Paying Through the Nose, Is It? PayPal vs. Paytm

Paytm has been riding high on the Demonetization wave ever since the Indian Government made 500 and 1000 Rupee notes redundant. It came up with full-page advertisements in national newspapers to vigorous social media campaigns and television advertisements – surely they are doing their best to reap benefits from the Government measure. However, all the attention that it has received also comes with its fair share of issues. We shall discuss how Paytm recently tripped onto an intellectual property dispute when international online payment giant, PayPal filed a formal opposition petition alleging various trademark infringements upon Paytm.

In its opposition petition dated 18th of November 2016, PayPal challenged the Indian Mobile Wallet company, Paytm’s trademark application 2424471 pending before the Registry of Trademarks of India. We mentioned the grounds for PayPal’s opposition:

• PayPal’s device mark in the blue tone has been registered in India since as early as 2007 giving it a legitimate right to roll up its sleeves.
• Paytm has adopted the two-tone color scheme of PayPal in its entirety by writing the first syllable in dark blue color and the second syllable in light blue color;
• Paytm and PayPal both begin with the term “PAY” which consumers catch more than the second syllable given that both marks are of similar length ;
• Paytm has adopted identical colors and colour schemes to PayPal to take advantage of its global reputation and goodwill, and to cause public confusion
• Paytm and PayPal offer identical services which again goes to the detriment of Paytm’s case as it makes it harder for them to deny prior knowledge of PayPal’s mark.

Under Section 21 of the Indian Trademarks Act, 1999, a time frame of four months is provided to any person for opposing the advertised application of a trademark. Taking advantage of this law, PayPal has filed the opposition application against Paytm on the last day available to file the application since Paytm’s trademark application was advertised on 18 July 2016.

PayPal has taken recourse under the following sections of the Trademark Act:

• Section 9(2)(a), which provides for deception or confusion as an absolute ground of refusal against registration of the trademark;
• Section 11, which provides for similarity with an ‘earlier trademark’ as a ‘relative’ ground for refusal to grant registration.
• Section 2(1)(zg) defining “well-known trademark”, in relation to any goods or services, means a mark which has become so to the substantial segment of the public which uses such goods or receives such services that the use of such mark in relation to other goods or services would be likely to be taken as indicating a connection in the course of trade or rendering of services between those goods or services and a person using the mark in relation to the first-mentioned goods or services. PayPal claims to be a well-known trademark.

In the past, similar issues had cropped up when eBay had initiated trademark opposition proceedings against Foodiebay. Soon after, Foodiebay rebranded themselves as Zomato to avoid further proceedings but the change came with a price and Zomato became a sample case in the list of Don’ts while naming your brand.

Another argument that goes in favour of PayPal is that since many international brands introduce their products under a single prefix such as Apple’s use of the work ‘I’ in its various electronic products – Imac, Ipod and Ipad or McDonald’s prefixing its renowned ‘Mc’ before all its delicious products – McMaharaja Burger, McServe, McPuff etc.; Paytm’s use of the same prefix, an unsuspecting customer might perceive it as an indigenous subsidiary of PayPal.

The rule of thumb remains whether two trademarks cause a person of ordinary prudence with imperfect recollection to be confused between the two trademarks. It remains to be seen how the battle will play out in the Trademark Registry with PayPal pleading that Paytm’s request for registration of the trademark Paytm be denied and PayPal be awarded the costs for the proceedings. With PayPal having robust contentions such as prior registration and providing identical services in their kitty, Paytm sure seems to be treading on thin waters as of now.

*Watch this space for the next update on Paytm’s defense and our observations on the recent copyright infringement suit filed by PayPal against Paytm.