COMMUNITY TRADE MARK COURT
Rolls Building, 7 Rolls Building,
Fetter Lane, London, EC4A 1NL
Before :
MRS JUSTICE ASPLIN
Between :
(1) BRITISH SKY BROADCASTING GROUP PLC (2) SKY IP INTERNATIONAL LIMITED (3) BRITISH SKY BROADCASTING LIMITED (4) SKY INTERNATIONAL AG | Claimants |
- and - | |
(1) MICROSOFT CORPORATION (2) MICROSOFT LUXEMBOURG SARL | Defendants |
Iain Purvis QC and Brian Nicholson (instructed by SJ Berwin LLP) for the Claimants
Michael Bloch QC, Anna Carboni and Stuart Baran (instructed by Redd Solicitors LLP) for the Defendants
Hearing dates: 12, 15 – 19, 23 – 24 April 2013
Judgment
Mrs Justice Asplin :
This is an action for passing off and for infringement of two registered Community trade marks (CTMs) and two UK registered trade marks (UKTMs) for the mark ‘SKY’ by which the Claimants seek to prevent the Defendants from using “SkyDrive” as the name for their cloud storage service throughout the European Union.
By way of counterclaim the Defendants seek a declaration of partial invalidity in respect of all four SKY trade marks on the grounds of descriptiveness for cloud storage services and a declaration of invalidity in respect of CTM 411 in the light of what is alleged to have been its impermissible amendment.
The counterclaim for the revocation of UKTM 176 on the grounds of lack of genuine use in relation to “receipt, storage and provision of computerised business information data” is no longer pursued.
The Parties
There are four Claimants for reasons connected with the ownership and licensed use of the various marks in issue. They are British Sky Broadcasting Group plc, Sky IP International Limited, British Sky Broadcasting Limited and Sky International AG. The first Claimant, British Sky Broadcasting Group plc owns and ultimately controls the activities of the others and nothing turns for present purposes on any distinction between them. Accordingly, I shall refer to the Claimants together as ‘Sky’.
The Defendants, Microsoft Corporation and Microsoft Luxembourg Sarl are members of the world-renowned computing and software group, Microsoft, which is responsible for the Windows operating system, the Microsoft Office suite and the Bing internet search engine, as well as SkyDrive. The First Defendant is the parent corporation and the Second Defendant sells and markets its products within Europe. Nothing turns on the distinction between them and I shall refer to them together as ‘Microsoft’.
Sky is a provider of television and communication products and services including broadband in the United Kingdom. In 2001, it produced a set-top box (Sky+) which includes digital storage for recording and replaying content. In 2005-6, it started transmitting its content over the Internet, available both through home broadband and mobile devices which include smart phones, iPads and similar devices. From 2006, it has itself been an Internet service provider. By the end of 2010, its broadband service was being used by over 3 million households and by 2012, the number of households had increased to 4.1 million.
Over the years, Sky has adopted a whole series of trade marks, comprising the mark ‘Sky’ followed by a descriptive element. This practice has been followed not only for its channels such as Sky Movies and Sky Sports, but also for its platforms such as Sky+, Sky Digital, Sky Broadband and for its computer software running on such platforms such as Sky Go, Sky Mobile, Sky Bet and Sky Photos. Two typical presentations of Sky’s sign are:
Between 2008 and 2011, Sky provided ‘Sky Store & Share’, which was an online storage service available for customers to upload and share their digital files and photos, and information about events and appointments. Sky Store & Share is no longer available to the public having been discontinued in December 2011.
The Acts complained of
Microsoft’s SkyDrive product was launched in the UK, the USA and India in August 2007 and in the rest of the EU during 2008. The product provides users with an online storage facility for document files, photos and the like which they can then access from anywhere on the internet and make available for sharing with others. It formed part of the “Windows Live” online services alongside Hotmail email and the Messenger messaging service. Its logo was:
Microsoft’s use of the SkyDrive sign has since developed into what Sky characterises as a major stand-alone brand. Since 2012, SkyDrive has started to feature as one of the main start-up tiles on the Defendants’ Windows 8 operating system and SkyDrive apps are now available for platforms including Windows Desktops, Macs, iPhones, iPads, Android Phones, Windows Phones and the Xbox games machine.
By June 2011 when this action was commenced, SkyDrive had over 3 million users in the UK, nearly 20 million in the EU and 92 million worldwide. The SkyDrive sign is now in the following form:
Copies of the sign used in relation to SkyDrive in all of the forms in which it has appeared are set out in appendix 1 to this judgment. As I have already mentioned, Sky contends that Microsoft’s use of the signs in all their forms in relation to cloud storage services has amounted to an infringement of their UKTMs and CTMs and amounts to passing off.
The Trade Marks
Sky relies on the following UK registered trade marks:
UK 2 415 829 (‘UKTM 829’) for the word ‘SKY’, was effective as of 6 March 2006. The mark is registered for a very large spectrum of goods and services. Although a wider variety were set out in the Particulars of Claim, Sky relied specifically, on the following:
“Class 9 (goods): ‘computer software to enable searching of data; computer programs; computer software; computer software to enable connection to databases and the Internet; computer software supplied from the Internet.
Class 38 (services): ‘communications by means of or aided by computers; transmission of text, messages, sound and/or pictures; computer aided transmission of messages or images; telecommunication services relating to the Internet; telecommunication of information (including web pages); provision of telecommunications links to computer databases and websites on the Internet.”
UK 2 302 176E (‘UKTM 176’) for the word ‘SKY’, effective as of 5 June 2002. This mark is also registered for a range of goods and services. However, for the purposes of this action, Sky relied on:
“Class 35 (services): ‘receipt, storage and provision of computerized business information data.”
In relation to UKTM 829, Microsoft challenges its validity on the basis that it is ‘invalid insofar as [it is] held to cover goods and services pertaining to cloud storage’, the assertion being that the mark is devoid of distinctive character or consists exclusively of descriptive matter. In relation to UKTM 176 the same challenge is made as to validity.
Sky also relies on the following Community Trade Marks (CTMs):
CTM 3,203,411
CTM 3 203 411 (‘CTM 411’) for the word ‘SKY’, effective date 30 April 2003, registered on 14 October 2008. This mark is registered in a series of classes. As originally granted, the specification listed all the goods and services in the class headings published by WIPO under the Nice Classification of Trade Marks for classes 9, 35, 38 and 42.
However, by a letter dated 12 April 2010, from Sky’s solicitors to the Office for Harmonization in the Internal Market (OHIM) Sky requested the amendment of classes 9, 35, and 42 pursuant to Article 50 of Council Regulation No: 207/2009. Article 50 reads as follows:
“1. A Community trade mark may be surrendered in respect of some or all of the goods or services for which it is registered.
2. The surrender shall be declared to the Office in writing by the proprietor of the trade mark. It shall not have effect until it has been entered in the Register.
3. Surrender shall be entered only with the agreement of the proprietor…”
A Notification of Deficiency of what was termed an “Application to Register a Declaration of Partial Surrender” was issued by OHIM on 6 July 2010 in which it was stated that “the proposed amendments are not acceptable as they are considered as being a widening of the specification of the list of goods and services.” Two months was given in which to submit any observations. In the event, an extension of that period was granted until 6 November 2010 and after the receipt of a further Notice of Deficiency dated 14 October 2010, a further extension was granted. Following telephone discussions with the examiner, Soledad Palacia Montilla, in order to understand the objections raised and further discussions with Thom Clarke, changes were made to the initial application for amendment in the form set out in a letter from Sky’s solicitors to OHIM of 11 January 2011. The relevant passage in the letter is as follows:
“In our telephone discussion with Mr Clarke, we agreed that the following changes would be made (the changes insofar as they offer from the initial amendment request are indicated in capitals)
Class 9
Scientific, nautical, surveying, photographic, cinematographic, optical, weighing, measuring, signalling, checking (supervision), life-saving and teaching apparatus and instruments, apparatus and instruments for conducting, switching, transforming, accumulating, regulating or controlling electricity; apparatus for recording, transmission or reproduction of sound or images; magnetic data carriers, recording discs; automatic vending machines and mechanisms for coin-operated apparatus; cash registers, calculating machines, data processing equipment and computers; fire-extinguishing apparatus; including data storage apparatus and instruments, software and data storage software, and software for video-conferencing, but excluding car batteries.
