British Sky Broadcasting Group Plc (BSBG) and Microsoft have settled the trade mark infringement action which Sky brought against Microsoft in an English Court. As a result Microsoft will have to find a new name for its cloud storage service SkyDrive. BSBG has, however, agreed to allow Microsoft to continue using the name for a “transition period”, but after that, Microsoft will have to rebrand the service. It is unclear when Microsoft will announce the new name.

The action taken by (BSBG) alleged infringement of a number of its SKY trade marks and also passing off. Microsoft denied infringement and counterclaimed for partial invalidity of BSBG’s registered trade marks. Mrs. Justice Aspilin upheld BSBG’s trade mark infringement and passing off claims while dismissing Microsoft’s counterclaims.

The Court held that BSBG’s trade marks containing the word Sky were similar to Microsoft’s Trade Mark SkyDrive (drive being a descriptive term) and that the respective services were also similar, namely television and communication services including broadband services on the one hand and online storage facilities which can be accessed from anywhere on the internet and made available for sharing with others on the other hand. There was therefore, the Court held, every reason to conclude that there was a likelihood of confusion and that the public might believe that the services came from the same undertaking or ones which were economically linked.

Given the strength of BSBG’s SKY marks within the UK and the reputation it enjoys there, BSBG established that there was a serious risk of loss of distinctiveness in its trade marks in the sense of “dilution, whittling away or blurring” in the minds of the average, reasonably informed consumer of the goods and services for which that marks were registered.

BSBG’s passing-off claim also succeeded, since the three elements of goodwill, misrepresentation and damage were all proved to the satisfaction of the Court.

Microsoft’s counterclaims were for a declaration of partial invalidity in respect of all four of Sky’s trade marks on the ground of descriptiveness for cloud storage services, together with a declaration of invalidity in respect of one of the Community trade marks in the light of what was alleged to have been its impermissible amendment but none of the claims was substantiated and they were dismissed.

Microsoft’s plans were therefore blown sky-high.