COMPOSITE MARKS & TRADEMARK INFRINGEMENT: THE TUSSLE OVER ‘Pe’
Determination of exclusivity over composite marks has been the subject matter of many disputes. A trademark registration warrants exclusive right to the owner to use the trademark in relation to the said good or service. However, this exclusive right cannot be claimed over a part of the trademark. Determining similarity in marks can be complex and involves numerous considerations. This determination can be even more intricate and confusing when the conflicting trademarks under question are composite marks, comprising of both distinctive and non-distinctive elements. A mark may be labeled as composite when it consist of a word or words combined with a design or designs; or it may consist of separable word or design elements.[i] As a general rule, independent elements cannot be evaluated separately and must be compared as a ‘whole’. A recent interim order by the Delhi High Court involved a similar issue between PhonePe and BharatPe, wherein the use of suffix ‘Pe’ by BharatPe was challenged on the ground that it amounts to trademark infringement and passing off.[ii] The Court explored the fundamental principles of Trademark law and laid down the standards for determination of trademark infringement.
BACKGROUND OF THE CASE
The plaintiff (PhonePe) sued the defendant (Ezy Services/BharatPe), seeking permanent injunction against the use of word ‘Pe’, claiming that it amounts to infringement of plaintiff’s registered trademark. The parties are well known billion-dollar companies engaged in digital payment services including all consumer-merchant and consumer-consumer payments. While, the plaintiffs provide services to merchants and consumers; the defendant’s work is limited to merchant business. The plaintiff asserted that ‘Pe’ is an inventive word and when combined with a generic word ‘Phone’, it forms a distinguishing, dominant attribute of their trademark. On the other hand, the defendant claimed that ‘Pe’ is merely a misspelled form of the generic word ‘Pay’ and no exclusive rights can be granted for such misspelled word. The defendant further submitted that the term ‘Pe’ is common to the trade and describes the services offered by the plaintiff.
The court on scrutinizing the facts and judicial trends, laid down following standards -
Infringement or passing can be alleged with respect to the whole mark and not part of it.
Where the part of a mark is a dominant feature, infringement can be alleged for the said part of the mark.
There lies no exclusivity over whole or part of a descriptive mark, even if it is misspelled.
A claim may arise if the said descriptive mark (in whole/part) has acquired distinctiveness which can be proved before the court.
Deceptive similarity has to be evaluated on the basis of how an ordinary prospective buyer would perceive the said mark.
In my opinion, the court in this case gave more emphasis on the term ‘Pay’ rather than ‘Pe’ which should be the focal point of discussion. The term ‘Pe’ appears to be innovative and must have been accorded protection.
HARMONIZING THE TWO RULES
Composite marks must be considered and compared in totality. Therefore, while determining the likelihood of confusion, the marks cannot be dissected or divided into component parts and compared with the corresponding part of the conflicting trademark. This is termed as the “anti-dissection rule”.[iii] The rationale is based on the commonsense observation of an ordinary prospective buyer who does not perceive the individual components of a mark, but only retains the general; overall notion created by the mark as a whole. For instance, the court in the case of Autozone Inc. v. Tandy Corporation,[iv] asserted that there was no likelihood of confusion between the marks “autozone” and “powerzone”. It was further opined that the common term “zone” is not a dominant part of the mark and when viewing the two marks, a consumer would tend to de-emphasize the “zone” portion.
The principle of anti-dissection has been upheld in a catena of cases. In Hoffmann-la Roche & Co. Ltd. vs. Geoffrey Manner & Co. Pvt. Ltd.,[v] , the court rejected the claim of deceptive similarity between the marks ‘DROPOVIT’ and ‘PROTOVIT’ and asserted that two words have to be interpreted in their look and sound. The court also laid down the principle that individual parts of a mark cannot be separated while determining deceptive similarity. Also, in the case of Amritdhara Pharmacy v. Satya Deo Gupta,[vi] the court applied the anti-dissection rule and did not dissect the marks while determining the similarity.
Another test that holds relevance is the “dominant feature rule” which implies that the court must afford greater weightage to one feature of a mark that dominates all others in the likelihood of confusion analysis. In the case of South India Beverages Pvt. Ltd. v. General Mills Marketing Inc.,[vii] the Court established and laid down certain rules for determining deceptive similarity in composite marks. The Court asserted that the anti-dissection test cannot completely rule out the consideration of essential component of a composite mark. The two tests are not antithetical to one another but rather complement each other, when viewed together. Under this test, the Court will first analyze if any part of the mark constitute an essential feature. If the first part is proved, it will go on to determine whether the essential or dominant part of the mark is infringed by the defendant.
