Madras High Court Dismisses PhonePe’s Trademark Infringement Suit Against BundlePe & LatePe

No Exclusive Monopoly Over 'Pe' – Common Usage in Fintech Industry – Madras High Court. In a significant ruling on trademark law, the Madras High Court dismissed a suit filed by PhonePe Private Limited against BundlePe Innovations Pvt. Ltd., rejecting claims of trademark infringement, passing off, and dilution. The court held that the marks "BundlePe" and "LatePe" are not deceptively similar to "PhonePe" and that PhonePe cannot claim exclusivity over the term "Pe", which is commonly used in the fintech industry.

Justice P. Velmurugan, presiding over the Commercial Division of the High Court, observed: "The word 'Pe' is a generic transliteration of 'Pay' in Hindi, widely used in the digital payments sector. The plaintiff cannot claim exclusive rights over a common industry term. The prefixes 'Bundle' and 'Late' create sufficient distinction from 'PhonePe', eliminating the likelihood of consumer confusion."

PhonePe Private Limited, a leading digital payments company, filed a suit against BundlePe Innovations Pvt. Ltd. and its directors, alleging that the defendants' use of the names "BundlePe" and "LatePe" infringed its registered trademark "PhonePe" under the Trade Marks Act, 1999. The plaintiff sought a permanent injunction restraining the defendants from using the contested marks, domain names, and branding elements, claiming that they were deceptively similar to PhonePe and likely to mislead consumers.

The defendants, in response, argued that "Pe" is a commonly used industry term derived from "Pay" and that their marks were distinct due to their prefixes. They further contended that PhonePe’s attempts to monopolize a generic term were legally unsustainable, citing the Delhi High Court’s 2019 ruling in BharatPe v. PhonePe, where similar claims were dismissed.

Trademark Infringement – No Deceptive Similarity Between "BundlePe" / "LatePe" and "PhonePe"

The court rejected PhonePe's claim that "BundlePe" and "LatePe" were deceptively similar to "PhonePe", stating:

"The suffix 'Pe' is insufficient to establish deceptive similarity. The prefixes 'Bundle' and 'Late' differentiate the marks visually, phonetically, and conceptually. Consumers are unlikely to assume an association with the plaintiff."

The court further noted that several fintech companies, including Google Pay, Paytm, BharatPe, and Amazon Pay, use similar terminology, indicating that "Pe" is not inherently distinctive to PhonePe.

2. Passing Off – No Consumer Confusion or Misrepresentation
PhonePe alleged that the defendants misrepresented their services as being associated with PhonePe. However, the court found no evidence of actual consumer confusion or deceptive misrepresentation.

"A mere phonetic resemblance in one component of the mark is insufficient to establish passing off. The plaintiff failed to demonstrate any actual confusion among consumers or unfair advantage taken by the defendants."

Trademark Dilution – No Proof of Harm to PhonePe’s Brand Identity

The plaintiff contended that the use of "Pe" in "BundlePe" and "LatePe" diluted the distinctiveness of "PhonePe". Rejecting this argument, the court ruled:

"For dilution to be established, the plaintiff must prove that the use of the contested marks diminishes the uniqueness of its brand. Here, 'Pe' is a commonly used suffix in the fintech industry, and no evidence suggests that the defendants' use has weakened the plaintiff’s market position."

Domain Name Dispute – No Likelihood of Consumer Confusion

PhonePe sought an injunction against the defendants' use of the domain names "bundlepe.com" and "latepe.in". The court, however, ruled that the domain names were sufficiently distinct from "PhonePe", stating:

"The presence of the term 'Pe' alone does not create confusion. The domain names contain distinct prefixes, and there is no evidence that consumers were misled or deceived."

"PhonePe" Not a Well-Known Trademark

PhonePe sought a declaration recognizing "PhonePe" as a well-known mark under Section 2(zg) read with Section 11 of the Trade Marks Act, 1999. The court declined the request, emphasizing:

"The widespread use of 'Pe' in the industry diminishes its exclusivity. The plaintiff has not met the threshold for well-known trademark recognition under the Act."

No Exclusive Rights Over "Pe" – Rule 28 of the Trade Marks Rules, 2017
The court referred to Rule 28 of the Trade Marks Rules, 2017, which allows transliteration between Hindi and English, stating:

"The term 'Pe' is a transliteration of the Hindi word 'Pay', a generic term in digital payments. The plaintiff cannot claim a monopoly over a descriptive term that is widely used in the industry."

No Evidence of Financial Loss – Damages Rejected
PhonePe sought ₹10,00,000 in damages, alleging loss of business and reputation. The court dismissed this claim, ruling:

"The plaintiff has not provided concrete evidence of financial loss or reputational damage resulting from the defendants’ use of 'Pe'. The claim for damages is speculative and lacks substantiation."

Suit Dismissed, No Injunction Against BundlePe & LatePe

After considering the arguments and evidence, the court ruled in favor of the defendants on all substantive issues and dismissed the suit. The final ruling stated:

"The plaintiff has failed to establish infringement, passing off, dilution, or any likelihood of consumer confusion. The suit is dismissed, and no injunction or damages are granted."

This judgment reinforces the principle that generic terms cannot be monopolized and sets a precedent for businesses in the fintech sector regarding the scope of trademark protection in India.

Date of Judgment: January 21, 2025