PAYING A PRICE?: Analyzing the claims made by PayPal against Paytm in reference to trademark infringement

Ever since demonetization, the online payments system known as PayTM has become a regular sight- ‘PayTM accepted here’– from your inviting, plush showrooms to your roadside ‘nukkad chaiwallah’. As PayTM CEO quoted that the online payments system was close to 2 billion transactions for the annum[1], all is not so swell in the paradise of numbers- as of November 18, 2016, PayPal, the global renowned payments system, has filed a notice of opposition to PayTM’s application to register its trademark under class 36.[2] This opposition was filed on the last day of the deadline and it is opined that this is a competitive move on part of PayPal in light of the momentum of the growth of PayTM due to government support for cashless transactions and cash crunches.

It has been put forth by PayPal that they are the registered proprietors of the earlier trade mark with registrations having being renewed from time to time such that they are valid and subsisting and PayPal has exclusive rights to the use of such earlier trademark and its affirmatives. They have further put forth that since 2007, PayPal has used a distinctive two-colour scheme with a dark blue for the former syllable and a lighter shade of blue for the latter syllable. They have argued that given their global reputation and use, they are a well known trademark and are well known by the public due to their promotions and advertisements due to which they should be granted enhanced protection as per the Trade Marks Act, 1999. This, they contend, has led to reputation and goodwill of a nature that leads to the public associating their trademark with PayPal exclusively. Further, it has been put forth by PayPal that the trademark sought by PayTM is deceptively and confusingly similar to that of PayPal due to the above reasons as well as the repetition of ‘Pay’ as the first syllable in their brands, which they contest, the public is likelier to recollect.

Not only the above, but it has also been put forth by PayPal that the singular intention of PayTM while filing and seeking rights over such a mark stem from their intention to take advantage of the reputation built up by PayPal in the market of online payments and to ride upon the goodwill of the Opponent in this regard. They state that such use of a mark might cause confusion in the minds of the public and lead them to believe that the two systems in question are related to each other or affiliated when such is not the case and this association shall impact the brand value or the association of equity with the brand of PayPal. In this post, we shall attempt to evaluate whether such claims and further possible claims that may be made when the case ensues, shall hold ground in light of the established law.

The first claim we evaluate is whether PayPal can claim exclusivity with regards to the word ‘Pay’ and in my opinion, it is a generic word and the position of law is settled as such that generic words cannot be claimed exclusive rights over. In the case of J.R Kapoor v. Micronix India, it was held by the Hon’ble Supreme Court that the term ‘micro’ was one which could not be claimed monopoly over as it was a word which was descriptive of products made from a particular technology and the word was a common one in the English language.[3] It was further held in the case of Kaviraj Pandit Durga Dutt Sharma v. Navaratna Pharmaceutical Laboratories, that in the Ayurveda market, the term Navratna was a common one and no exclusivity could be provided over it.[4] Further, in the recent decision in People Interactive (I) Pvt.Ltd v. Vivek Pahwa of the Bombay High Court, it was held that the word ‘shaadi’ was a common word in India which was used to refer to marriages and would be commonly used for online portal services and could not be claimed a monopoly over.[5] Applying the same in this case, ‘pay’ being a generic word, which is descriptive and common in the online payments system, would make it a difficult claim to rule in favour of PayPal.

We now evaluate whether the colour combination of the ‘blues’ can be claimed exclusivity over by PayPal. While the Indian Trademark registry had rejected Cadbury’s attempt to monopolize the purple colour of their packaging due to lack of distinctiveness, with regards to a combination of colours, the law is slightly different. In the decision by the Delhi High Court in Deere & Co. & Anr. v. S. Harcharan Singh & Anr, it was held that trademark protection could be extended to the distinctive green and yellow colour combination by Deere in regards to tractors and that the defendant’s use of the same was deceptive in nature as the usage of the colours on specific parts of the tractors was identical.[6] While the exact nature of the objections is not outlined, with this precedent, if the facts fall similar, PayPal may have a claim in such regard for trademark protection.

