In the fast-paced domain of digital payments in India, two major players, PhonePe and BharatPe, were engaged in a significant legal dispute over trademark registration. This clash underscored the importance of brand identity in the fiercely competitive industry and raised critical questions about Intellectual Property Rights and market dominance.

The Origins and Growth of PhonePe and BharatPe

PhonePe, launched in 2015 and acquired by Flipkart in 2016, swiftly emerged as a frontrunner in India’s digital payment ecosystem. PhonePe expanded its services rapidly, offering a seamless user experience for UPI payments (Unified Payment Interface), bill payments, and more. With millions of users and a strong market presence, PhonePe became synonymous with innovation and convenience in digital transactions.

BharatPe, founded in 2018, aimed to address the specific needs of small merchants and kirana stores. Focused on empowering these businesses through QR code-based payments and financial services, BharatPe quickly gained traction, particularly in urban and semi-urban markets. The suffix "Pe" in its name symbolizes its commitment to serving the grassroots economy, making digital payments accessible to small businesses across India.

The Core of the Dispute: Interpretation and Ownership of the Suffix ‘Pe’

PhonePe demanded a permanent injunction against BharatPe for the use of the suffix ‘Pe’. Both PhonePe and BharatPe argued that ‘Pe’ is integral to their brand identity and market positioning. PhonePe asserted that it has used the brand name since its inception, predating BharatPe‘s entry into the market. The suffix ‘Pe’ in PhonePe is widely recognized among consumers and has become synonymous with its digital payment services. BharatPe contended that the suffix "Pe" is a distinctive element of its branding strategy, reflecting its mission to empower small merchants ("Bharat" referring to India and "Pe" to people). According to BharatPe, the use of "Pe" is crucial for maintaining brand consistency and consumer trust.

Legal Considerations in the Trademark Dispute

While resolving the issue of trademark infringement, the Delhi High Court considered the following points:

1.     Anti-Dissection Rule 

The anti-dissection rule posits that a trademark should not be compared in parts but should be considered as a whole. The court ruled that both PhonePe and BharatPe are composite marks and should not be dissected for comparison. The court held that the plaintiff could not claim rights over the suffix ‘Pe’, as it was a misspelling of the word ‘Pay’. Therefore, no infringement could be claimed over this.

2.    Dominant Mark Test

The court observed that there was no separate registration of the word ‘Pe’, and hence PhonePe could not claim trademark infringement on that basis. The similarity between the non-essential, unregistered composite marks did not constitute infringement.

3.    Non-exclusivity of Descriptive or General Marks

The court held that a party could not claim exclusivity over a merely descriptive or general mark. However, the court acknowledged an exception to this principle in cases where the generic or descriptive mark had acquired a secondary or peculiar meaning. The case also discussed the nature and character of a misspelt word when used as a trademark.

Outcome and Implications

The legal proceedings ended in favor of BharatPe, with the court rejecting PhonePe’s plea to grant a permanent injunction against BharatPe's use of the word ‘Pe’. This outcome will likely set a precedent for future trademark disputes in India’s dynamic digital payment industry and will also shape industry practices concerning brand protection and competition.

In conclusion, the battle over ‘Pe’ between PhonePe and BharatPe has ended in BharatPe’s favor. The resolution of this dispute will not only impact the immediate parties involved but also influence the broader trajectory of innovation and competition in India's burgeoning digital markets.

-Written & Reviewed by HSILF Team