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Internet Titans Clash in Trademarks Dispute

In a ruling which illustrates that even corporate titans can fall foul of intellectual property laws, Microsoft Corporation will have to re-christen its ‘SkyDrive’ cloud storage service after a judge found that the name violated trademarks held by British Sky Broadcasting Group (BSB) and amounted to passing off.

SkyDrive was launched in 2007 as part Microsoft’s ‘Windows Live’ online service. It provides an online storage facility for documents and photos which can be accessed from anywhere on the internet and made available for sharing. By June 2011, SkyDrive had 92 million users worldwide, three million of them in the UK. As well as its well-known broadcasting activities, BSB also has a huge internet presence with more than four million UK households using its broadband service by 2012.

BSB instituted High Court proceedings, alleging that use of the SkyDrive name by Microsoft amounted to passing off and breached two of its registered community trademarks and two UK registered trademarks for the mark ‘Sky’.

Upholding those claims, the Court ruled that, on undertaking a global assessment, there was every reason to conclude that there was a likelihood that reasonably well informed and observant users of broadband internet services would be confused by the SkyDrive name and might wrongly believe that it was a service provided by, or at least economically linked to, BSB.

The level of public confusion was illustrated by survey results and telephone calls made by members of the public to the BSB helpline seeking assistance with the SkyDrive service. BSB had established that there was a serious risk of loss of distinctiveness of its trademarks, in the sense of dilution, whittling away or blurring, in the minds of average consumers.

Also upholding BSB’s passing off claim, the Court found that the ‘classic trinity’ – impact on goodwill, a likelihood of confusion in the minds of real internet users and misrepresentation, whether or not intentional – had all been made out. Microsoft’s counter-arguments that the four relevant trade marks were partially invalid for the purposes of describing cloud storage services were rejected.