PHONEPE V/S BHARATPE

Background of Companies
Phone Pe
PhonePe is a digital payments and financial services company based in India. It was founded in December 2015 by Sameer Nigam, Rahul Chari, and Burzin Engineer. PhonePe is now a subsidiary of Flipkart, one of India's leading e-commerce companies. PhonePe is primarily a mobile payment application that allows users to transfer money, pay bills, recharge mobile phones, and shop online. The app is based on the Unified Payments Interface (UPI) platform, which was developed by the National Payments Corporation of India (NPCI) to facilitate instant money transfers between bank accounts. PhonePe users can link their bank accounts to the app and make transactions directly from their bank accounts without the need to transfer funds to a wallet.
Bharat Pe
BharatPe is a financial technology company based in India. It was founded in 2018 by Ashneer Grover and Shashvat Nakrani with the aim of providing payment solutions to small and medium-sized businesses in India. The company is headquartered in New Delhi and has offices in several other Indian cities. BharatPe offers a QR code-based payment system that allows merchants to accept digital payments from customers. The system is based on the Unified Payments Interface (UPI) platform, which enables instant money transfers between bank accounts. BharatPe's payment system allows merchants to accept payments from multiple sources, including UPI, credit cards, and debit cards, all through a single QR code. BharatPe's payment solution also includes a point-of-sale (POS) device that enables offline transactions.
    PHONEPE V/S BHARATPE    
Background of the Case:
Phone Pe is a widely used platform all around India for UPI transactions. Everyone who downloads PhonePe can use it to make online payments. The only online payment app for businesses, BharatPe, also offers loans to those businesses. In a marketable lawsuit filed on April 15, 2021, between Phonepe(P)Ltd. and Ezy Services, a Single Judge Bench of the Delhi High Court presided over by Mr. Justice C. Hari Shankar rendered a significant ruling. In this case, the complainant sued the defendant Bharat Pe, for using the suffix "Pe" in the mark because it constituted a violation of the registered mark "PhonePe" and passing off. 
The plaintiff's services are accessible to anybody who installs their app, in contrast to the defendants' services, which are only available to merchandisers. The court declined to grant an injunction against the defendant and dismissed the petition. The Honorable High Court has held that this is a matter of trial and substantiation when the case is finally heard and decided and that both parties cannot misconstrue appropriate terms and hold privilege over them and even more so at the prima facie stage unless the words have acquired a secondary meaning through continuous marketable use. The defendants also were required to submit to the court the audit statements for the previous six months and the accounting of the profit made using the "Bharatpe" mark. In this case study, we'll examine the Delhi High Court's interim ruling in a dispute over trademark infringement and passing off between the digital payment services PhonePe and BharatPe, as well as the complainant and defendants' arguments and the court's significant compliances.
Issues:
Is PhonePe right in its position to expect an injunction from BharatPe from using the word “Pe”?
Arguments:
Arguments from the Plaintiffs’ side:
•    The complainant argued before the Delhi High Court that a typical person would mistakenly identify the mark "bharatpe" with the mark "PhonePe" if they came across it.
•    The plaintiff began using the mark "PhonePe" in 2015, whereas "BharatPe" wasn't used until 2018. This difference shows that the plaintiff had plenty of time to create their trademark's goodwill as well as standing in the marketplace.
•    The plaintiff's application has been accessed more than 10 crore times since the plaintiff's trademark was registered before the defendant's.
•    The plaintiff asserted that the letter "pe" in their trademark is a significant and pertinent element.
•    Additionally, the plaintiff asserted that while the word "phone" is a common dictionary word, the word "pe," which differentiates it from other words and is, therefore, more important in the trademark "phonepe," is an invented word.
•    The plaintiff's trademark has developed sufficient goodwill and renown over the years, as evidenced by ads, partnerships, articles, and their active participation in the IPL 2019 and endorsements from numerous celebrities.
•    The defendant is infringing and passing off since the services it offers are identical to those of the plaintiff, and it also copied the distinctive trademark suffix "pe" from the plaintiff's trademark "PhonePe."
Arguments from the Defendants’ side:
•    Neither the plaintiff nor the defendant has ever utilized "Pe" as a standalone mark in their commercial endeavors. 
•    The domain name www.bharatpe.com was registered on November 15, 2017, in the name of the company's creator, and the online payment services launched in 2018 with a legitimate interest. The mark "BharatPe" was adopted and utilized starting in 2016.
•    The defendants created the "BharatPe" trademark, which is fundamentally distinct from the plaintiff's services. Several businesses also use the suffix "pay" in their names, including Google Pay, Amazon Pay, Samsung Pay, and others.
