments and financial services. The mark Phonepe is a combination of English word Phone and a Hindi word Pe, which means ‘On’ and is used as a preposition in Hindi language.

Facts of the case:

Phonepe filed the suit against the Defendant, Digipe Fintech Private Limited alleging trademark infringement, passing off, etc., and to restrain the latter from using the mark ‘DigiPe’ in relation to their business.

The Single Judge dismissed the injunction application holding that PhonePe failed to make out a prima facie case. Aggrieved by the dismissal of the injunction petition, PhonePe filed the appeal before the DB.

Phonepe in the appeal contends:

  1. They coined the distinctive ‘PhonePe’ mark in September 2015.
  2. The mark ‘PhonePe’ is a combination of two words ‘Phone’ and ‘Pe’. The unique spelling in English and capitalization of the ‘Pe’ feature confers inherent distinctiveness and is thus entitled to protection as an essential feature of the ‘PhonePe’ mark.
  3. They have registrations for PhonePe and a family of marks such as ‘FonePay’, ‘Fonepe’, ‘Foneis’, as well as phonetically dissimilar marks such as ‘CardPe’ and ‘StorePe’, which bear the formative ‘Pe’ element.
  4. They are one of the leading digital payments and financial services companies in India and acquired goodwill and reputation over the years.
  5. ‘Pe’ is a distinctive adoption and is attached to Phone to signify the business being done, i.e., financial and payment related services ‘on’ mobile. The dominant portion of the mark PhonePe is ‘Pe’ which is unique and entitled for protection.
  6. Use of the mark ‘DigiPe’ will cause confusion as the customers will falsely assume that it is a part of a bouquet of services operated by PhonePe.
  7. In response to the cease-and-desist letter DigiPe admitted the well-known nature of the ‘PhonePe’ mark and will amicably settle the dispute. However, proceeded to file a trademark application for the DigiPe mark.

DigiPe counters the appeal on the following:

  1. ‘PhonePe’ and ‘DigiPe’ are not similar.
  2. The word ‘Pe’ forms a part of the registration for ‘PhonePe’ and there is no separate registration for ‘Pe.’ Thus, PhonePe cannot seek exclusivity over ‘Pe’.
  3. ‘PhonePe’ means ‘on the phone’ and is, therefore, generic. Moreover, the issue whether ‘PhonePe’ has acquired any distinctiveness is a matter for evidence.
  4. There is suppression of material facts which disentitle PhonePe from seeking injunction. PhonePe had earlier approached the Delhi and Bombay High Courts seeking injunction against ‘BharatPe’ and ‘PostPe’ respectively, however, this was not disclosed in the instant suit.
  5. Services offered by the rival parties differ and there is no question of passing off.
  6. The contention that DigiPe has accepted the PhonePe mark to be well-known is not admitted as it has been taken out of context.

The DB after considering the pleadings, arguments and case laws held:

  • PhonePe contends that its registered mark is well-known, and the word ‘Pe’ is the dominant element in the trademark. Thus, use of the same suffix ‘Pe’ in the trademark ‘DigiPe’ would cause confusion among the trade and public.
  • Admittedly PhonePe has registration for the combination of the word ‘Phone’ and ‘Pe’ and not for the word ‘Pe’ separately. ‘PhonePe’ and ‘DigiPe’ are not similar except for the suffix ‘Pe’. There are other trademarks such as ‘Phone Pe Deal’, ‘Phone Pe Store’, ‘PhonePe Crore’, ‘Pe’, ‘Pay’ and so on with ‘Pe’ already in the market.
  • There is no evidence that rival parties cater to the same clientele and their area of operations are identical. PhonePe acts as a container for various payment instruments, including but not limited to wallet, debit/credit card, Unified Payment Interface (UPI) and can be used to pay bills, recharge and send money. They provide their services to businesses/merchants by enabling them to accept payments and services from their customers for the products and services on their platform. DigiPe App facilities services only to merchant establishments and is not used by an individual customer.
  • PhonePe is approbating and reprobating. At the time of examination before the Trademark Registry, they had contended that its mark ‘PhonePe’ taken as a whole, was distinct from marks such as ‘Phone Pe Deal’, ‘Phone Pe Store’, ‘Phone Pe Crore’, etc. However, in the instant suit it is aggrieved by the use of the mark ‘DigiPe’.
  • PhonePe has taken an inconsistent stand before the Registrar of Trademark and the High Courts which has been considered by the Single Judge while dismissing the injunction petition.

In light of the above the DB refused to interfere with the findings of the Single Judge and dismissed the appeal filed by PhonePe.

Our comments and key takeaways:

From the facts and findings of the court in the above case, it is important to maintain consistency in arguments related to similarity of the marks. If the parties change their statements before different judicial bodies to suit their case, it can undoubtedly backfire on them.

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