Sky v Microsoft trademark case instructive for smaller businesses

Television company Sky has succeeded in forcing software giant Microsoft to drop its SkyDrive name for “cloud” digital storage services.  The case highlights the need for businesses to be cautious when it comes to new brand or service names, warns Geoffrey Sturgess, IP and commercial contracts solicitor.

Microsoft are being forced to change the name of their SkyDrive online storage after Sky issued proceedings alleging trade mark infringement, arguing that the use of the name SkyDrive infringed their Sky trademarks.

Sky also successfully argued that there was a serious risk to their reputation and that Microsoft’s use of SkyDrive would dilute the value of their brand; and that Microsoft’s actions amounted to passing off—that is confusing the public into thinking that the Skydrive service was provided by Sky.  Sky’s claim – backed up with evidence of calls to their helpline from customers who had assumed it was one of their services – was successful in the English High Court and will have effect across Europe.

An attempt by Microsoft to counter-claim invalidity of Sky’s trade mark registrations on the basis that ‘sky’ was simply descriptive of cloud computing was unsuccessful. Largely because they had registered the marks before the concept of cloud computing had entered the minds of the public.

It turns out that Microsoft had done their research back in 2007 but perhaps underestimated the importance of the Sky brand, believing that the company was solely concerned with broadcasting.  Unfortunately for them Sky had started to supply internet services in 2006 and by 2010 had 3million household customers for those services. They raised an objection to Microsoft’s SkyDrive trademark application at the outset, which Microsoft decided to contest.

These two companies could afford a big court case. SMEs generally can’t. If one of the big boys objects to an SMEs name or brand there is not much the SME can do except fold. Global brands are particularly zealous about protecting their name and image and it would be quite wrong for a small company to imagine that they are too small to be noticed by a major international company or that such a company would not bother pursuing a little business. They do, all the time. Occasionally the little guy wins, but rarely.

It’s a complex and thus very expensive area for court cases. The clear message to any business looking to develop a new brand for a product or service is to make a realistic assessment of existing brands, both those that are registered and those that are just used. Making application for or registering a trademark which is the same as, or similar to an unregistered mark used by a competitor does not guarantee that the mark can’t be attacked by that competitor. No one wants to invest in marketing their new name or product only to be forced to change it.

If you need legal advice on trademark or copyright issues, contact Geoffrey or the Commercial team on 02380 717717, email Geoffrey at geoffreysturgess@warnergoodman.co.uk or visit the Company Commercial section of our website here.

ENDS

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