We also need to consider whether PayPal has acquired reputation and goodwill of a nature which can allow it to be considered a well known trademark which should receive enhanced protection under the Act. There is enough evidence to showcase that PayPal is a leading global payments system in the online domain which has immense transborder reputation, being internationally available at several countries as a mode of payment. In the case of N.R Dongre v. Whirlpool Corporation, the principle of transborder reputation to allow foreign owners to protect rights over trademarks was recognized by the Supreme Court of India.[7] Not only this, but the Delhi High Court has also recognized that a strong presence of an online nature is a strong indicator of such reputation.[8] Further, while these claims need to be assessed and evaluated by the court, the argument of prior user has also been extended by PayPal such that they had an international presence from 2007 onwards and were dealing with Indian customers from 2000 onwards. On these grounds, it would appear that PayPal, on the basis of these claims may be able to bring about a suit for passing off but to what extent they shall reap what they seek is on the basis of several evaluations by the court.

PayTM, in India, has attained goodwill and reputation, especially with the economic circumstances at present, of such a nature that not only has its valuation and consumer base expanded, but it has also created for itself a niche in the minds of individuals such that scope for likelihood of confusion is low due to its recognition. However, while the above is one such view, we also have to counter it with the flipside, that as more and more customers begin to provide a secondary meaning to PayTM and use it as a verb and not a noun, it leads to the possibility of the term becoming associated with a particular activity and losing exclusivity such as in the cases of Zippers, Aspirin, Yo-Yo etc. In the decision of Schering Corporation and Ors.
v. Getwell Life Sciences India Pvt. Ltd
,[9] it was held that the name of an organ, ailment or ingredient, was publici juris such as ‘Temo’ which could not be claimed exclusivity over. This is also a consideration which needs to be taken into account as a flipside to the lack of likelihood of confusion as leading to acquiring such meaning that it becomes publici juris.

Lastly, we consider whether there stands an argument of concurrent use on the part of PayTM and whether PayPal has been ‘sitting on trademark rights’. Honest concurrent use is entailed under S. 12 of the Trademark Act. However, honest and concurrent use requires that there is prima facie evidence while filing for the trademark that there is no user of an identical or similar nature, since there is no way of conclusively determining the same. In light of the reputation acquired by PayPal, it is difficult to consider this argument in favour of PayTM for honest concurrent use. Further, while it may be put forth that PayPal has only objected or opposed PayTM now, while the application had been made in 2012, the counter that can be put forth is that the publication of the application was made only in 2016 in the Trademark journal, post which in November, PayPal filed the opposition, albeit on the last day. On both these grounds, it would appear that the stand of PayTM is weaker than that of PayPal, however, all that can be done now is wait- for the war of the ‘pay’ systems to end and for either one of the two systems to pay a price.

[1] http://www.dnaindia.com/money/report-will-complete-2-billion-transactions-this-year-paytm-ceo-2281003.

[2] http://ipindiaonline.gov.in/eregister/Showdoc.aspx?DOCUMENT_NO=WFlaW1xdKC4sJykqLyxYWVpbXF0=.

[3] J.R Kapoor v. Micronix India, 1994 Supp (3) SCC 215.

[4] Kaviraj Pandit Durga Dutt Sharma v. Navaratna Pharmaceutical Laboratories, 1965 AIR 980.

[5] People Interactive (I) Pvt.Ltd v. Vivek Pahwa, Suit No. 846 of 2015.

[6] Deere & Co. & Anr. vs S. Harcharan Singh & Anr , CS(OS) No. 3760/2014.

[7] N.R Dongre v. Whirlpool Corporation, 1996 PTC (16) 583.

[8] Cadbury UK Limited & Anr v. Lotted India Corporation Ltd, 2014 (57) PTC 422 (Delhi).

[9] Schering Corporation and Ors.v. Getwell Life Sciences India Pvt. Ltd, IA No. 2226/2007 in CS (OS) 361/2007.



ABOUT THE AUTHOR

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SANSKRITI SANGHI

Currently pursuing her undergraduate degree from the Gujarat National Law University, Gandhinagar, Sanskriti Sanghi possesses a flair for writing and a yearn to learn. Being avidly interested in Antitrust law, Intellectual Property Rights, Children’s Rights and International Relations, she seeks to engage in and discuss multiple disciplines which keep her constantly discovering. She believes in immersing and involving herself in various activities and letting the passion for each of those interests allow her to deliver her best.

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