The Paytm-Paypal dispute

One of the most significant changes the Modi Government's demonetization scheme has brought about in India, is an economy struggling to veer towards cashless transactions. During this period of paper money shortage, the most prominent gainers include the payment instruments (e-commerce platforms) such as Paytm, Freecharge, PayPal and other mobile wallets.

PayPal or Paytm: Who wins the popularity contest in India?

PayPal is an USA based multinational company, whose presence in India is growing more than satisfactorily and rumour has it, that it may acquire a stake in Freecharge, although Freecharge has out rightly denied this.

Paytm on the other hand is an Indian company, which has seen an almost vertical growth after the demonetization drive, recording almost 5 million transactions a day. However, in India, the common man, the trader, the vegetable vendor & the tea seller are more likely to know about Paytm as it has been spending substantial amounts in advertisement campaigns and is relatively simple to use for daily transactions.

The government of India has also encouraged persons to make use of Paytm to ease the burden of the impact of demonetization and to push persons towards a less cash economy. Therefore in the Indian Territory, we can say with absolute confidence that Paytm will always win the popularity battle against PayPal.

The Dispute

It is interesting to note that Paytm has applied for a trademark with the Registrar of Trademarks, which has been vehemently opposed by PayPal for its deceptive similarity in its name and logo with that of the latter.

The Trademark Registry is responsible for registration of Trademarks in India according to the Trademarks Act, 1999, if such marks conform to the Act and the rules.

PayPal has numerous trademarks registered in India, however the Registrar of Trademarks objected to the one above. Paytm with a desire of the registration of their above mark has in accordance with the S. 21 of the Act, advertised the particular application of trademark and invited objection from persons within four months of this advertisement. It is under this very provision that PayPal has filed a notice of objection.

PayPal has raised objections to Paytm's application for registration of their trademark under the Act stating that its mark is deceptively and confusingly similar to their mark, which is an absolute ground for refusal of registration of such a mark. It has also objected to the registration of this trademark under S.11, on the ground of its similarity with an earlier trademark.

Similarities in the Marks:

It can be seen that the two marks are very likely to be deceptive to the consumer as they both deal with similar goods and services. The dark blue colour and the light blue colour scheme only add to further confusion between the marks. Further, keeping in mind that the definition of a 'trade mark' under the Trade Marks Act, 1999 now, expressly includes combination of colours as well, such a blatant imitation could be considered as an infringement itself.

It is also pertinent to note that since both marks start with the word "Pay" and deal with payment instruments, they are more than likely to cause uncertainty in the minds of the public.

The first syllable Pay, common to both the marks has the exact dark blue colour whereas the second syllable of both marks has an almost identical light blue shade.

Such similarity in colour combinations is more than likely to create chaos in the minds of consumers and may most likely be to the disadvantage of PayPal. It is actually quite shocking that Paytm would use a mark, which is so similar to PayPal because they most definitely would have knowledge of their rival's mark.

PayPal has accused Paytm of wanting to tap into their global reputation & business and hence using a mark, which is structurally similar to theirs, so as to benefit from the former's established reputation

Who is more likely to succeed in this dispute?

Even though PayPal may not have such a wide presence in India as compared to its competitor Paytm, Pay Pal is more likely to succeed, as it has been first to use a mark with this distinct colour combination.

Schedule 10 of the Trade Marks Act, 1999, pertains specifically to use of colours and reads as follows:

1.    A trademark may be limited wholly or in part to any combination of colours and any such limitation shall be taken into consideration by the tribunal having to decide on the distinctive character of the trademark.

2.    So far as a trademark is registered without limitation of colour, it shall be deemed to be registered for all colours.

PayPal is expected to defend its mark by pointing out the similarities in the colour combinations between the marks, and by showing that Paytm would only copy such a similar colour scheme so as to pass off its services as that of PayPal and gain from their global reputation.

Paytm is more likely to argue that it has no reason to attempt to tap into PayPal's reputation, as it has a more substantial presence in the Indian market & that the shades of colour used in their mark are not identical to that of PayPal.

The outcome of this tussle now depends on the view that the Office of the Trademarks Registry adopts.  The fates of the companies hang on this decision, although it may not have a substantial effect on their revenues and market share.

(Nishit Dhruva is Managing Partner at MDP & Partners. He was assisted by Roger Mendonca, an Associate at MDP & Partners, for writing this column)