Paytm hits PayPal hurdle in trademark row

Mobile wallet and e-commerce firm One97 Communications Ltd's bid to seek a trademark for Paytm has hit a hurdle with global online payments company PayPal Inc. challenging the Indian company's move.

PayPal has filed a notice with the Indian trademark office in which it opposed Paytm's application for trademark rights and said that the homegrown company provides services identical to its own.

The Indian company had filed an application for trademark rights in July 2012 and advertised it on 18 July this year as required. Paypal filed its complaint on 18 November, the last day of the four-month period during which the application could be opposed, a person aware of the matter told VCCircle.

In its notice, PayPal said that Paytm is "deceptively and confusingly similar to PayPal" and follows a similar colour scheme, which is likely to cause confusion among consumers.

It also said Paytm "slavishly adopted the two-tone blue colour scheme" of PayPal in its entirety. "The first syllable in each mark is in dark blue colour and the second syllable in a light blue colour," it said.

"Further, both marks begin with the term 'PAY', which consumers tend to remember more than the second syllable and the marks are of similar length," PayPal said. It added that this showed Paytm's intent to benefit from PayPal's fame and goodwill.

PayPal also said that it had been offering its services globally since 1999. Paytm started operations in India in 2010. PayPal, however, hasn't registered its trademark in India.

Both PayPal and Paytm refused to comment on the matter.

Another prominent Indian tech company that has faced a similar complaint in the past is Zomato. The food-tech firm was earlier known as Foodiebay and rebranded itself six years ago when US e-tailer eBay Inc started legal proceedings against it for trademark violation.

Patent attorney and tech corporate lawyer Rahul Dev has raised doubts on PayPal's intention behind this complaint.

"The fact that Paypal waited till the last day to file for opposition raises questions on the real motives behind Paypal's move," he wrote on his LinkedIn blog. "Additionally, Paypal's global trademark had not even been registered in India until they took notice of Paytm's application and post demonetization – raising questions on their focus on digital payments in the country."

Dev was referring to the government's demonetisation drive launched on 8 November when Prime Minister Narendra Modi announced the decision to scrap old high-value banknotes to combat graft and tax evasion. The move has led to a cash crunch and prompted a large number of people to increasingly use digital wallets such as Paytm.

Paytm, which claims to have 164 million users on its platform, registered a surge in traffic after the government move and says it is recording 7 million transactions a day.

Paytm, backed by Chinese e-commerce titan Alibaba Group, has spent millions in branding and marketing. Last year, the Vijay Shekhar Sharma-led company spent nearly Rs 2,046 crore in acquiring customers. It has set aside Rs 500 crore on marketing for this year alone.