Class 35
Advertising business management business administration; office functions; including online storage of files, data, photographs, graphics, documents, videos, images, audio files, audio-visual files, visual files, computer files, computer applications and information for others, electronic data storage services for personal and business use, and services for the electronic storage and organisation of files, images, music, audio, video, photos, drawings, audio-visual, text, documents and data, but excluding business relocation services.
Class 38
Telecommunications, INCLUDING VIDEO-CONFERENCING SERVICES AND SHARING OF FILES, IMAGES, MUSIC, VIDEO, PHOTOS, DRAWINGS, AUDIO-VISUAL, TEXT, DOCUMENTS AND DATA; BUT EXCLUDING TELEGRAPH COMMUNICATIONS SERVICES.
Class 42
Scientific and technological services, and research and design relating thereto; industrial analysis and research services; design and development of computer hardware and software; legal services; including ONLINE TECHNICAL STORAGE FACILITIES, ONLINE TECHNICAL BACK-UP SERVICES AND ONLINE TECHNICAL BACK-UP FACILITIES, software as a service (SaaS) services, and electronic hosting of files, data, photographs, graphics, documents, videos, images, audio files, audio-visual files, visual files, computer files, computer applications, information for others and video-conferencing services but excluding the performance of chemical analyses.
We look forward to receiving confirmation of these changes. . . .”
After further discussions between Mr Ladas of SJ Berwin LLP acting on behalf of Sky and Thom Clarke, a Notification of Entry in the OHIM’s Database dated 16 March 2011 was received. The Notification recorded the partial surrender and set out the goods and services which remained within the registration.
By a letter dated 28 March 2011, SJ Berwin LLP acknowledged the 16 March 2011 Notification described as “amending the specification of the [above Registration] in respect of classes 9, 38 and 42 as per our letter of 11 January 2011” but noted that class 35 had not been amended in accordance with the original request. As a result, on 29 March 2011, a “Correction of Mistakes and Errors in the Community Trade Mark Bulletin and on the Registration Certificate” was received in which the amendment to class 35 was recorded.
The upshot of all this is a specification in which the following is added at the end of each respective class heading:
“Class 9: “. . . . . .including data storage apparatus and instruments, software and data storage software, and software for video-conferencing, but excluding car batteries.”
Class 35: “. . . . . including online storage of files, data, photographs, graphics, documents, videos, images, audio files, audio-visual files, visual files, computer files, computer applications and information for others, electronic data storage services for personal and business use, and services for the electronic storage and organization of files, images, music, audio, video, photos, drawings, audio-visual, text, documents and data, but excluding business relocation services.”
Class 38: “. . . . . including video-conferencing services and sharing of files, images, music, video, photos, drawings, audio-visual, text, documents and data; but excluding telegraph communications service.”
Class 42: “ . . . . . including online technical storage facilities, online technical back-up facilities, software as a service [SaaS] services, and electronic hosting of files, data, photographs graphics, documents, videos images, audio files, audio-visual files, computer applications, information for others and video-conferencing services, but excluding the performance of chemical analyses.””
Neither the officers of OHIM nor Mr Ladas the senior assistant solicitor at SJ Berwin LLP who made the calls to them on behalf of Sky were available to give evidence, Mr Ladas having left that firm. His supervising partner, Mr David Rose gave evidence and was cross examined. He was unable to shed any light on the precise nature or content of the calls. However, I shall return to his evidence in this regard under the heading of “bad faith” below.
CTM 3,166,337
Community Trade Mark 3 166 337 (‘CTM 337’), the effective date of which is 14 April 2003, was registered on 26 May 2008.
This is for the mark ‘SKY’ in the form of a device. The stylisation is of a very low level, and it essentially comprises, as Microsoft accepts, simply the word SKY written in capitals. It is accepted that the scope of protection of this mark will be little different from the scope of the word mark itself.
The specification of goods and services covered by this mark is in exactly the same form as the specification of CTM 411 prior to the partial surrender process to which I have referred. In other words, it comprises the complete class headings for Class 9, Class 35, Class 38 and Class 42.
Sky only alleges an infringement of this mark because Microsoft has sought revocation of CTM 411 in its entirety on the basis of bad faith in the partial surrender process. As I understand it, if either the application for revocation is rejected in its entirety; or revocation were only granted in relation to the material added as a result of the surrender process which it is alleged expands the registration, Sky does not rely on CTM 337 at all.
The Evidence
Before turning to the background, I must say a little about the evidence. First, I should say that I found all of those witnesses of fact who were cross examined to be honest, careful and truthful witnesses who endeavoured to assist the court.
This was also true of the experts, Riccardo Baxter, a self employed market research professional who devised and conducted a survey on behalf of Sky, to which I shall refer, (the Survey) and produced three reports and Philip Ian Malivoire who produced three expert’s reports on behalf of Microsoft. Mr Malivoire’s evidence was in relation to the Survey and its reliability. He has extensive experience in the conduct of research projects for legal purposes and was involved in the surveys carried on in the Interflora litigation to which I shall refer. He now runs his own market research consultancy business.
Both experts were cross examined at length about the Survey. It was quite clear that they were both concerned to protect the reputation of the field of market research and that Mr Malivoire’s strict approach arose from that concern. I shall deal with the Survey, its contents and its evidential value below.
I should also mention that the witness statements of a number of individuals who contacted the Sky helpline seeking assistance in relation to SkyDrive were not challenged in cross examination. The only challenges made to that evidence were Mr Bloch’s cross examination of Ms Baxter, the solicitor who contacted them, seeking a statement from them and his submissions that the manner of that contact had included leading questions which may have distorted the evidence, that they amounted to a skewed sample, in individual cases were atypical and in any event, were of little assistance to the court.
Simon Robert MacLennan is the Group Head of Intellectual Property for Sky. He is a solicitor and was appointed Head of Intellectual Property in 2006 and Group Head in 2012.
Jonathan Karl Blumberg joined Sky as Head of Telephony in January 2006. He became Director of Product Management in December 2006 and in May 2010 became Commercial Director for Broadband and Telephony which is his current role.
Bo Theodor Olofsson joined Sky as Director of Product Research Group in March 2010. The group focuses on emerging consumer technologies and their potential future application and implications for Sky. Mr Olofsson has 15 years of experience in the technology industry in market leading companies and 5 years of experience at a global digital media company.
Victoria Clair Louise Baxter is an assistant solicitor with SJ Berwin LLP, solicitors for Sky. She assisted Mr David Paul Rose, a partner of that firm who had care and conduct of this matter. She was responsible for liaising with Sky’s customer call agents and customers in relation to enquiries made to Sky regarding SkyDrive. She also assisted in contacting the participants in the Survey.
As I have already mentioned, Mr Rose is the solicitor with conduct of these proceedings on behalf of Sky. He gave evidence as to the commissioning of the Survey upon which Sky seeks to rely, the way it was set up and the responses. He was also cross examined as to the partial surrender exercise to which I shall refer below.
Josephine Aisling Curry is also a solicitor working for Mr Rose in relation to these proceedings. Her evidence was unchallenged in cross-examination. She researched the different ways in which SkyDrive could be used and the user experience from the perspective of Microsoft Account holders and non- account holders, the use of “DRIVE” for online storage services, the use of “SKY” for online storage services, the integration of online storage services generally with third party goods and services and co-branding in the context of Microsoft SkyDrive and other Microsoft products.