•    The defendants employed the slogan "Bharat pe sab chalta hai" with the intention of launching a single rapid response (QR) code for retailers that would function with all customer unified payments interface (UPI)-based applications, including Google Pay, Paytm, WhatsApp Pay, Amazon Pay, and others.
•    By the end of 2020, the "BharatPe" app had been installed more than 50 lakh times.
•    The defendants' "BharatPe" markings were examined in order to raise objections under Section 11 of the Trademarks Act, 1999, however, none of the plaintiff's marks were cited as an earlier trademark in the initial examination report produced by the Trademarks Registry.
•    Previous to the plaintiff's "PhonePe" marks, there were earlier marks incorporating "Pe," such as "Phone Pe Deal," "Phone Pe Shop," etc. These earlier marks asserted that there were users of registered trademarks before the plaintiff. As a result, the plaintiff was unable to assert that they were the first to utilize the "Pe" mark.
•    The plaintiff acknowledged that the suffix "Pe" was a created word and was simply a misinterpretation of the word "Pay". "Pe" and "Pay" sound the same on the phonetic scale. The purpose of the suffix "Pe" was to allow the consumer to pronounce the dictionary word "Pay" phonetically. When a term is misspelled and the original term is intended to be descriptive, there are no legal consequences that can be taken. A misspelled term cannot be the subject of exclusive rights enforcement unless it has come to mean something else in relation to the plaintiff's line of work.
•    The prefix "Pe" was frequently used in the commerce and services the plaintiff offered, which allowed customers to make payments using the plaintiff's app.
LAW
(a) THE ANTI-DISSECTION RULE:
•    Section 17 addresses the effects of registering a mark's elements (3). The claim gains significance in the current circumstance because none of the allegedly infringing "PhonePe" marks have been individually registered by the claimant. According to Article 17, the owner of a registered trademark that "contains of numerous topics" is specifically given the exclusive rights "to the use of the trademark taken as a whole". 
•    According to the "anti-dissection" rule, conflicting composite marks should only be examined visually rather than by dissecting them into individual sections. This is because a typical consumer views the mark as a whole rather than in sections. Hence, it is necessary to compare conflicting marks as a whole. 
•    The anti-dissection rule is based on consumer behavior observations that show the average consumer only remembers the overall, general impression that the composite mark as a whole creates rather than all the specific features of the composite mark. Not the impression produced by a tidy and meticulous comparison as in legal analysis, but the overall impression formed by the mark from the average consumer's perception of the market is what might or might not lead to a possibility of confusion.
•    The Supreme Court ruled in the Kaviraj Pandit Durga Dutt Sharma case, cited by the court, that trademarks should be evaluated comprehensively.
(b) DOMINANT TEST
•    In this case, the court cited a decision by the Delhi High Court in South India Beverages where the court discussed the "dominant mark" test.
•    The goal of the test was to determine whether any aspect of the plaintiff's trademark was dominant or an essential component, and if so, whether the defendant had violated that aspect. Because "Pe" was written with a capital "P," the court decided that there may be merit to the claim that it made up a dominant component or significant characteristic of the marks.
•    In accordance with the Anti-Dissection Regulation, if the defendant copies a "dominant part" of the plaintiff's trademark, the court must consider whether infringement has occurred as a result of the imitation.

(c) NON-EXCLUSIVITY OF DESCRIPTIVE MARKS
•    The court ruled that while aspects of a registered mark cannot be claimed to be exclusive, imitations of their prominent components may nevertheless constitute trademark infringement. Both descriptive markings and misspelled descriptive words do not grant exclusivity.
•    The court decided that an infringement claim may have been established if the plaintiff could show that they had gained second meaning.
•    In the Marico case, the court ruled that a descriptive term mark should only be granted trademark status if it has been used for several years and is exclusively connected to one source.
Conclusion
In the case of PhonePe v. BharatPe, it is stated that while the defendant's app was a QR-based app for traders that provided options for all UPI payment services within the app, including the plaintiff's app, the plaintiff's app was used by customers to make online payments, so the services offered by the two apps were different. There is nothing misleading, comparable, or confusing about either app other than the suffix "pe," which is the only similarity between both. The app names "Phonepe" and "Bharatpe" are both composite nouns that cannot be broken down into "Phone" and "pe," "Bharat" and "pe," respectively. Since the suffix "pe" has not been registered as a separate trademark, the plaintiff is ineligible to assert exclusivity or infringement with respect to it alone. Pe is a created word and a misspelling of the word pay in the English language, hence it is not entitled to exclusivity. For the purpose of claiming infringement, "Phonepe" and "Bharatpe" are not even phonetically similar.