Précis

Skyscape Cloud Services Limited, a provider of cloud computing services, is the latest in a series of IT companies which have used brand names incorporating the word “Sky” to allude to the on-line or cloud-based aspects of their services, but have fallen foul of Sky plc and related companies. An unusual feature of the case was that Skyscape argued that the G-cloud services it provides under the SKYSCAPE mark are targeted only at public sector organizations, who would be able to differentiate it from Sky plc’s services. Skyscape’s tactics were also unusual. It attempted to seize the initiative in light of Sky plc’s complaint, by applying to the court for a declaration of non-infringement (“DNI”). However, this tactic backfired.

What?

Skyscape provides cloud computing services to public sector organisations under the UK Government’s “G-Cloud” initiative, under which approved private sector suppliers provide cloud services to public sector bodies.

Skyscape provides three types of service under the mark SKYSCAPE:

  • Infrastructure as a Service ("IaaS"): the service is confined to storage, network and other basic resources
  • Platform as a Service ("PaaS"): as well as the IaaS services, operating software and 'middleware' (programs which act as an interface between the operating software and the user's applications) are provided; and
  • Software as a Service ("SaaS"): the service also includes applications to be run by the user.

The Skyscape services include email accounts.

Sky is the very well-known provider of broadcast, internet and related services under the mark SKY. Sky has offered Sky-branded email services, including email accounts, since 2006. It owns UK and Community trade marks, including the word SKY, in respect of a wide range of goods and services (including “electronic mail services” in Clause 38)

Sky’s solicitors wrote to Skyscape, alleging infringement of certain registered trade marks. Sky also drew attention to its recent victory against another supplier in the English Courts, in which it was held that that supplier’s use of the sign SKYDRIVE for a product providing an on-line storage facility infringed Sky’s registered trade marks for the word SKY. However, despite protracted correspondence, Sky plc declined to strike by issuing proceedings for infringement. So Skyscape seized the initiative by applying for a DNI of the registered trade mark identified in correspondence by Sky.

The main substantive issue in this case was whether the name SKYSCAPE, used in relation to Skyscape’s services, infringed the SKY trade marks. That involves comparing the name SKYSCAPE with the SKY trade marks from the point of view of the “average consumer.” That hypothetical person is the average consumer of the services which are alleged to infringe, not the trade mark owner’s services. This case therefore provides an interesting example of who that average consumer may be in the context of cloud computing.

Skyscape argued that the average consumer of its cloud computing services for the public sector will be a knowledgeable civil servant, making a large investment in an important service. He or she will therefore be extremely careful and attentive in selecting the service, taking professional IT advice where required, and so is not likely to be confused or misled as to who the supplier is. It argued that the answer to the two questions would therefore be “no.”

However, the judge noted that some of the 29,000 or so public bodies referred to as potential users of G-Cloud are very small. He referred to Abergavenny Baptist Church and a nursery school in Carmarthenshire as examples. He found that they were unlikely to have an IT professional on hand to arrange, for example, an email account. As a result, the judge found that the average consumer would be someone working in a small public entity such as a nursery school, with a role including the arrangement of an email account. He or she uses G-Cloud, but otherwise need not have a knowledge of IT or the IT industry significantly greater than that of an ordinary member of the public. He or she is also aware of email services being provided under the SKY trade marks and is aware that SKY is a very well-known mark for TV and for Sky’s other core services.

The judge found that when that person sees the name SKYSCAPE being used for email services there is a likelihood of believing it to be a service offered by Sky (on the basis that, like ‘Sky Sports’, ‘Sky News’, ‘Sky Atlantic’ etc., it is a composite name for a service offered by Sky). There was therefore potential infringement of the SKY trade marks by Skyscape, which was enough for the Court to dismiss Skyscape’s declaration of non-infringement.

So What?

Many IT companies have been tempted, for obvious reasons, to use brand names incorporating the word “Sky” to allude to the on-line or cloud-based aspects of their services. This case highlights the significant risks in doing so, in light of the broad registered trade mark protection owned by Sky plc and its group companies.

The “average consumer” is a fictional character who plays a crucial role in many trade mark disputes. He or she is also a somewhat slippery character who will differ according to the goods or services in question. This case highlights that it is crucial in trade mark infringement disputes to establish the characteristics of the average consumer. In this case, Skyscape put forward persuasive evidence that its typical customers were well-informed and careful civil servants, spending a large amount of money, and so exercising a very high level of care. If the “average consumer” were to have these characteristics, the likelihood of confusion would be low and the Court might have been prepared to find that there was no infringement. No doubt this was the reason why Skyscape pursued the case, and decided to seize the initiative.

However, the description of Skyscape’s services in the declaration of non-infringement sought was not limited to those typical customers. Instead, Skyscape’s services in the declaration of non-infringement were described by reference to the full range of public sector organizations which can participate in the G-cloud, which led to the Court adopting a different view of the “average consumer”.

Finally, this case is a salutary warning of the difficulties of seeking a DNI in relation to registered trade marks. Extreme care is needed in defining the activities (i.e. the combinations of signs and goods/services) in relation to which the declaration is sought. Whilst it is tempting for the applicant to define the activities broadly, in order to maximize commercial certainty, this is likely to reduce the chances of success. As the burden of proof is reversed, the trade mark owner only has to find one activity within the scope of the DNI in relation to which the applicant cannot prove non-infringement for the Court to reject the DNI in its entirety.