Scott Mackay has been Director of Customer Business Systems at Sky Subscribers Services Ltd (“SSSL”) since September 2009. SSSL is a subsidiary of British Sky Broadcasting Ltd which is part of Sky. In August 2008 he became Director of Business Enablement. In his present role, he operates and controls the customer management platform for Sky and undertook searches of call records held by Sky in respect of contacts made in relation to SkyDrive.
Michael Benford Kroll is employed by Microsoft as a Director of Brand Strategy for Online Services and was involved in the naming of the SkyDrive service. His evidence focussed on how and why Microsoft decided to adopt the name.
Gabrielle Maria Hegerty works in Marketing at Microsoft Ltd in the UK and has the job title “Internet Explorer Lead”. She joined in March 2011 as the Windows Live and Internet Explorer Lead for the UK in respect of marketing. She gave evidence as to the marketing, promotion and presentation of SkyDrive in the UK to July 2012 and any connection of which she was aware between SkyDrive and Sky.
Andrew James Burton is a Senior Consumer Technology Account Manager at the UK communications consultancy firm, 3 Monkeys Communications. He has been in that role since 2009 and is one of the four managers of the Microsoft account at 3 Monkeys. He is concerned with Microsoft’s public relations. He gave evidence about what 3 Monkeys did in particular, in relation to SkyDrive and also dealt with feedback and comments received from press and public about SkyDrive.
Elke Duncker is employed by Microsoft Ltd as Group Manager Delivery Community Support. She gave evidence on the feedback and support options available to users and potential users of Microsoft’s products and services and the nature and type of feedback it receives with particular reference to SkyDrive.
Diana Pennock Connolly is the managing director of Findtech Limited, a company which provides information research services to the intellectual property professions. She is a mathematics graduate with over thirty years’ experience of conducting business, technical and patent and trade mark research. She presented the results of a research exercise which she had conducted on behalf of Microsoft. She had researched the use of business names, trade marks, other brand names and signs incorporating the word “SKY” as either a prefix or a suffix in relation to goods and services in certain technology related sectors. Her second task was to research the use of the word “SKY” in the names of applications available for download from the internet from the UK version of the Apple AppStore. Her final task was to search for articles in the press and online sources in which the term “SKY” or “SKIES” had been used in a descriptive manner in connection with cloud storage services, the internet and wireless communication generally.
The evidence of Camillo Gatta, a solicitor employed by Redd Solicitors, acting on behalf of Microsoft was not challenged on behalf of Sky. He had carried out research aimed at reviewing the stylistic and/or presentational features of Sky’s advertising and marketing materials in the United Kingdom promoting the “SKY” branded goods , services and channels.
The evidence of Claudia Bonatti, Pierre-Eric Daniel Jacoupy, and Anusch Mohadjer was not challenged. Ms Bonatti works for Microsoft as a Windows Business Group Lead at Microsoft Italia srl and gave evidence about SkyDrive in Italy. Mr Jacoupy is a Web Product Marketing Manager for Microsoft and gave evidence about SkyDrive in France. Mr Mohadjer is a Windows Product Marketing Manager for Microsoft Germany and gave evidence as to SkyDrive in Germany.
The evidence of Peter Hamish Larmour Mercier was also unchallenged. He is Senior Director, Content Acquisition and Strategy Team at Microsoft Limited. He gave evidence as to the collaboration between Sky and Microsoft in relation to the Xbox. He also related an incident when having seen a Microsoft demonstration about SkyDrive at a conference at the Excel Centre in London’s Docklands, he emailed the Windows Live Dogfood Discussions Group on 2 September 2010 asking whether Microsoft had “checked the rights for SkyDrive in the UK against BSkyB’s various consumer trademarks which are all prefaced clearly as Sky__.”
Other witnesses were cross examined more extensively and I refer to their evidence in more detail below.
History of development and use of SkyDrive
Having been developed in 2006, SkyDrive was launched in the UK in August 2007 as an addition to the Windows Live suite of services and at that stage was branded as “Windows Live SkyDrive”. Windows Live contained over twenty communication tools aimed at the individual computer or electronic device user. Mr Brian Hall, General Manager Business Planning Windows at Microsoft described Windows Live as a group of Windows online services that work well together and with the Microsoft Windows operating system.
Prior to August 2007, SkyDrive was called “Windows Live Folders”. As Mr Hall explained in his evidence in chief, as with the other communications tools in the Windows Live suite, it was accessed by logging in to a Microsoft account through a web-based internet page. “Folders” provided the user with the ability to store files remotely on a server and to access them from other devices.
Mr Hall described the core function of SkyDrive in more detail as the provision of protected online storage for the holder of a Microsoft Account or formerly a Windows Live Account, the ability to access online files from any browser, the ability to share folders and to post onto public networks. “SkyDrive” appeared at that stage in the menu bar within Windows Live. In February 2008 coverage was extended to Europe.
On 20 November 2007, Microsoft applied to register the word mark “SKYDRIVE” in respect of the goods and services within classes 9 and 35 as a CTM. The application was published in the Community Trade Marks bulletin No 19/2008 of 13 May 2008 and on 13 August 2008, Sky filed a notice of opposition against all the goods and services of the contested trade mark application. The opposition was based on CTM 411. The opposition was upheld by the Opposition Division in a decision dated 30 September 2010 and an appeal was filed on 22 November 2010.
At the time that SkyDrive was launched the two main Windows Live products in the UK were Hotmail and Messenger. As Gabrielle Hegerty, who works in marketing for Microsoft in the UK, observed, there was no particular fanfare for SkyDrive at that stage and no real focus from a marketing perspective. Ms Hegerty also explained that SkyDrive had its teething troubles and that nothing was done in relation to marketing until at least 2008 and in fact, it was not given much attention until around August 2010 when it became integrated with Hotmail in “Wave 4” for Windows Live.
However, by the middle of 2010 Microsoft started to market SkyDrive across its Windows Live, Hotmail and Messenger platforms and at this time it was also integrated with the Windows Phone. This meant that photographs or documents could be saved in SkyDrive and then shared by means of a link sent by email, rather than attaching the photographs or documents to the email itself. Mr Hall also described the process by which SkyDrive was integrated into Windows and the software pacakge known as Microsoft Office in order to make it available through franchise products and to make the SkyDrive developer code available to third parties in order to enable them to integrate their applications with SkyDrive.
By the end of 2011 SkyDrive users could use the service to post direct to Facebook, Twitter and Linkedin and as a result of the iOS application and the Windows Phone application, SkyDrive files could be accessed from a phone or an iPad. The applications could be downloaded from the internet or could have been pre-loaded on a device. SkyDrive applications have also been launched for Android phones, Mac computers and Windows itself.
It will be clear therefore, that by this time, the SkyDrive brand had separated from Windows. Ms Hegerty explained that ‘In October 2011, the branding began to move away from ‘Windows Live’ altogether for Hotmail and SkyDrive. The move was part of a strategy to focus on the individual product names rather than the Windows Live service.’
By this time, the SkyDrive link was also used automatically by default in Hotmail if the user was attaching more than seven photographs or was attaching any Microsoft Office document. Mr Hall described this phase as ‘not a complete success’ because there were difficulties in recipients opening attachments. Microsoft abandoned the sending of SkyDrive links by default in Spring 2012. However, Mr Hall explained that it is still an option for the Hotmail user.
In 2012 SkyDrive was integrated into Windows 8 which is very widely used as the operating system for personal computers and devices. Windows 8 has a user interface made up of pre-loaded tiles visible on the opening screen, one of which is the SkyDrive tile. A copy of a screen shot depicting the tiles is in the second appendix to this judgment. Lastly, in December 2012, Microsoft released a SkyDrive application for Xbox. The way in which the tiles appear when selecting the SkyDrive application for installation on an Xbox is depicted in Appendix 2 to this judgment.
