British Sky Broadcasting Group Plc & Ors v Microsoft Corporation Microsoft & Anor

Likelihood of confusion under trade mark law requires a global assessment through the eyes of the average consumer. A composite sign may be assessed by its dominant component where the remaining element is descriptive or non-distinctive. Contextual use, including initial interest confusion and downstream exposure, is relevant.

For extended protection, the proprietor must establish reputation, a link between the sign and the mark, and one of the specified injuries. A serious risk of dilution may be inferred from the circumstances. Passing off requires goodwill, a misrepresentation likely to confuse a substantial proportion of the public, and damage.

The claim concerned alleged infringement of four SKY trade marks and passing off arising from Microsoft's use of SkyDrive for online storage and file-sharing services. Microsoft counterclaimed for partial invalidity on descriptiveness grounds and for invalidity of one Community trade mark based on alleged bad faith in a later partial surrender and amendment.

The central issues were likelihood of confusion, similarity between the relevant goods and services, extended protection for a mark with a reputation, passing off, descriptiveness at the registration dates, and the temporal scope of bad faith under the Community trade mark legislation.

1. Infringement under section 10(2)(b) of the Trade Marks Act 1994 and article 9(1)(b) of the Regulation. The goods and services were identical or closely connected. The court applied a global assessment, considering the visual, aural and conceptual similarity of the marks, the distinctive character of SKY, the descriptive nature of “Drive”, the relevant consumer, and the context in which SkyDrive appeared. “Sky” was the dominant element and the use created a likelihood of confusion, including confusion as to an economic connection. The finding applied to Windows Live SkyDrive, Microsoft SkyDrive and SkyDrive alone, and to the different contexts in which the service was presented.
2. Initial interest confusion and confusion arising from downstream exposure were relevant. The court relied significantly on spontaneous real-world examples from consumers who contacted Sky's helpline, while treating the survey evidence with limited weight. Statistical extrapolation was inappropriate, but the real-world incidents supported the conclusion that confusion was sufficiently likely to warrant intervention.
3. Extended protection. Sky's mark had the necessary reputation in the United Kingdom. SkyDrive called the mark to mind and there was a serious risk of dilution. The creation of related applications, including SkyWallet, supported the inference of dilution. Microsoft failed to establish due cause; the burden lay on Microsoft and the defence was of limited scope.
4. Passing off. Sky had goodwill, Microsoft's use amounted to a misrepresentation likely to confuse a substantial proportion of the public, and damage was inherently likely where customers wrongly connected the businesses. The absence of Sky's get-up or indicia did not prevent passing off because the evidence demonstrated confusion concerning commercial connection.
5. Validity. The descriptiveness counterclaim failed. At the relevant registration dates, the average consumer would not have immediately perceived “sky” as an allusion to cloud computing or online storage. The bad-faith counterclaim also failed. Article 52(1)(b) focused on the applicant's state of mind when the application for registration was filed, whereas the partial surrender occurred years later. In any event, the application had been examined and accepted by OHIM and was not shown to fall below acceptable commercial standards.
6. The claims for infringement and passing off therefore succeeded, while the counterclaims failed.