SUMMARY
A Bengaluru-based startup Blinkhit has filed a petition in a city civil court, seeking to restrain Blinkit from using the trademark
The Bengaluru civil court has twice ruled in favour of Blinkhit and has issued injunctions against Blinkit
While the injunctions are currently stayed by Karnataka HC, the legal tangle poses a big problem for Blnikit and its owner Zomato
In the shareholder letter, released alongside the company’s financial results for September 2022 quarter, Zomato CEO Deepinder Goyal said he was happy with the acquisition of Blinkit and nervously excited about where the quick-commerce vertical was headed.
However, now it appears that besides the excitement, the top brass at Zomato would also have been nervous as Blinkit was involved in a legal dispute, at that time, which could potentially decide if the quick commerce player would get to keep its name. But let’s start from the beginning. The story goes back to December 2021.
As 2021 neared its end, quick-commerce platform Grofers undertook a full-fledged rebranding exercise. The startup purportedly filed for a trademark on the name ‘Blinkit’ in early December of 2021.
In the middle of December 2021, Grofers went on a media blitzkrieg, announcing to the world that it had rebranded itself as Blinkit. The new name alluded to its ambitious 10-minute delivery plan, meaning that it could deliver products at its customers’ doorsteps in the ‘blink of an eye’.
While the startup was occupied with media coverage, a Bengaluru-based web development startup Blinkhit Private Limited also applied for the trademark of the word ‘Blinkit’ in late December 2021. In its application, Blinkhit said it had been using the trademark for seven months.
As per the publicly available data about trademarks of Indian startups, Grofers India applied for the trademark on December 24, 2021, with the quick-commerce platform claiming that it was using the trademark since December 13, 2021.
A similar application made by Blinkhit, in the same month, to the Office of the Controller General of Patents, Designs and Trade Marks noted that it was using the ‘Blinkhit’ trademark since June 8, 2020. This set the stage for what would eventually become a major tussle which has a lot at stake for the Gurugram-based platform.
While the developments largely flew under the radar, the case took a legal turn around the time Zomato was looking to acquire Blinkit. In June 2022, Blinkhit filed a lawsuit against the quick-commerce platform in a Bengaluru civil court, alleging trademark infringement.
In its plea before the civil court, Blinkhit sought to restrain Blinkit from using the contentious trademark. The petition also called for barring Blinkit from using the ‘website hosted in relation to the defendants’ existing and future business trademark, to surrender the entire stock of unused offending hoardings, bills, carry bags, negatives, positives, transparencies, blogs for destruction and to render true account of the profit that defendant derived by promoting their business by using the offending trademark’.
Amidst all this, Zomato acquired Blinkit for $568 Mn in an all-stock deal, even as the listed foodtech giant came under heavy fire for a slew of reasons ranging from corporate governance issues to alleged over-valuation of Blinkit.
From there onwards, problems only escalated for the mighty consolidated entity, which has been fighting a legal battle against the small Bengaluru-based startup.
The proceedings have largely been mixed for both parties. The Bengaluru civil court twice ruled in favour of Blinkhit and issued injunctions against Blinkit. However, Blinkit approached the Karnataka High Court and secured stay orders on both the rulings.
A Tale Of Two Courts
Blinkit has a lot at stake in the legal tussle. Any adverse judgement could throw the crores of rupees it spent on branding down the drain. This is notwithstanding any future prospects where Blinkhit itself could venture into the quick-commerce category at Blinkit’s expense.
As per the Bengaluru civil court documents of the case, accessed by Inc42, Blinkhit contended that Blinkit was trying to benefit from its trademark. In the June 2022 petition, Blinkhit also claimed that the use of the trademark by Blinkit was not a matter of coincidence but ‘an extremely calculated and blatantly dishonest act acquainted with bad faith’.
The court ruled in favour of Blinkhit in June and granted a temporary injunction, restraining Blinkit from using the trademark till the completion of the trial in the matter. However, Blinkit knocked on the doors of the Karnataka HC in July 2022 and sought interim relief in the matter.
According to The Morning Context, Blinkit argued before the HC that its usage of the trademark was honest and bonafide and its business had nothing to do with Blinkhit’s. The HC sided with Blinkit in the matter and stayed the proceedings.
In August, during the second round of proceedings before the civil court, the Albinder Dhindsa-led company said that Blinkhit was ‘virtually a defunct entity with nil/zero revenues’ between FY17 to FY21. However, the court once again issued an injunction in favour of Blinkhit saying that the registered ownership of the trademark had to prima facie prevail.
The court also said that, prima facie, Blinkhit was the prior user of the trademark as the quick-commerce player began operations as Blinkit five years after Blinkhit was incorporated by ‘just removing the alphabet H’.
The court said that Blinkit could not make an argument that its name was not ‘deceptively similar’ to Blinkhit. The Gurugram-based company once again approached the HC and obtained a stay.
Inc42 reached out to Blinkit seeking its comments on both the lawsuits, however, the company refused to comment citing the subjudice nature of the matter.
Not Learning From The Past
This is not Blinkit’s first brush with a trademark case. Grofers India, as Blinkit was earlier known, was also the subject of a similar case in 2015 after a startup by the name of Groffr accused it of trademark infringement.
Groffr eventually filed a case before the Delhi HC and accused Grofers India of using a similar sounding name to confuse customers. The case is still pending before the court even though the entity in question, Grofers India, does not exist now.
The latest developments have cast a dark shadow over the quick-commerce startup and raised questions over how the startup landed in two consecutive trademark infringement cases.
This could also complicate matters for the parent entity Zomato, which is already reeling under mounting losses and investor scrutiny over the fine print of Blinkit acquisition.
While the fortunes of Blinkit have somewhat improved since its acquisition by Zomato, it still continues to bleed heavily. Blinkit reported an adjusted revenue of INR 301 Cr in Q3 FY23 and an adjusted EBITDA loss of INR 227 Cr.
Meanwhile, Blinkit also plans to scale its dark store count by 30-40% over the next 11 months, which could also entail capital expenditure before the investment yields any result.
A Flurry Of Trademark Infringement Cases
The Blinkit saga adds to the growing number of trademark and copyright infringement cases involving big startups and companies.
Earlier this year, audio streaming platform Kuku FM entered into a settlement agreement with competitor Pocket FM after a seven-month-long protracted legal dispute. The case involved Kuku FM publishing the audio summaries of a few books that Pocket FM had the exclusive licence for.
In September last year, Bengaluru-based startup Happy Belly Bakes brought ecommerce giant Amazon to its heels after the former won a four-year-long lawsuit against the ecommerce major’s sister concerns – Tootsie LLC and now defunct Cloudtail India.
A Bengaluru district court reportedly ruled that the trademark of the words ‘Happy Belly’ belonged to the startup and directed Amazon to remove all products with similar name and label.
In another major case involving an Indian startup, the Bombay High Court, in September 2022, extended a restraining order against listed electrical company Polycab India and prohibited the company from selling or marketing some ceiling fans, which had a ‘nearly identical’ visual design to that of D2C cleantech startup Atomberg’s products.
However, not all cases have gone in favour of startups. In July last year, the Delhi High Court permanently barred a Bengaluru-based cakery from using the name ‘Facebake’ or ‘Facecake’, for its products. This came after Meta, the parent company of social media platform Facebook, filed a case against the cakery for trademark infringement.