The pictorial time line depicting the way in which the SkyDrive logo developed, was set out very helpfully by Mr Hall in his witness statement and in fact, it is what I have reproduced it in the first appendix to this judgment. It is clear that from February 2012 the mark being a number of clouds with SkyDrive beside it, was used universally.
I should mention that the First Board of Appeal gave its decision in relation to the opposition proceedings to the registration of SkyDrive as a CTM in respect of goods and services within class 35 on 19 January 2012 and upheld the opposition. I shall refer to its reasoning below.
There is no dispute that the recipient of an email with a SkyDrive picture link attached neither sees Windows Live branding nor anything to indicate that SkyDrive is connected with Microsoft. It was also accepted by Mr Hall that in such circumstances, the recipient was not necessarily a Microsoft or Windows Live Account holder and therefore had not accessed SkyDrive through the filter of a Microsoft account.
I should add that Mr Hall also accepted that even in the case of the Microsoft Account holder using SkyDrive through certain Windows versions, it is possible to remain signed in for some time.
Mr Andrew Burton, a senior consumer Technology Account Manager at 3 Monkeys Communications, a UK consultancy firm where he is one of four managers who deal with a Microsoft public relations account, was involved in running an event on the London Eye in January 2012. It was designed to target technology journalists and bloggers whom it was hoped would influence the public. The event was entitled “Is your head in the Cloud?” The journalists were encouraged to test the features of SkyDrive whilst on the London Eye and the intention was to tie SkyDrive to the clouds and the sky. Many of the participants used the features in order to send messages on twitter and Mr Burton accepted that the only connection with Microsoft which would be apparent to a follower was the “live.skydrive” link. He also accepted that that would only be a connection for anyone aware of the Windows Live brand.
Mr Burton also stated that although he had never had feedback to suggest that the public or the press drew a connection between Sky and SkyDrive, on one occasion he had used SkyDrive in the office in order to share a report with clients. He uploaded it to SkyDrive and sent the clients an email to tell them that he had done so. He shared with them the link which he used to access the SkyDrive login page ( www.skydrive.com ) and included the user name and password. As a result one of the client representatives at the meeting asked him whether SkyDrive was anything to do with Sky.
Returning to the history and use of SkyDrive, it is not disputed that the free-standing SkyDrive application appears as a separate tile on the device to which it has been downloaded or pre-loaded and may appear together with any number of applications which are unconnected with Microsoft or Windows, although Mr Hall pointed out that the Microsoft product tiles were generally together on one side of the screen. Ms Hegerty explained that nevertheless, if the individual user is a SkyDrive customer they will have been exposed to the sign in the Microsoft context but if a person were to see a SkyDrive tile on someone else’s Apple Mac or android phone for example, they would not be aware of the Microsoft connection. She also accepted that a clip from the American television program known as “Hawaii Five O” which was played to the court and in which SkyDrive was mentioned expressly and depicted in relation to sharing photographs on a mobile phone, appeared to be product placement. It made no reference to Microsoft.
However, the Windows Phone app store purchase page for the SkyDrive app from which a consumer would choose and purchase the app before download to their device, displays the SkyDrive name and a prominent representation of the cloud sign and in the bottom corner in relatively small print states “Publisher Microsoft Corporation”. Mr Hall accepted in cross examination that whether a purchaser saw the reference to the publisher at all would depend on the screen size of their device and whether they bothered to scroll to the bottom. However, he also added that at the outset most of the users of phone apps were already Hotmail, Microsoft Messenger or users of SkyDrive on their personal computers and therefore, were already aware of the Microsoft context. He also accepted, however, that once the SkyDrive app was in use on a Windows Phone there no was reference to Microsoft which showed at all.
By contrast, the advertisements for the HTC Windows phone, featuring SkyDrive and its capabilities made reference albeit peripherally, (in the corner of the page) both to Microsoft and O2. However, the advertisements themselves were prominently for SkyDrive itself.
It was also the evidence of Mr Long, one of the individuals who called the Sky Customer Services helpline asking for assistance with SkyDrive, that despite the fact that he had noticed the reference to Microsoft in relation to SkyDrive he had assumed that there was some sort of partnership with Sky.
Mr Hall fairly accepted in cross examination that in the circumstances in which it is not plain that SkyDrive is a Microsoft product, it was certainly possible that ordinary consumers familiar with Sky’s position as a provider of broadband internet might think that there was a connection between Sky and SkyDrive and that it was not plain to a recipient of an email with a SkyDrive attachment that it is a Microsoft product.
Mr Hall who had overall responsibility for marketing in relation to Windows Live and SkyDrive in 2007 and was based in the USA, recalled that Windows Live SkyDrive had been sent for legal clearance in April 2007 and that clearance was received in May of that year. He stated in cross examination that “sky” was known in IT circles as a reference to the internet but could not say what the public’s perception had been in 2007. He also accepted that at the time he had had no knowledge of Sky other than as a broadcaster and was not aware that it was a broadband provider.
I should make clear at this stage that the mark with which Mr Purvis on behalf of Sky is concerned for the purposes of infringement is SkyDrive however it appears. His case is that it is just as much an infringement in the form of Windows Live SkyDrive or Microsoft SkyDrive as it is when it appears alone. He accepts that the perception of the sign is that of the average consumer and that the context in which it appears and the likelihood of confusion are all part of the global assessment.
Relevant legal principles – infringement of trade marks
It is accepted that the provisions of the Trade Marks Act 1994 (TMA) in relation to infringement contained in section 10 and in Article 9 of Council Regulation 40/94/EC of 20 December 1993 on the Community trade mark which was replaced by a codified version Council Regulation 207/2009/EC of 26 February 2009, with effect from 13 April 2009 (“the Regulation)” are for all practical purposes identical. The relevant provisions are as follows:
“10 – (1) A person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered.
(2) A person infringes a registered trade mark if he uses in the course of trade a sign where because -
(a) the sign is identical with the trade mark and is used in relation to goods or services similar to those for which the trade mark is registered, or
(b) the sign is similar to the trade mark and is used in relation to goods or services identical with or similar to those for which the trade mark is registered
there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark.
(3) A person infringes a registered trade mark if he uses in the course of trade, in relation to goods or services, a sign which –
(a) is identical with or similar to the trade mark,
(b) [repealed]
where the trade mark has a reputation in the United Kingdom and the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark.
(4) …”
Article 9 of the Regulation
“1. A Community trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:
(a) any sign which is identical with the Community trade mark in relation to goods or services which are identical with those for which the Community trade mark is registered;
(b) any sign where, because of its identity with, or similarity to, the Community trade mark and the identity or similarity of the goods or services covered by the Community trade mark and the sign, there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes the likelihood of association between the sign and the trade mark;
(c) any sign which is identical with, or similar to, the Community trade mark in relation to goods or services which are not similar to those for which the Community trade mark is registered, where the latter has a reputation in the Community and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or repute of the Community trade mark.”
The types of infringement with which this case is concerned are set out in TMA s10(2)(b) and Regulation Article 9(1)(b) and in TMA s10(3) and Article 9(1)(c) respectively.
In relation to section 10(2)(b) TMA and Article 9(1)(b), the claim is based first upon identity between the goods and services for which the sign is used and those for which the mark is registered and the sign is similar to the mark and secondly, upon what has been termed ‘double similarity’, between mark and sign and between the goods and services. In either of the circumstances, it is accepted that in order to amount to infringement, the identity/similarity must be such as to be ‘likely to cause confusion’ on the part of the public.
In relation to s10(3) TMA and Regulation Article 9(1)(c) infringement will occur without the need to show a risk of confusion, if the sign is sufficiently similar to the trade mark to ‘bring it to mind’, and (inter alia) where this causes detriment to the distinctive character or repute of the mark.
s10(2)(b) and Art 9(1)(b) – infringement by identity of goods and services and by similarity
The applicable law
I shall turn first to the claims for infringement under s10(2)/Article 9(1)(b) and the aspects of the law which are of relevance for the purposes of this head of the claim.
