PayPal vs Paytm: A Trademark Case

On 18th November, 2016 PayPal company filed a lawsuit for infringement of trademark against a famous Indian company Paytm.

Emergence and popularity of Paytm

On 8 November, 2016 Prime Minister Narendra Modi announced demonitization of all Rs 500 and Rs 1000 banknotes to curbe the problem of black money. He also announced issuance of new banknotes of Rs 500 and Rs 2000. Due to this decision, there was cash crunch all over India. There used to be long lines outside ATM counters every day since cash was not easily available to meet the daily needs. In this situation, making online payments was the best option. That's when Paytm came into picture and within a short period of time, the company flourished and became a household need. 

Emergence of PayPal

PayPal is an American based online payment portal rather a company founded long back when Paytm didn't even exist. It was founded in the year 1998. PayPal provides online payment services across the globe. 

When Paytm caught attention of Paypal

With the growth and flourish of Paytm, it grabbed attention of its competitors including an American based company PayPal who filed a case of trademark infringement against Paytm on 18 November, 2016 for using its name and logo. PayPal caught attention of Paytm when Vijay Shekhar Sharma, founder of Paytm had been extremely busy and aggressively advertising and promoting its services. 

Objections Of PayPal against Paytm

Paypal filed law suit against Paytm under the following grounds- 

1. Names of both the companies start with the word 'Pay'. 
2. Logo of both the companies have similar colour combination of dark blue and light blue but with slightly different shades which is almost unnoticeable with naked eyes. 
3. Also, Both the companies have used the dark shade of blue for the word 'Pay'. 
4. Both companies carry out same type of business activities that is online payment and transaction.
5. According to PayPal, Paytm intended to confuse the customers and take Paytm as PayPal since both of them have similar logo. 
6. Since PayPal was not famous in India and had not registered its own trademarks in India before demonitisation, Paytm took the advantage of PayPal's unpopularity in India and used logo similar to that of PayPal's. 

Some important points

It is to be noted that the Indian Trademark Law does not protect colours to the extent of colours or combination of colours conferring a distinctive characteristics to the product of service

As per the Trademark Act, 1999, a trademark may be limited partly or wholly to the colour combinations and any such limitations shall be taken into account by the Tribunal having to decide on the distinctive character of a trademark.

As far as trademark is registered without limitation of colours, it shall be considered to have been registered for all colours.

Why is it so much concerning for PayPal?

Paytm is extremely popular in India. From cab drivers to shopkeepers to common public, everyone knows about Paytm. On the others hand, popularity of PayPal in India is limited to eBay shoppers, frulancers and IT software developers mainly those who are exposed to global world much more than common consumers. 

PayPal function across the globe. PayPal fears its loss to Paytm in the global scenario if Paytm starts gaining popularity outside India.

This case is still going on and may take few more years to get the final judgement.