Sky v Microsoft: Trade Mark Infringement; Passing Off

Background

Sky sought to prevent Microsoft from using ‘SkyDrive’ as the name for its cloud storage service throughout the European Union (EU). In addition to passing-off arguments based on the ‘classical trinity’ of goodwill, misrepresentation and damage, the trademark infringement claims were based on both Section 10(2) (b) and Section 10(3) of the Trademarks Act 1994 in relation to Sky’s UK marks, and the equivalent European legislation in relation to its CTMs, being Articles 9(1)(b) and 9(1)(c) of the Community Trademark Regulation (40/94).

The judge, Mrs Justice Asplin, held that the ‘Sky’ element of ‘SkyDrive’ was the “dominant element of the sign”. This meant that the average consumer would consider the ‘Sky’ part as “fulfilling a trademark function” on its own, as opposed to just forming a “composite part” of the SKYDRIVE mark as whole. On this basis, the judge found that the average consumer, here being “a reasonably well informed and reasonably observant user of broadband internet services”, would have been likely to confuse the SkyDrive product as belonging to Sky.

It was noted that ‘SkyDrive’ was used predominantly by itself in advertising and use, often with no reference to its Microsoft connection. However, the judge’s findings of infringement and passing off were also confirmed in relation to ‘SkyDrive’ in the form of Windows Live SkyDrive or Microsoft SkyDrive, as well as ‘SkyDrive’ appearing on its own.

It was held that “damage is inherently likely where frequently the customers of a business wrongly connect it with another... [which] is clear from the very fact that the callers to the Sky helpline who were enquiring about SkyDrive were having serious difficulties with the product which they believed to be connected with Sky”. The proof of actual confusion supporting Sky’s claims was certainly very helpful for the claimant and this was highlighted by the judge, who noted that such evidence is a rare occurrence. Further, the judge accepted that the examples of confusion provided may have only been the tip of iceberg, as the call recordings from Sky’s customer help centre were kept only for six months.

Sky was also able to demonstrate “a link” in the mind of the average consumer, as required by Section 10(3) of the Trade Marks Act 1994, between the SkyDrive sign and Sky’s trademarks, with the judge stating that there was a “serious risk of loss of distinctiveness in the sense of ‘dilution, whittling away or blurring’ in the minds of average, reasonably informed consumers of the goods and services for which the mark is registered”. Dilution of Sky’s reputation was established on, among other things, unchallenged evidence of apps developed by third parties to enable use of SkyDrive, with names such as Sky Manager, Sky Wallet and Sky Player.

The judge was dismissive of both of Microsoft’s counterclaims, in particular in relation to the alleged descriptiveness of ‘Sky’, where she stated that there was not a: “sufficiently direct and specific relationship between the sign and the goods or services in question to enable the public immediately to perceive, without further thought, a description of the goods and services in question or one of their characteristics.”

Microsoft was planning on appealing this decision, however it has since announced its intention to re-brand its SkyDrive service, having “reached a resolution” with Sky on 31 July 2013. Sky has issued a statement that they “will remain vigilant in protecting the Sky brand”.

Notes and useful links

A previous version of this article first appeared in WTR Daily, part of World Trademark Review, 10 July 2013. For further information, please see www.worldtrademarkreview.com.