It is not disputed that the scope of a trade mark registered for a word as opposed to a device (as in the case of both UKTMs and CTM 411) is not limited to the form of the mark as it appears on the Register (in this case, in capitals). It extends to any representation of the word: the General Court in Present-Service T-66/11 at ¶57.
A registered category of goods or services is treated as a compendious claim to all the individual types of goods or services included within its scope. So where a mark is registered for a category that includes the goods or services being provided under the sign, the goods or services must be treated as being identical. See Aventis Parma v OHIM [2008] ECR II-229 (¶35).
The likelihood of confusion is determined by comparison between the Defendant’s sign and any ‘normal and fair’ use of the registered trade mark in relation to any of the goods and services for which it is registered: per Neuberger J (as he then was) in Premier Brands v Typhoon Europe [2000] FSR 767 at 778-9 (citing Jacob J (as he then was) in Origins [1995] 280 at 284). In this regard, Jacob LJ in Reed Executive Plc v Reed Business Information Limited [2004] RPC 40 at 79-81, pointed out that the court must assume for the purpose of the comparison that ‘the mark has been in use and developed…a reputation and goodwill for the specification of goods and services’.
To put the matter shortly it is clear from [50] of Jacob LJ’s judgment in the Reed case that the precise manner in which Sky actually presents its ‘Sky’ brand to the public whether in capitals or lower case letters, or whether it presents the mark in the form of a particular logo is not material to this inquiry, since a trade mark gives monopoly protection regardless of whether or how it is actually used. Similarly, it is made clear at [45] of the Present Service case that the comparison is not with the precise goods and services in respect of which a Claimant actually uses its mark but with the goods and services for which its mark is registered.
The question is whether, by reason of the identity/similarity between the mark ‘Sky’ and the sign, “SkyDrive” (however presented) and the identity/similarity of the goods or services for which the sign is used and those for which the mark is registered, being software for the online storage and sharing of files, there is a likelihood of confusion on the part of the relevant public ‘which includes the likelihood of association’. It is clear from [29] of the judgment of Canon v MGM [1999] RPC 117 that ‘association’ means the belief that the goods or services provided under the sign originate with an undertaking which is economically linked in some way with the trade mark proprietor.
I also remind myself that the likelihood of confusion is to be assessed from the perspective of the:
“average consumer who is deemed to be reasonably well informed and reasonably circumspect and observant, but who rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind, and whose attention varies according to the category of goods or services in question’. (Lloyd Schuhfabrik v Meyer [1999] ETMR 690 ¶¶26-7).”
The concept of the “average consumer” has been revisited at some length by Arnold J in Interflora v M&S [2013] EWHC 1291 (Ch). Having conducted a detailed consideration of the authorities, he went on:
“208. Against this background, a number of points are common ground between the parties. First, the average consumer is, as Lewison LJ put it in Interflora (CA I) at [44] and [73], a “legal construct”.
209. Secondly, the average consumer provides what the EU legislature has described in recital (18) of the Unfair Commercial Practices Directive as a “benchmark”. As counsel for M & S put it, the test is a “normative” one. By assessing matters from the perspective of a consumer who is reasonably well-informed and reasonably observant and circumspect, confusion on the part of those who are ill-informed or unobservant is discounted.
210. Thirdly, as Lewison LJ stressed in Interflora (CA I) at [45]-[56], in a case concerning ordinary consumer goods and services, the court is able to put itself into the position of the average consumer without requiring expert evidence or a consumer survey. As Chadwick LJ said in BACH and BACH FLOWER REMEDIES Trade Marks [2000] RPC 513 at [41], in a passage which Lewison LJ emphasised in Interflora (CA I) at [41]-[43]:
“The task for the court is to inform itself, by evidence, of the matters of which a reasonably well informed and reasonably observant and circumspect consumer of the products would know; and then, treating itself as competent to evaluate the effect which those matters would have on the mind of such a person with that knowledge, ask the [relevant] question”.
“211. Fourthly, the average consumer test is not a statistical test in the sense that, if the issue is likelihood of confusion, the court is not trying to decide whether a statistical majority of the relevant class of persons is likely to be confused.”
212. There is nevertheless a significant dispute between the parties with regard to the average consumer (and the reasonably well-informed and reasonably observant internet user, as to whom see below). Counsel for M & S submitted that the effect of the Court of Justice’s case law is to create a single meaning rule in European trade mark law, that is to say, a rule that the use of a sign in context is deemed to convey a single meaning in law even if it is in fact understood by different people in different ways. Accordingly, he submitted that it is impermissible for the court to consider whether a significant proportion of the relevant class of persons is likely to be confused when determining an issue as to infringement. Counsel for Interflora disputed that there is a single meaning rule in European trade mark law. He submitted that consideration of whether a significant proportion of the relevant class of persons is likely to be confused is not merely permissible, but positively required by the Court of Justice’s case law. I shall consider this question in two stages. At this stage, I shall consider the position with regard to the average consumer test generally in European trade mark law. Below, I shall consider whether the position is any different in the case of the reasonably well-informed and reasonably observant internet user confronted with keyword advertising.
213. In my judgment there is in general no single meaning rule in European trade mark law. My reasons are as follows.
214. First, it is settled law that a trade mark may acquire distinctive character for the purposes of registration if it is distinctive to a significant proportion of the relevant class of persons: see in particular the passages from Windsurfing and Philips quoted above.
215. Secondly, as a matter of logic, it follows that it is necessary to consider the impact of an allegedly infringing sign upon the proportion of the relevant class of persons to whom the trade mark is distinctive. This must be so whether one is considering whether the use of the sign affects, or is liable to affect, the origin function of the trade mark under Article 5(1)(a)/Article 9(1)(a), whether there is a likelihood of confusion under Article 5(1)(b)/Article 9(1)(b) or whether there is a “link” and consequent harm under Article 5(2)/Article 9(1)(c).
216. Thirdly, as a matter of principle, it should be sufficient for a finding of infringement of a trade mark that a significant proportion of the relevant class of persons is likely to be confused. That is both damaging to the trade mark proprietor and contrary to the public interest.
217. Fourthly, I am aware of no decision of the CJEU which supports the proposition that there is a single meaning rule in European trade mark law. By contrast, there is ample authority which supports the opposite proposition. In addition to the cases cited in paragraphs 200-202 above, I would particularly mention three of the cases in which the Court of Justice developed its doctrine that infringement under Article 5(1)(a)/Article 9(1)(a) requires an adverse effect on the functions of the trade mark.
218. In Arsenal the Court of Justice held that Mr Reed’s use of the sign Arsenal was liable to jeopardise the trade mark’s guarantee of origin. In this context it stated (emphasis added):
‘56. Having regard to the presentation of the word ‘Arsenal’ on the goods at issue in the main proceedings and the other secondary markings on them (see paragraph 39 above), the use of that sign is such as to create the impression that there is a material link in the course of trade between the goods concerned and the trade mark proprietor.
57. That conclusion is not affected by the presence on Mr Reed's stall of the notice stating that the goods at issue in the main proceedings are not official Arsenal FC products (see paragraph 17 above). Even on the assumption that such a notice may be relied on by a third party as a defence to an action for trade mark infringement, there is a clear possibility in the present case that some consumers, in particular if they come across the goods after they have been sold by Mr Reed and taken away from the stall where the notice appears, may interpret the sign as designating Arsenal FC as the undertaking of origin of the goods.’
219. In Anheuser-Busch the Court of Justice, having addressed the requirements for liability under Article 5(1) of the Directive, went on to address the “own name” defence under Article 6(1)(a) of the Directive, which is subject to the proviso that the defendant’s use of the sign is in accordance with honest practices in industrial or commercial matters. In that context, the Court stated at [83] (emphasis added):”
‘In assessing whether the condition of honest practice is satisfied, account must be taken first of the extent to which the use of the third party’s trade name is understood by the relevant public, or at least a significant section of that public, as indicating a link between the third party’s goods and the trade-mark proprietor or a person authorised to use the trade mark, and secondly of the extent to which the third party ought to have been aware of that. Another factor to be taken into account when making the assessment is whether the trade mark concerned enjoys a certain reputation in the Member State in which it is registered and its protection is sought, from which the third party might profit in selling his goods.’
