PayPal and Paytm Trademark Dispute

Paytm, the largest e-wallet company in India, which saw a drastic surge in user volume post-demonetization, has found itself embroiled in a controversy over its logo with the US-based PayPal, also a digitized payment system. Paypal claims that Paytm’s logo is ‘deceptively and confusingly similar’ to that of the global giant’s. PayPal further claims that Paytm is free-riding on the goodwill of PayPal. What is similar between the two logos is that the first syllable of both the logos is dark blue while the second syllable is a light blue. Secondly, the word ‘Pay’ is common to both logos.

Contents of the Notice:

The notice asks the relevant authorities to desist from accepting Paytm’s trademark application, claiming that the colour scheme of both the logos bear such a great degree of similarity as to cause confusion in the minds of customers. The notice claims that allowing the registration would be in violation of ss. 9, 11 and 18 of the Trade Marks Act, 1999.

Points of Law Argued:

The provisions specifically mentioned in the notice are s. 9(2)(a), 11(1), 11(2), 11(3), 11(4), 18(1), are 11(10).

  • 9 lists out the absolute grounds of refusal, with s.9(2)(a) stating that registration shall be refused if it is deceives the public or causes confusion.
  • 11 lists out the relative grounds for refusal.
  • 11 (1) provides for refusal for registration of application for deceptively similar trademarks, which is deceptively similar and likely to cause confusion in the minds of the public, or which is similar to another trademark for a business that is similar or identical to that of the earlier registered trademark.
  • Additionally, 11(1) also provides for likelihood of association with the previous mark.
  • 11(2), as argued by PayPal, states that usage of the similar trademark would be inimical to the distinctive character of its trademark.
  • PayPal argues that the application would be hit by s.11 (3) of the Act, as it would amount to passing off.
  • According to the PayPal, Paytm is precluded from relying on s. 11 (4), which allows the applicant to seek the consent of the earlier trademark holder.
  • 11 (10), argues PayPal, is at play here, as there is an element of bad faith involved.
  • 18 is at play here as it disallows the registrar from registering trademarks where there is no honesty involved, with the original proprietor being the owner of the trademark.


Possible Outcome:

A colour or combination of colours may constitute a trademark; and in this particular situation there is a high degree of similarity between the colour schemes of the two. In the case of Loubotin v. Yves Saint Laurent, the court stated that including a colour within the scheme of trademark registration may affect the competition in the market. However, what is of significance in the tussle between PayPal and Paytm is that the combination of the two colours is nearly identical, with the public associating the colour scheme with the holder of the earlier trademark.
The most crucial element for the registration of a trademark is distinctiveness. Another element of contention between the two is their phonetic similarity. In the Cadila Healthcare v. Cadila Pharmaceuticals case, the court refused trademark registration to the word Falcitab, which was similar to Falcigo, a drug that was used for the same purpose due to its phonetic similarity. However, this was in reference to medication, where similarity in the names of drugs could have potentially disastrous consequences. A landmark case in regard to ‘deceptively and confusingly similar’ trademarks is the Pianola case, where it was held that one must look at the word as a whole, both phonetically and visually in order to determine the similarity between the two.
Thus, PayPal’s argument may hold good, as there is a high degree of both phonetic and visual similarity between the two words- Paytm and PayPal.
Authored by Malavika Parthasarathy (Intern)
Image Source here, the image is in the public domain.

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