Who: British Sky Broadcasting Group Plc and others (“Sky”) v Microsoft Corporation and others (“Microsoft”)
Where: High Court, Chancery Division
When: 28 June 2013
Law stated as at: 2 August 2013
Sky provides television and communication products and services in the UK and has adopted a series of trade marks comprising the mark ‘SKY’ – both on its own and followed by a descriptive element. In 2011, Sky brought an action against Microsoft alleging the infringement of its SKY trade marks and passing off in relation to Microsoft’s “Skydrive” product. The issues looked at within this case were as follows:
Infringement by identity or similarity of goods and services
A trade mark will be infringed where a mark is used and because of its similarity to the trade mark, and the identity or similarity of the goods or services, there exists a likelihood of confusion by the public.
It was accepted in this case that Sky’s and Microsoft’s trade marks were used for identical goods and services. Asplin J concluded that the trade marks were also used for similar goods and services and that, if anything, Sky had a stronger case under the ‘similar’ head, as the non-identical goods and services form the core of Sky’s reputation.
The question as to whether there was a likelihood of confusion was a more contentious issue. Asplin J concluded, after conducting a global assessment, that there was a risk that the average consumer (being a reasonably well informed and reasonably observant user of internet services) might believe that the services came from the same or a related undertaking, and therefore, that there was a risk of confusion. The Judge took four main factors into account in reaching this conclusion:
1. While she accepted that the average consumer usually sees a trade mark as a whole, she took the view that “drive” was merely a descriptive term for a remote storage device, and therefore that “Sky” was the dominant element of the mark. The natural conclusion of this analysis was that the average consumer would see “SkyDrive” as two words: a trade mark followed by a descriptive element. This followed the pattern of a number of Sky’s trade marks (for example, ‘Sky Movies’ and ‘Sky Broadband’).
2. Asplin J rejected Microsoft’s arguments that “sky” had been used as a descriptive term in the sense that it is allusive to or a metaphor for the internet. She took into account evidence of a number of online storage facilities, none of whom used the word “sky” to refer to the internet, and also considered the results of a survey in which only 11 of 515 people interviewed by Sky saw any connection between the word “sky” and the internet.
3. The context in which SkyDrive was used was an important factor. Since 2011, SkyDrive has featured as one of the main start-up tiles on Microsoft’s Windows 8 operating system, and is also available for platforms including Macs, iPhones, iPads, Android phones and Xbox games machines. Consumers who see the tile on any of these platforms would have no reason to associate SkyDrive with Microsoft. Asplin J also took into account that even before 2011, when the mark used by Microsoft was “Windows Live SkyDrive” or “Microsoft SkyDrive”, a recipient of photos or documents by email through SkyDrive would not necessarily have been aware of any link to Microsoft. Therefore, whether used as “SkyDrive”, “Windows Live SkyDrive” or “Microsoft SkyDrive”, there was a risk of confusion.
4. Asplin J also found support for her conclusion in examples of actual confusion that were presented by Sky. While she acknowledged that examples of actual confusion would be rare, in this instance Sky was able to point to 17 individuals who had contacted the Sky helpline with queries about SkyDrive. The Judge agreed with Sky that while these examples were not numerous, they were likely to be the tip of the iceberg, and there were enough examples to conclude that confusion is likely.
Infringement under s.10(3) Trade Marks Act / Art. 9(1)(c) Community Trade Mark Regulation
A trade mark will also be infringed where a person uses a sign which is identical with or similar to a trade mark, that trade mark has a reputation in the relevant territory (being the EU or the UK) and where the use of the sign is without due cause, and takes unfair advantage of or is detrimental to the distinctive character or repute of the trade mark. Taking into account the same evidence as set out above, Asplin J concluded that Microsoft also had infringed Sky’s trade marks under this head of claim. In particular, she commented that given her earlier conclusions, it was clear that for the average consumer, SkyDrive would call to mind the Sky mark. Sky had also established a serious risk of loss of distinctiveness. The Judge considered that a risk of loss of distinctiveness was an obvious inference from the facts of the case, and this opinion was supported by the creation of subsidiary apps such as ‘Sky Wallet’, ‘Sky Music’ and ‘Sky Player’ by third parties.
Asplin J held that Sky’s claim in passing off also succeeded, as the three elements of passing off (goodwill, misrepresentation and likelihood of confusion or damage) were all present.
Microsoft counter-claimed that Sky’s trade marks were invalid as the word “sky” was descriptive of the internet. The Judge rejected this claim due to a lack of evidence of “sky” being used in this sense.
Microsoft also alleged invalidity of one of Sky’s trade marks based on a bad faith argument, due to a partial surrender and amendment of the trade mark. The Judge also rejected this argument, on the basis that whether or not there was bad faith should be judged at the time of the trade mark application and that there was nothing in the legislation which implied that bad faith could encompass acts which occurred several years after registration (as did Sky’s partial surrender and amendment). Asplin J also commented that in any event, the partial surrender and amendment process took place over several months and was tested by OHIM. On that basis, it would have been extremely difficult to characterise the application as falling short of the standards of acceptable commercial behaviour.
Why this matters:
Of particular importance here was evidence of actual examples of confusion by consumers in the form of calls to Sky’s helpline. Microsoft had claimed that this evidence was a skewed sample of customer data of the kind recently rejected in the Interflora v Marks v Spencer litigation. However, Asplin J rejected this argument and distinguished these calls by classifying them as “spontaneous real life examples of confusion”. She noted that such spontaneous examples of confusion would be rare, but confirmed that they can be valuable evidence in cases such as this.
The Judge also placed importance on the lack of any apparent connection between Microsoft and SkyDrive. The fact that consumers could use SkyDrive without any indication that it was linked to Microsoft (particularly where SkyDrive appears as a tile or app on an unrelated product such as an iPhone or Xbox games console) increased the likelihood of confusion in this case.
Contrary to initial indications from Microsoft that it intended to appeal this decision, Microsoft and Sky have now announced that they have reached an agreement whereby Microsoft will not appeal this decision and will rebrand Skydrive after a reasonable transition period. It has been reported that the agreement between the two companies includes financial and other terms that have not been publicly disclosed.