The Court of Justice repeated this in Céline at [34].
“220. Fifthly, it is clear from the case law of the Court of Justice surveyed above that the average consumer test applies in a number of different areas of unfair competition law (using that term in a broad sense). As with trade marks, so too in the neighbouring fields of unfair commercial practices and misleading and comparative advertising, the case law does not support the existence of a single meaning rule, but contradicts it: see in particular the cases cited in paragraphs 197-199 and 205-207 above.
221. Sixthly, I am not aware of any textbook or academic commentary which supports the existence of a single meaning rule in trade mark law. Nor am I aware of any authority from the superior courts of the other Member States to support the existence of such a rule.
222. Seventhly, I am aware of no domestic authority which supports the proposition that there is a single meaning rule in trade mark law. It is beyond dispute that English trade mark law prior to implementation of the Directive did not have a single meaning rule. Nor does English passing off law have such a rule. While it is possible that trade mark law may have changed as a result of implementation of the Directive and its interpretation by the CJEU, the only case in which this question has been directly addressed prior to the present one is Hasbro Inc v 123 Nahrmittel GmbH [2011] EWHC 199 (Ch), [2011] ETMR 25, where Floyd J (as he then was) accepted Mr Hobbs QC’s own submission that there was no such rule:”
‘169. The overall assessment must be performed through the eyes of the ‘average consumer’, see, for example, Koninklijke Philips Electronics BV v Remington Consumer Products Ltd (C-299/99) [2002] E.C.R. I-5475; [2002] E.T.M.R. 81 at [65]. Yet, as the above citation from Lloyd recognises, a mark can possess distinctive character if only a proportion of the relevant public recognises that the mark means that the goods originate from a particular undertaking. The proportion of the relevant public which identifies the mark as denoting origin is a factor which the court must take into account in assessing distinctiveness. But it follows from this that the existence of a proportion of the relevant public who have not heard of the mark, or do not regard it as identifying the goods of a particular undertaking is not necessarily destructive of validity.
170. Mr Hobbs also submitted that there is no ‘single meaning rule’ in trade marks of the kind that there was once thought to be, but there is no longer, in the law of malicious falsehood: see Ajinomoto Sweeteners Europe SAS v Asda Stores Ltd [2010] EWCA Civ 609; [2010] F.S.R. 30. He relied on two decisions of General Court: Icebreaker Ltd v Office for Harmonisation In the Internal Market (Trade Marks and Designs) (OHIM) (I-112/09) [2010] E.T.M.R. 66 and Travel Service AS v Office for Harmonisation I the Internal Market (Trade Marks and Designs) (OHIM) (T-72/08), judgment of September 13, 2010, not yet reported, both of which concerned relative grounds. The latter case shows that the Court was prepared to take into account conceptual similarity ‘as regards that part of the relevant public which understands English’ – see [57]. Those cases do not have a direct bearing on whether a mark can be distinctive to some and merely descriptive to others, but do indicate that a segmented approach is permissible.’
“223. The only authority I am aware of which comes anywhere near to supporting the existence of a single meaning rule is the following passage from the judgment of Lewison LJ in Interflora (CA I):
‘33. I should also refer to Reed Executive Plc v Reed Business Information Ltd [2004] EWCA Civ 159; [2004] E.T.M.R. 56; [2004] RPC 40. In the course of his judgment in that case Jacob LJ (with whom Auld and Rix LJJ agreed) said (at [82]):
‘Next the ordinary consumer test. The ECJ actually uses the phrase “average consumer” (e.g. Lloyd paras [25] and [26]). The notion here is conceptually different from the “substantial proportion of the public” test applied in passing off (see e.g. Neutrogena Corp v Golden Ltd [1996] RPC 473). The ‘“average consumer” is a notional individual whereas the substantial proportion test involves a statistical assessment, necessarily crude. But in the end I think they come to the same thing. For if a “substantial proportion” of the relevant consumers are likely be confused, so will the notional average consumer and vice versa. Whichever approach one uses, one is essentially doing the same thing—forming an overall (“global”) assessment as to whether there is likely to be significant consumer confusion. It is essentially a value judgment to be drawn from all the circumstances. Further conceptional over-elaboration is apt to obscure this and is accordingly unhelpful. It may be observed that both approaches guard against too “nanny” a view of protection—to confuse only the careless or stupid is not enough.’
34. I agree entirely that the average consumer (in trade mark infringement) is conceptually different from the substantial proportion of the public test (in passing off). What I find difficult to accept is that they come to the same thing. If most consumers are not confused, how can it be said that the average consumer is? I do not think that this particular paragraph of Jacob LJ's judgment is part of the ratio of the case and, with the greatest of respect, despite Jacob LJ's vast experience of such cases I question it. In some cases the result will no doubt be the same however, the question is approached; but I do not think that it is inevitable.
35. There is, of course, no doubt that a valid survey can be an accurate diagnostic or predictive tool. They are used daily to sample public opinion on a variety of different topics. For example, they are used to gauge support for rival candidates in an election and to predict the eventual result. Suppose that a valid survey shows that in an election 49 per cent of the electorate support candidate A and 51 per cent support candidate B. It would be possible to say on the strength of such a survey that B will win the election. It would also be possible to say that a substantial proportion of the electorate will vote for candidate A. But what a survey does not, I think, tell you is: for whom will the average voter vote? In cases where acquired distinctiveness of a mark is in issue a survey may accurately identify that proportion of the relevant public which recognises the mark as a badge of trade origin. It will then be for the fact finding tribunal, with the aid of such a survey, to decide whether a significant proportion of the relevant public identify goods as originating from a particular undertaking because of the mark: see Windsurfing Chiemsee Produktions-und-Vertriebs GmbH v Boots-und-Segelzubehor (C-108/97) [1999] ECR I-2779; [1999] ETMR 585 at [52], [53].
36. In our case the question is whether M & S's advertisement would enable a reasonably well-informed and reasonably observant internet user to grasp without undue difficulty that Interflora and M & S were independent. This, as the Court of Justice has emphasised is not a question of counting heads, but is a qualitative assessment. The fact that some internet users might have had difficulty in grasping that Interflora and M & S were independent is not sufficient for a finding of infringement. If, by analogy with Neutrogena and Chocosuisse, the court were to conclude that most internet users would have grasped that, but that some would not, I cannot see that the court would be any closer to answering the legal question.’