ANALYSIS OF THE CASE
The Delhi High Court, while delivering the interim order, construed ‘Pe’ as a misspelling of the term ‘Pay’. Following this, the Court refused to grant exclusive right to use ‘Pe’ on the ground that mere misspelling of a descriptive or generic term would not make it non-descriptive to enjoy exclusivity. This reasoning was based on the judgment of Delhi High Court in the case of Marico v. Agro tech Food Ltd.,[viii] wherein the court rejected to grant exclusivity over the term ‘LOSORB’, holding that it is merely a tweaked version of the generic term ‘LOW ABSORB’. The court emphasized on the principle that mere misspelling or minor modification of a descriptive mark cannot be granted exclusivity. The court further asserted that the two marks are composite and therefore, while determining deceptive similarity, the marks cannot be dissected into separate parts.
On rejection of its interim injunction plea, PhonePe moved to the division bench to seek relief. However, the company recently withdrew its plea. This draws our attention towards how important it is for businesses to have a strong brand and consumer base. The present case is a wake-up call for all market players and entities, prompting them to be more mindful of what set them apart and how they can actively protect their trademarks.
On analyzing the facts of the case and observations made by the court, there are some considerations that seem to have been misinterpreted by the court.
Firstly, when a word is phonetically similar to another, it does not necessarily mean that it is its misspelled form. The term ‘Pe’ cannot be blindly interpreted to signify tweaked version of ‘pay’. This holds true on the ground that the word ‘pay’ may have many misspelled forms such as ‘Paay’, ‘Payy’ ‘Py’ etc. However, in the present case, ‘Pe’ seems to be an invented and non-generic term that describes the brand’s unique services. Therefore, the evaluation of distinctiveness by keeping the words ‘Pay’ and ‘Pe’ on the same pedestal seems unwarranted.
Also, the assembly of the term ‘Pe’ as a capital ‘P’ followed by a lower case ‘e’ seems to be intentional effort on the part of the plaintiff. Use of the same word in the same manner reflects the intention of the defendant to copy the plaintiff’s mark.
Secondly, in my opinion, ‘phone’ is a purely descriptive and generic term and it is the word ‘Pe’ that adds some uniqueness and creativity to it. Hence it would be right to say that ‘Pe’ should be treated as dominant part of the mark and shall be accorded protection.
Thirdly, the court asserted that triangle used in the defendant’s trademark holds weightage and is a crucial distinguishing factor. However, it is important to note here that the malafide intention to use or copy certain aspect of the plaintiff’s trademark can be reflected from the fact that the defendant originally adopted a mark which was strikingly similar to that of the plaintiff’s and later abandoned it. Therefore, the decision of the court needs reconsideration.
The court’s reasoning does not seem justified as it followed the ruling propounded in Marico case[ix] and neglected the fact that the defendant adopted a dominant part of the plaintiff’s trademark. I agree that the court is correct in asserting that the services offered by both the parties are different. However, the difference in services is not much and may cause confusion in the mind of ordinary and illiterate consumers. The case surely puts forth how important it is for market players to be conscious of their trademarks which set them apart from others. It also highlights significance of registration of independent mark. If PhonePe had registered its independent word mark ‘Pe’, things would have been different. The decision, no doubt is a wake-up call for trademark owners to actively assert and protect their rights over it.
[i] James D. Nelson and Pam Kohli Jacobson, Composite Trademarks: Deconstructing the Similarity of Marks Element in a Trademark Infringement Action, 72 Def. Counsel J. 347 (2005). [ii] Phonepe Private Ltd. v. Ezy Services and Another, (2021) SCC OnLine Del 2635. [iii] Kaviraj Pandit Durga Dutt Sharma v. Navaratna Pharmaceutical, AIR 1965 SC 980. [iv] 174 F. Supp. 2d 718, 725. [v] AIR 1970 SC 2062. [vi] 1963 AIR 449 [vii] (2014) SCC OnLine Del 1953. [viii] (2010) 44 PTC 736. [ix] Id.