News

Sky drives away with High Court decision

Tuesday 23 July 2013

After an eight day trial, the High Court has upheld claims of infringement of trade marks for ‘SKY’ in Europe and allegations of passing off against Microsoft’s ‘SkyDrive’. The High Court dismissed Microsoft’s counterclaims for partial invalidity and ruled in favour of Sky (British Sky Broadcasting Group Plc and Others).

Although a date for the follow-up hearing on remedies has not yet been set, Sky will be entitled to elect between damages and an account of profits. Microsoft, on the other hand, are said to be appealing.

The key points of interest from this case are summarised below:

Background – Company Profiles

The Sky and Microsoft groups are prolific market leaders and are very well known.

Under the ‘SKY’ brand, Sky provides, among other things, broadband services, media content transmitted over the internet and a TV set-top box for storing digital media. Under the ‘SkyDrive’ name, Microsoft provides an online digital media storage facility, which is accessible through various platforms with internet access, including Windows desktops, Apple Macs, Windows Phones, Apple iPhones and Microsoft’s Xbox game consoles.

In terms of branding, Sky has adopted a process of using the word ‘Sky’ followed by a descriptive element in its satellite channel and media platforms. Some of the most prominent Sky examples include: ‘Sky Movies’, ‘Sky Sports’, ‘Sky Digital’ and ‘Sky Broadband’.

Background – Previous Decisions

In 2010, Sky successfully opposed Microsoft’s CTM application of 2007 for ‘SkyDrive‘ (CTM No. 6452411) based on Sky’s earlier CTM registration for ‘SKY’ (CTM No. 3203411) which was filed in 2003 and later registered in 2008. The grounds of opposition were based on a likelihood of confusion between the marks.

Although an appeal was subsequently lodged by Microsoft, this was dismissed by the First Board of Appeal in 2012 and Microsoft was ordered to pay Sky’s costs in relation to both the opposition and appeal proceedings.

Infringement

Sky alleged infringement and passing off of two registered Community trade marks (CTMs) and two registered UK trade marks (UKTMs) for the mark ‘SKY’. Sky contended the use of the sign ‘SkyDrive’ in connection to its media storage service provided throughout the EU.

In reviewing the goods and services to which the ‘SKY’ marks and the ‘SkyDrive’ name related, Mrs Justice Asplin decided that there is clearly a close connection, being media storage and broadband services, including email. Therefore, the next task was to assess the similarity of the marks and whether there is likelihood of confusion between the marks.

In analysing Microsoft’s ‘SkyDrive’ sign, Mrs Justice Asplin decided that although the ‘Drive’ term is descriptive, ‘Sky’ is not descriptive of the internet. The dominant element is the ‘Sky’ term. The ‘Sky’ term fulfils a trade mark function rather than being a composite of ‘SkyDrive’ as a whole and it is this part that is likely to cause confusion and lead the average consumer towards Sky.

For Mrs Justice Asplin, the likelihood of confusion was clear. Sky provided evidence of actual confusion amongst the public in the form of calls to Sky’s helpline during difficulties which were encountered with ‘SkyDrive ‘in 2011 and 2012. The evidence of confusion was strong. Mrs Justice Asplin ruled that damage to Sky was inherently likely because the customers of ‘SkyDrive’ were actually led to believe that the serious difficulties with ‘SkyDrive’ were connected with Sky.

It was therefore established that Microsoft infringed the ‘SKY’ marks under Section 10(2)(b) of the UK Trade Marks Act and Article 9(1)(b) of the Regulation on Community the trade mark.

Passing Off

In terms of passing off, there are three key elements: goodwill, misrepresentation and damage.

  1. The existence of goodwill was not really in dispute. Sky relies upon its reputation and goodwill across its entire business.
  2. Evidence of misrepresentation of the ‘SkyDrive’ sign was present. The dominant ‘Sky’ term in ‘SkyDrive’ actually led Microsoft’s customers of ‘SkyDrive’ to call the Sky helpline. Therefore, there was misrepresentation, whether or not this was intentional.
  3. Mrs Justice Asplin also ruled that the existence of actual confusion of the Sky helpline calls meant that damage to Sky in the general sense was inherently likely.

Sky’s claim in passing off therefore succeeded.

Counterclaims by Microsoft

In Microsoft’s defence, two counterclaims were filed, one for a declaration of partial invalidity of all four of the Sky trade marks on the ground of descriptiveness and the other for a declaration of invalidity in respect of one CTM for an alleged impermissible amendment (bad faith). Both counterclaims were unsuccessful.

Since the decision was handed down, Microsoft has announced that it intends to lodge an appeal. However, given the strength of the evidence put before the High Court and the previously dismissed appeal in Europe, Sky are likely to be feeling confident.

If you need advice on any trade mark matter please contact a member of our Trade Mark team.

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