224. In my judgment this passage does not support the existence of a single meaning rule for the following reasons. First, nowhere in this passage does Lewison LJ say that there is a single meaning rule. Secondly, given that the single meaning rule which exists in English defamation law is widely regarded as anomalous, that the Court of Appeal forcibly ejected the single meaning rule from the English law of malicious falsehood in Ajinomoto Sweeteners Europe SAS v Asda Stores Ltd [2010] EWCA Civ 609, [2010] FSR 30 (thereby bringing that part of English unfair competition law into line with the Court of Justice’s jurisprudence in that field) and that there is no such rule in passing off, it would be very surprising if Lewison LJ had intended to adopt such a rule unless it was clearly required by the case law of the Court of Justice. Thirdly, Lewison LJ expressly accepts that a trade mark is distinctive if a significant proportion of the relevant public identify goods as originating from a particular undertaking because of the mark. Thus he accepts that there is no single meaning rule in the context of validity. As I have said, that is logically inconsistent with a single meaning rule when one comes to infringement. Fourthly, the reason why it is not necessarily sufficient for a finding of infringement that “some” consumers may be confused is that, as noted above, confusion on the part of the ill-informed or unobservant must be discounted. That is a rule about the standard to be applied, not a rule requiring the determination of a single meaning. If a significant proportion of the relevant class of consumers is confused, then it is likely that confusion extends beyond those who are ill-informed or unobservant. Fifthly, Lewison LJ does not refer to many of the authorities discussed above, no doubt because they were not cited. Nor does he discuss the nature of the test for the assessment of likelihood of confusion laid down by the Court of Justice. The legislative criterion is that “there exists a likelihood of confusion on the part of the public”. As noted above, the Court of Justice has held that “the risk that the public might believe that the goods or services in question come from the same undertaking or, as the case may be, from economically-linked undertakings, constitutes a likelihood of confusion”. This is not a binary question: is the average consumer confused or is the average consumer not confused? Rather, it requires an assessment of whether it is likely that there is, or will be, confusion, applying the standard of perspicacity of the average consumer. It is clear from the case law that this does not mean likely in the sense of more probable than not. Rather, it means sufficiently likely to warrant the court’s intervention. . . ”
It is also common ground that it is now well-established that ‘initial interest confusion’ is sufficient to give rise to infringement. Thus there will be infringement where the use of a sign in an advertisement gives rise to a risk of confusion amongst average consumers, even if that confusion would be expected to be dispelled at the point of sale of the goods or services in question. In this regard, Arnold J came to the following conclusion in OCH-ZIFF Management Europe Limited v OCH Capital LLP [2010] 2599 (Ch) at [97]:
“It again seems clear from this that there can be a likelihood of confusion within the meaning of Article 9(1)(b) at the point when a consumer views an advertisement, whether or not the advertisement leads to a sale and whether or not the consumer remains confused at the time of any such sale.”
The case law makes clear that ‘likelihood of confusion’ is established by ‘a risk that the public might believe that the goods or services in question come from the same undertaking or, as the case may be, from economically-linked undertakings’. It is not necessary to show that the public would be confused: Thomson Holidays v Norwegian Cruise Lines [2003] RPC 32 at 56.
Nor is it necessary for Sky to show that all average consumers will be confused, or even that a majority of average consumers will be confused. Arnold J pointed out in the extract from his most recent Interflora judgment which I have quoted at some length, that the Court is not being asked to resolve a simple ‘binary question’ – is the average consumer confused or not? The question is whether confusion is sufficiently likely to warrant the court’s intervention:
“The fact that many consumers of whom the average consumer is representative would not be confused does not mean that the question is to be answered in the negative if a significant number would be confused”.
The assessment of likelihood of confusion involves a global assessment ‘taking into account all factors relevant to the circumstances of the case’ – see Canon v MGM [1999] RPC 117 at ¶16 and Case C-533/06 O2 Holdings Ltd v Hutchinson 3G UK Ltd [2008] ECR I-4231. The Trade Marks Registry has developed the following summation of the guidance of the CJEU on some aspects of the global assessment, which was approved by the Court of Appeal in Specsavers v Asda [2012] FSR 19 at 52 as a ‘useful and accurate summary of key principles sufficient for the determination of many of the disputes coming before it’:
the likelihood of confusion must be appreciated globally, taking account of all relevant factors;
the matter must be judged through the eyes of the average consumer of the goods or services in question, who is deemed to be reasonably well informed and reasonably circumspect and observant, but who rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind, and whose attention varies according to the category of goods or services in question;
the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details;
the visual, aural and conceptual similarities of the marks must normally be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components, but it is only when all other components of a complex mark are negligible that it is permissible to make the comparison solely on the basis of the dominant elements;
nevertheless, the overall impression conveyed to the public by a composite trade mark may, in certain circumstances, be dominated by one or more of its components;
and beyond the usual case, where the overall impression created by a mark depends heavily on the dominant features of the mark, it is quite possible that in a particular case an element corresponding to an earlier trade mark may retain an independent distinctive role in a composite mark, without necessarily constituting a dominant element of that mark;
a lesser degree of similarity between the goods or services may be offset by a greater degree of similarity between the marks, and vice versa;
there is a greater likelihood of confusion where the earlier mark has a highly distinctive character, either per se or because of the use that has been made of it;
mere association, in the strict sense that the later mark brings the earlier mark to mind, is not sufficient;
the reputation of a mark does not give grounds for presuming a likelihood of confusion simply because of a likelihood of association in the strict sense;
if the association between the marks causes the public to wrongly believe that the respective goods [or services] come from the same or economically-linked undertakings, there is a likelihood of confusion.”
In making the global assessment, the Court is considering the degree of ‘visual, aural and conceptual’ similarity between the marks. Furthermore, the assessment ‘must be based on the overall impression given by the marks, bearing in mind in particular their distinctive and dominant components.’: Sabel v Puma [1998] RPC 199 at 224. The effect is to strongly discount the significance of distinguishing matter in a sign which is essentially descriptive of the goods or services in question and is in common use in the field in question. In Lloyd Schuhfabrik the CJEU stated at paragraph 21:
“Furthermore, the more distinctive the earlier mark, the greater will be the likelihood of confusion (SABEL, paragraph 24), and therefore marks with a highly distinctive character, either per se or because of the recognition they possess on the market, enjoy broader protection than marks with a less distinctive character (see Canon, paragraph 189).”
As Millett LJ observed in The European v The Economist [1998] FSR 283 at 289, the converse is also true. He went on to state:
“ . . . Where descriptive words are included in a registered trade mark, the courts have always and rightly been exceedingly wary of granting a monopoly in their use.”
In Alejandro v OHIM [2004] ETMR 15 (General Court: BUD v BUDMEN for clothing) for example:
“53. Accordingly, the suffix " MEN" in the mark claimed is likely to carry a suggestive or even descriptive connotation for the relevant public that the " clothing, footwear and headwear" covered by that mark are intended for male customers. The Court notes that the public will not generally consider a descriptive element forming part of a complex mark as the distinctive and dominant element of the overall impression conveyed by that mark.
54. It follows that, from a conceptual viewpoint, the first syllable "BUD" must be viewed as the dominant element of the mark claimed.”
This approach has been consistently applied in the UK Courts. See for example Compass v Compass Logistics [2004] RPC 41 at 25:
“there can be little doubt that a likelihood of confusion exists between the defendant's use of the sign or mark “COMPASS LOGISTICS” in relation to its business consultancy services and the notional use of the mark “COMPASS” used in relation to business consultancy services, including those in relation to which the defendant specialises. The dominant part of the defendant's mark is the word “compass”. For many customers, the word “logistics” would add little of significance to it. It alludes to the type of area of consultancy in which the services are carried out.”
More recently, Arnold J expressed the principle in the Och-Ziff case in the following way at 105-6:
“105…the essential difference between each of the signs and the trade mark is the addition of the word CAPITAL. (Counsel for the defendants did not suggest that the presence of the coat of arms in the logo made any difference.)
106 Counsel for the defendants submitted that the addition of the word CAPITAL sufficed to avoid a likelihood of confusion. I disagree. As discussed above, CAPITAL is descriptive, or at least non-distinctive, for financial services, and in particular investment services. Given the distinctiveness of the trade mark, the identity of the services and the non-distinctiveness of the word CAPITAL, I consider that there is a manifest likelihood of confusion on the part of both types of consumer in the case of all five signs.”
It must also be borne in mind that the closer the goods or services are, the lesser the degree of similarity which will give rise to a risk of confusion. This was expressed in the leading case of Canon v MGM [1999] RPC 3 at 17 as follows:
“A global assessment of the likelihood of confusion implies to interdependence between the relevant factors, and in particular a similarity between the trade marks and between these goods and services. Accordingly, a lesser degree of similarity between these goods and services may be offset by a greater degree of similarity between the marks, and vice versa”.
It was also made clear in Canon v MGM at [18] that the degree of distinctiveness of the registered trade mark, either because it is inherently distinctive or because it has acquired distinctiveness in the mind of the public through extensive use (or both) is a relevant factor in the global assessment.
