BSkyB, the British Satellite Broadcasting company has won a case against the American multinational software corporation (Microsoft) in actions for passing off and for infringement of two CTM Registrations and two UK trade mark registrations for SKY. By way of these actions, BSkyB sought to prevent Microsoft from using “SkyDrive” as the name for their cloud storage service in Europe.

In a counterclaim, Microsoft filed for a declaration of partial invalidity in respect of the SKY trade marks on the grounds of descriptiveness for cloud storage services.

Judge Justice Asplin held that although the average consumer “is a reasonably well informed and reasonably observant user of broadband internet services, if one undertakes a global assessment there is every reason to conclude that there is a likelihood of confusion”.

In light of other cases, the judge considered that “since it is accepted that “drive” is a descriptive term, just as in Alejandro v OHIM and Compass v Compass Logistics, the first syllable “Sky” must be seen as the dominant element of the mark and that there is a manifest likelihood of confusion on the part of the consumer with regard to the SkyDrive mark. Thus, the judge rejected Microsoft’s arguments that the average consumer would see SkyDrive as one word and would characterise it in the same way as VapoRub or BlackBerry. Moreover, the judge considered that “Sky” is an arbitrary trade mark and that the evidence submitted by Microsoft stating that “sky” was descriptive in the sense that it is allusive of the internet and that it is a common word used by traders to describe a cloud system are not consistent.

Sky’s claim under passing off submitted that the “classical trinity” of passing off also succeeded. The judge said that the existence of goodwill with regard to its considerable marketing budget was obvious. There is a misrepresentation that is likely to lead to confusion found in the above circumstances and “damage is inherently likely where frequently the customers of a business wrongly connect it with another”.

The next stage in this battle is an appeal in which Microsoft would wish to submit new arguments. Indeed, a Microsoft spokesman has said that “This case is only about the SkyDrive name and has nothing to do with service availability or future innovation. The decision is one step in the legal process and Microsoft intends to appeal.”

However, if Microsoft loses the appeal they may be forced to rename their product. Will Microsoft find new arguments to counterclaim in appeal? We look forward to finding out.