The unseeded Indian pair lost 3-6 2-6 against American combination of the Jack Sock and Jackson Withrow.
It was second setback for 44-year-old Paes after his early exit in New York last week.
Paes had earlier made the third round of the Australian Open and also reached the finals of two back-to-back Challengers, winning one.
Divij Sharan now remains the lone Indian in the doubles fray. He and his American partner Scott Lipsky will take on Netherlands' Wesley Koolhof and Artem Sitak of New Zealand in their tournament opener.
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