On 28 June 2013, the High Court of England and Wales held in British Sky Broadcasting Group plc and others v Microsoft Corporation and another  EWHC 1826 (Ch) that, in addition to passing off, Microsoft’s "SkyDrive" mark in respect of cloud storage services infringed Sky’s UK and Community trade marks (CTMs).
BSkyB (Sky) provides television and other communication services such as broadband services. These services include a set-top box with the ability to digitally record and replay television programmes and internet streaming and on-demand television services. Sky has registered UK trade marks and CTMs for the word and device marks "SKY" for a variety of services, including those under Classes 9 and 35, particularly in relation to computer software and data storage.
Microsoft, in addition to its well-known operating system, software and online services has provided cloud storage services in the United Kingdom since 2007, under the mark "SkyDrive". SkyDrive applications have subsequently become available across a variety of platforms and are integrated into start-up tiles on Microsoft’s Windows 8 operating system. In 2007, Microsoft applied to register the mark "SkyDrive" as a CTM for goods and services in Classes 9 and 35.
The present case involved the alleged passing off and infringement by Microsoft of four of Sky’s trade marks (two UK-registered trade marks and two CTMs) under Sections 10(2)(b) and 10(3) of the Trade Marks Act 1994 (the Act) and equivalent provisions contained in the CTM Regulation (207/2009/EC). Microsoft counterclaimed for invalidity of Sky’s trade marks on the basis, amongst other things, that they were wholly descriptive under the Act owing to "SKY" alluding to internet services/storage.
Under Sections 10(2)(b) and 10(3) of the Act and Articles 9(1)(b) and 9(1)(c) of the CTM Regulation, a trade mark is infringed if, in the course of trade, a sign is used that is:
- Confusingly similar to the trade mark and is used in relation to identical or similar goods and services or
- Is identical or similar to the trade mark that has a reputation in the United Kingdom or European Union, is not used in relation to similar goods or services and where the sign used takes advantage of, or is detrimental to, the distinctive character or repute of the trade mark.
In addition to the above, passing off may be established in cases where the following key elements are satisfied:
- There is goodwill or reputation attached to the relevant goods or services.
- The defendant makes a misrepresentation to the effect that the public believes (or is likely to believe) that its goods and services are those of the claimant.
- The claimant suffers damage as a result of the above.
The High Court found that, in addition to passing off, Microsoft’s use of "SkyDrive" infringed Sky’s UK trade marks and CTMs under Sections 10(2)(b) and 10(3) of the Act and the equivalent provisions in the CTM Regulation. It was common ground that Microsoft’s mark covered similar, if not identical, goods and services. The Court rejected Microsoft’s counterclaim for invalidity on the basis that "SKY" did not allude to cloud computing generally and was not therefore descriptive.
The key findings of the Court included the following:
- It was often very difficult, or even impossible, for consumers to determine Microsoft’s connection to SkyDrive when used in smart phone applications or on Windows 8 tiles.
- Evidence submitted by Sky in relation to 17 of its customers who had contacted Sky’s customer support, believing that SkyDrive must be connected with Sky’s services, was very persuasive.
- Although not conducted with the High Court’s approval, survey evidence submitted by Sky helped the Court gauge the public’s perception of the "SkyDrive" mark.
- The strength of Sky trade marks in the United Kingdom was sufficient for the requirement that its marks were known by a significant part of the public in a substantial part of the EU territory.
- "SKY" was the dominant element of Microsoft’s mark, with "Drive" being merely descriptive).
- Based on the above, there was a likelihood of confusion because, on a global assessment, the reasonably well informed and observant user of internet services might believe SkyDrive formed part of Sky’s services.
The High Court’s decision highlights the importance of ensuring sufficient connection between a mark and the relevant business or brand. In this case, the Court was satisfied that consumers could not sufficiently connect the SkyDrive service to Microsoft, which thereby, amongst other things, led to confusion as to the origin of its services.
In addition, the case demonstrates the utility in being able to deduce valuable evidence as to actual confusion on the part of consumers. The Court was particularly persuaded by Sky’s customer support evidence, which provided "spontaneous real life examples of confusion".
Although originally stating that it would appeal the decision, Microsoft has since announced that it has agreed with Sky that it will change the name of its SkyDrive services during a transitional period.