Bengaluru-based digital payments provider, Innoviti Payment Solutions, on Wednesday said it had filed an infringement suit against Pine Labs Pvt Ltd over sale of payment products that infringe on Innoviti’s patent on the payments processing technology that enables UPI payments at retail POS terminals.
Innoviti also said that it has been granted an ex-parte ad interim injunction from the Bengaluru High Court effective immediately that will prevent Pine Labs from manufacturing, selling, distributing, advertising, exporting, offering for sale, procuring and dealing with this technology through its ‘Plutus Smart’ or any other device in India.
“This transaction-specific dynamic-QR technology enables processing of payments using UPI, Bharat QR and other QR-based payment forms through the same point-of-sale POS devices that are normally used for accepting credit/debit card payments. Innoviti has already licensed this technology to several partner financial organizations and is currently in discussion with more,” Innoviti said in a statement.
Pine Labs declined to comment to Inc42’s queries till the time of publication.
Innoviti has been granted the patent by Indian Patent Office which will hold force till March 29, 2037.
Bengaluru-based Innoviti is backed by marquee investors including Infosys co-founder NR Narayana Murthy’s Catamaran Ventures, SBI Ven Capital, Singapore and Bessemer Venture Partners, USA.
“We were shocked to know about this when one of our employees alerted us about it this month after seeing the technology being used at one of the shops in Bengaluru,” said Rajeev Agrawal, chief executive at Innoviti.
Innoviti said that given several instances of commercial organizations in India being involved in selling and offering for sale payment products that may infringe on Innoviti’s patent, it has now begun legal enforcement of its patent rights.
Across India, Innoviti said it processes around $5 billion of payments annually from over 1000 cities. It has filed 16 patent applications in different payment technology areas.
In March, Innoviti raised INR 80 Crs in a funding round led by Trifecta Capital and a clutch of other NBFCs.
Innoviti process’ 4.3% of overall retail digital payment transactions in India with around $5 Bn of payments annually from over 1000+ cities.
Pine Labs which is backed by top investors such as Sequoia, PayPal, Temasek and Sofina and had recently acquired gift card solutions provider, Qwikcilver, for $ 110 Mn.
In February, it was reported that Pine Labs was in advanced talks to close a funding round of around $75 Mn from existing investors like Temasek and PayPal that would push the company valuation to $1.2-1.4 billion, up from its previous valuation of $900-950 million, making it a unicorn.
Founded in 1998, Pine Labs raised $125 Mn from Temasek and PayPal last May. Before that, Pine Labs had raised $82 Mn from private equity fund Actis and California-based investment company Altimeter Capital.
Update: July 22, 2019 | 4:50 PM
In a media statement, Pine Labs said, “Pine Labs Private Limited filed its appearance before the District Court in Bengaluru today, refuting allegation of patent infringement IN309274 and to confirm its non-infringing status in the matter. As leaders in this industry we will defend against such frivolous and anti-competitive legal actions as well as challenge the legitimacy of such generic patent grants. Pine Labs respects intellectual property rights and shall continue to comply with the law of the land. We will continue to defend our position before the authorities and ensure uninterrupted business for our customers.”
Update: July 24, 2019 | 7: 35 PM
In a media statement, Pine Labs said that following its petition before the District Court on July 22, 2019, the District court while moving the matter to Karnataka High Court also modified its earlier order to remove references to Plutus Smart or to dynamic QR codes. “While malicious rumors are still being circulated in the market, Pine Labs continues to adhere to compliance with law of the land and shall ensure uninterrupted business for our customers,” the spokesperson added.