Kiran Raj

The Madras High Court has dismissed a trademark infringement suit filed by PhonePe a leading digital payment service provider, ruling that the defendant’s use of the suffix "Pe" does not amount to infringement or passing off. The court found that the plaintiff had failed to establish that its mark was distinctive enough to warrant exclusive rights over the term "Pe" in the financial services sector.

PhonePe a well-established digital payments company, filed a civil suit (COMM DIV No.119 of 2023) seeking multiple reliefs, including:

• A declaration that its "PhonePe" mark is a well-known trademark under Section 2(1)(zg) read with Section 11 of the Trade Marks Act, 1999.

• A permanent injunction restraining the defendants from using the marks "BundlePe" and "LatePe" or any similar variations.

• An injunction against the use of domain names that allegedly infringed upon the plaintiff’s brand identity.

• Damages of ₹10,00,000 for trademark infringement and passing off.

PhonePe argued that the use of "Pe" by the defendants created confusion among consumers and attempted to benefit from the goodwill of the "PhonePe" brand. It asserted that "Pe" had acquired distinctiveness and was strongly associated with its services in the digital payment sector.

The defendants, BundlePe Innovations Pvt. Ltd. and its directors, contested the claims, asserting that:

• The term "Pe" is a common Hindi word meaning "on" or a phonetic variation of "Pay" and cannot be monopolized.

• Their brand names "BundlePe" and "LatePe" were phonetically and visually distinct from "PhonePe" and catered to different financial services.

• There was no evidence of consumer confusion, as their services were functionally different from those offered by the plaintiff.

• The suit was an attempt to suppress competition in the financial technology sector.

The court examined whether the marks "BundlePe" and "LatePe" were deceptively similar to "PhonePe" and whether the plaintiff was entitled to protection under the Trade Marks Act, 1999.

It recorded that:

• "Pe" is commonly used in the digital payment industry, with entities like Paytm, Google Pay, and Amazon Pay employing similar terminology.

• The plaintiff had not produced evidence of actual consumer confusion arising from the defendants’ use of "Pe".

• The prefixes "Bundle" and "Late" significantly distinguished the defendants’ marks from "PhonePe".

• Trademark law does not grant monopoly over generic terms commonly used in an industry, particularly when the term is descriptive of the services offered.

The court stated: "The term 'Pe' is widely used in the financial services sector and does not have an inherently distinctive character that can be exclusively associated with the plaintiff. The defendants' marks, 'BundlePe' and 'LatePe', contain distinguishing prefixes that create a separate brand identity and do not lead to confusion in the minds of consumers."

Regarding PhonePe’s claim that its mark had acquired well-known trademark status under Section 2(1)(zg) of the Trade Marks Act, the court found: "The plaintiff has not provided sufficient evidence to establish that 'PhonePe' has acquired a reputation that entitles it to well-known status under Section 11 of the Act. The mere popularity of a brand does not automatically confer such recognition in legal terms."

Based on its findings, the court ruled against PhonePe on all key issues:

• The marks "BundlePe" and "LatePe" are not deceptively similar to "PhonePe".

• The plaintiff is not entitled to an injunction preventing the defendants from using the marks.

• There was no ground for a passing off claim as there was no misrepresentation causing consumer deception.

• The plaintiff’s demand for damages was dismissed, as no financial harm had been proven.

• The request to declare "PhonePe" a well-known trademark was denied.

The suit was dismissed, with the court ruling that PhonePe had not established a case for trademark infringement, unfair competition, or dilution of its brand identity.

Case Title: PhonePe Private Limited vs. BundlePe Innovations Pvt. Ltd. and Others
Case Number: Civil Suit (COMM DIV) No.119 of 2023
Bench: Justice P. Velmurugan

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