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Innoviti sues Pine Labs, accuses it of infringing patent on UPI payments

The payment tech company said it has filed the suit for infringement against Pine Labs before the City Civil Court, Bengaluru and has been granted an ex-parte ad interim injunction against Pine Labs

UPI
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Payment technology firm Innoviti has sued digital retail payments company Pine Labs  for infringement on its patent for technology enabling Unified Payments Interface (UPI) at point of sale terminals. The company said it has filed the suit for infringement against Noida-based Pine Labs before the City Civil Court, Bengaluru and has been granted an “ex-parte ad interim injunction” against Pine Labs with effect from July 16, 2019. 

This prevents Pine Labs from manufacturing, selling, distributing, exporting and dealing with this technology through its Plutus Smart or any other device in India, according to Innoviti.

“Pine Labs’ product infringes upon Innoviti’s technology,” said Rajeev Agrawal, chief executive at Innoviti. The Bengaluru-based firm 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,” added Agrawal.

An email query to Pine Labs remained unanswered till the time of going to press. Pine Labs which is backed by top investors such as Sequoia, PayPal, Temasek and Sofina had earlier said that it is gearing up for the next phase of its journey. It is planning to bring in the latest solutions that aim at providing better customer experience, foray into new markets and categories, and eventually go for an initial public offering (IPO) which may happen over the next two years. In the next couple of years, the firm is also expecting the total payment volume (TPV) on its transactions to rise more than four-fold to $100 billion from $23 billion.

Salman Waris, managing partner at Delhi-based specialist technology law firm TechLegis Advocates & Solicitors said this case is an ideal example of how Indian companies can actively enforce their intellectual property (IP) rights in the market. “While as a country we are still trying to develop a culture of innovation and promoting startups, it is equally important for (companies) to protect their technology and intellectual property by not only registering the same but also actively enforcing their rights against others who may be trying to exploit the same,” said Waris. “Normally startups either lack awareness and do not have the right guidance or the requisite funding to pursue infringers,” added Waris.

Interestingly, in March, tech giant Google’s payment arm Google Pay had formed partnerships with Pine Labs and also with Innoviti to enable UPI payments across a massive footprint of PoS terminals spanning 200,000 stores in over 3,500 cities and towns in the country.

Innoviti said that in view of 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. 

Innoviti’s invention for payments processing using transaction-specific dynamic-QR technology has been granted a patent  by the Indian Patent Office, with patent rights in force till 29th March 2037. It has been given this for a “system for establishing secure communication between terminal device and target system.”

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 and debit card payments. Innoviti has already licensed this technology to several partner financial organizations and is currently in discussion with more.

In everyday life, consumers normally come across a specific implementation of this transaction-specific dynamic-QR technology when they pay for purchases at a retail store via a UPI or Bharat QR payment app on their mobile phone. The transaction involves scanning a dynamically generated QR-code from the display screen of a regular credit or debit card POS terminal. Once scanned, the POS terminal automatically initiates a payment authorization request on user’s mobile-app. This in turn results in a UPI-payment charge-slip being printed or confirmatory SMS being generated.

Compared to static QR based payments that have been in use, the use of transaction-specific dynamic QR codes enables more frictionless and  less error-prone cashier-customer interaction. This includes enhanced payment reconciliation “leading to better fraud control and more secure transaction processing,” said Agrawal of Innoviti. 

Unlike a single static printed QR code being used across all transactions at a merchant, the dynamic QR is generated uniquely for each individual payment transaction. Apart from payee merchant identity, it encapsulates vital additional data like amount of purchase and a unique payment transaction id. This automatically ensures a one-to-one linkage between a unique payment request and its corresponding payment receipt.

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.