Epay vs Ipay – lengthy unfair competition dispute finally resolved by the court
After a long dispute, the Supreme Administrative Court has rendered the final decision in an unfair competition matter, brought up by Epay AD – the operator of the extremely famous electronic payment system ePay (represented by Pavlov & Co), hosted at the epay.bg domain (both ePay and ePay.bg being registered trademarks). The case was started back in 2012, after Intercard Finance LTD – a local affiliate of Ipay International S.A. – a Luxemburg based company launched services for internet payments, electronic transfers of money and electronic money accounts and other similar services under the brand iPay and on the ipay.bg website.
Given the fact that the two companies were direct competitors, EPAY brought up an action before the Commission for Protection of the Competition, citing that Intercard Finance was using a similar sign (iPay as opposed to ePay), which was confusing the consumers as to the commercial origin of the services, which could be damaging for the competitor. Numerous evidence for the reputation of the ePay and ePay.bg brands were presented, along with evidence of actual confusion on behalf of consumers, who were trying to use the services of Intercard Finance, but were calling the ePay help lines when encountering problems, as they could not make a difference between them. It is highly important to note that Bulgarian consumers, given the characteristics of the Bulgarian language and the Cyrillic alphabet and the relatively low level of use of English, have difficulties differentiating between ePay and iPay, mainly due to the fact that in Bulgarian the letter “e” is pronounced as [e], rather than [i] (as it is in English), while they usually accept and pronounce “i” as [i], rather than [ai], which had a significant effect in creating the confusion.
The CPC did not take those facts into account and ruled that despite the companies being competitors, the consumers could differentiate between the services, given the different signs and also the different design of their websites.
The decision of the CPC was appealed by Epay AD, citing the obvious discrepancies between the reasoning of the CPC and the established facts. A key point in the matter was the conclusion of an expert in philology (requested by Pavlov & Co), who clearly stated that Bulgarian consumers would have a hard time differentiating between “ePay” and “iPay”. That was coupled with a conclusion by an expert in trademarks, who indicated that the services provided were similar, and the signs were also similar from a trademark point of view. Last but not least, two of the callers to the ePay customer service line from the recordings were summoned to give testimony and even then, years after the incident, they were still confusing the two systems. These overwhelming evidence lead to a decision of the Supreme Administrative Court to overturn the CPC decision and send the case back to the CPC for a new ruling.
The decision of the SAC was appealed by Ipay International and the CPC before the last and highest instance – the Five-judge panel of the Supreme Administrative Court. The appellants insisted that the signs were easily distinguishable, consumers would not be confused and the occurrences of confusion were only isolated incidents, and that confusion has taken place when trying to get assistance, and not when purchasing or choosing the particular service. Epay AD contested the appeals, citing the evidence above and dismissing the claims that consumers distinguish between the signs.
After a lengthy deliberation and several months of delay, the SAC Five-judge panel finally issued a decision, confirming the SAC decision and returned the case to the CPC for a new ruling, according to the motives of the SAC that an infringement has taken place.
An important turning point before the final instance was also the fact that parallel to these proceedings, Epay AD (again represented by Pavlov & Co) has initiated procedures against the registration of several EUTM trademarks in the name of Ipay International that all included the element iPay, and all of these proceedings ended successfully, with the EUIPO concluding the signs were similar, given the similarity between the elements “ePay” and “iPay”. These decisions were pointed out to the SAC Five-judge panel and played an important role of further convincing the Court that the signs were indeed similar.
The lengthy dispute ended successfully, which is of extremely high importance for the protection of the client’s leading positions in the field of electronic payment services in Bulgaria.