When assessing likelihood of confusion, the circumstances of the use of the sign alleged to infringe are relevant to the inquiry. As put by the Court of Appeal in Specsavers v Asda at 87: the Court
“.. must take into account all the circumstances of that use [the use alleged to infringe] that are likely to operate in that average consumer’s mind in considering the sign and the impression it is likely to make on him. The sign is not to be considered stripped of its context.”
As Mr Bloch submitted, in my judgment, the context here is the context in which the sign is used and does not include things which might or would happen after the initial exposure to the sign. See Och-Ziff at 76-78.
In Levi-Strauss & Co v Casucci [2006] ECR I-3703, the CJEU considered the question of the date at which infringement should be assessed. The specific context of that dispute was a trade mark which had been granted on the basis of distinctiveness acquired through use. The Defendant argued that by the date of trial, the distinctiveness had been lost or reduced (at least in part by its own use of a similar sign). The CJEU considered that the position of the trade mark owner should be protected by considering infringement at the date the Defendant commenced its use.
This authority was recently considered by Arnold J in Stichtung BDO v BDO Unibank [2013] EWHC 418 at 89-98. Most relevantly, he said this at ¶94:
“This leaves open a number of points. First, neither that case nor any subsequent case has considered the relevant date where there are different types of use of the sign each giving rise to different issues on likelihood of confusion (e.g. because they are used in a quite different context). Counsel for the Defendants submitted that Levi Strauss should be read in the light of the CJEU's subsequent decision in Case C-533/06 O2 Holdings Ltd v Hutchison 3G UK Ltd [2008] ECR I-4231, which requires a contextual assessment of the use of the sign, to mean that likelihood of confusion was to be judged at the date the sign in question began to be used in the particular manner and context complained of. If the defendant used the sign in a materially different manner or context at a later date, a new global assessment had to be made as of that date. I accept that submission.”
It seems to me therefore that where the defendant has used the sign in a materially different manner or context after the initial use, the right approach is to undertake a new assessment at the date of each material change. In this case such an assessment will be necessary therefore, in relation to Windows Live SkyDrive, Microsoft SkyDrive and SkyDrive alone. It is also necessary in relation to use in order to share documents as a result of email contact, as a tile in the Windows 8 armoury and as an application which can be downloaded or pre-loaded onto a mobile phone or an iPad.
S10(2)(b) and Art 9(1)(b) - Infringement by Identity of Goods and Services
Although at one stage, Microsoft sought to make a distinction between goods and services and to contend that the SkyDrive mark was being used not in relation to computer programs or software but in relation to the services which are available if one uses those programs, this distinction was abandoned by Mr Bloch at the beginning of the closing speeches. It is now accepted that the sign is being used in relation to software and accordingly, it is common ground that there is an identity of goods and services for the purposes of s10(2)(b) and Art 9(1)(b).
I have already set out the relevant principles to be distilled from the authorities in this regard. In summary, the comparison is between Microsoft’s sign and any normal and fair use of the registered trade mark in relation to any of the goods and services for which it is registered. Therefore, in this case, one assumes the use of “sky” as a trade mark for computer software including the storage of files on remote drives and storage services under the same name. One also assumes that the mark has developed a reputation and goodwill for those goods and services. It is then necessary to consider the notional average consumer confronted by computer software for the storage of files on a remote drive under the name “SkyDrive” and the question for the court in those circumstances is: is there a risk that such consumers might believe that the two were from the same source or from a connected source?
Mr Purvis on behalf of Sky submits that the answer is obviously “yes”. He says that the mark says that this is Sky’s drive by which is meant a remote storage program. It is not disputed that there are numerous examples of “drive” used in this way. For example, evidence of the use of Google Drive, AOL Xdrive, ElephantDrive and ZumoDrive amongst others were before the court. In fact, Microsoft put in evidence a list of 132 providers of online storage facilities of whom approximately twenty per cent used the word “drive” in their title.
Mr Purvis submits that the term “drive” has become entirely descriptive and generic and certainly is of no assistance to Microsoft in distinguishing their mark and product. In this regard, he referred me to a an article in 2010 PC World entitled “Free Services that Store, Sync and Share Your Files” which made reference to the fact that “cloud based syncing services usually use a virtual drive that exists on your desktop in some manner, and it is linked directly to your online storage space. The contents of this virtual hard drive remain in sync across all of the desktops, notebooks and mobile devices on which you have installed client software.” The article makes a number of further references to “virtual drive” and then goes on to choose five cloud storage services to review, three of which used “drive” in the name, being DriveHQ, OpenDrive and ZumoDrive.
Once one accepts that ‘drive” is descriptive, which Mr Purvis says is inevitable and which Microsoft, in fact, have done, he says that Microsoft is left with no distinguishing matter at all. In such circumstances he says that the average consumer aware that Sky is operating in this field would take SkyDrive to be another Sky operation and be uncertain as to which is being referred to. Alternatively, he says that the average consumer would view SkyDrive as a sub-brand.
On the other hand, Mr Bloch on behalf of Microsoft submits that there is no reason why the average consumer should perceive the SkyDrive sign as a sub-brand at all, especially where the brand of which it is supposed to be a “sub” is little known in the field in question.
Mr Purvis says that Microsoft’s defence that one would not read SkyDrive as being “sky” followed by the description ‘drive” even though they say that that is exactly why they coined the name, is very weak indeed. He referred me to the evidence of Mr Kroll that he liked the name because it alluded to the idea of a computer drive removed from the desktop. He also referred me to the decision of the Board of Appeal of OHIM which had no difficulty in concluding that “SkyDrive” as presented to them was “sky” followed by ‘drive’ even though it was presented to them as a single capitalised word.
Paragraphs 30 to 36 of the Board of Appeal’s decision which appear under the heading “Visual comparison” are as follows:
“30. When comparing the signs, the Board notes that the word “SKY” which is the sole element of the earlier mark, is perfectly recognizable at the beginning of the mark applied for. In this regard, the fact that a mark consists exclusively of the earlier mark, to which another word has been added, is an indication that the two trade marks are similar (see, to that effect, judgment of 4 May 2005, T-22/04, “Westlife”, para 40).
31. Moreover, the common elements appear at the beginnings of the marks at issue. In this regard, one has to recall that consumers generally pay greater attention to the beginning of a word sign than to the end (see judgment of 25 March 2009, T-109/07, “Spa Therapy”, para 30).
32. The word element “SKY” may also be perceived by a substantial portion of the relevant consumers as playing an independent role in the mark applied for (see, to this effect, judgment of 6 October 2005, C-120/04, “Thomson Life”, para 37). It may thus remain in the overall visual impression made by the mark or the imperfect picture which the relevant consumer will keep in mind.
33. In determining the existence of likelihood of confusion, the comparison of the conflicting signs must be based on the overall impression given by the marks, bearing in mind, in particular, their distinctive and dominant components.
34. The marks under comparison have no elements which could be considered clearly more dominant (visually eye-catching) in comparison to other elements. The element “DRIVE” contained in the contested sign will be associated with the concept “A device that spins disks or tapes in order to read and write data: for example, a hard drive, floppy drive, CD-ROM drive or tape drive” (Computer High-tech Dictionary accessible online, as of 11 January 2012).
35. Bearing in mind that the relevant services are related to data storage, it is considered that this element is weak for these services. The part of the relevant public who understands the meaning of that element will not pay as much attention to this weak element as to the other more distinctive elements of the mark. Consequently, the impact of this weak element is limited when assessing the likelihood of confusion between the marks at issue. (see judgment of 14 July 2011, T-160/09, “Oftal Cusi”, para 89).”
Mr Bloch submits nevertheless that SkyDrive would be read naturally as a single mark and therefore, neither confused nor even associated with SKY. He also pointed out that but for MySky and Skyscape, Sky uses its mark as a separate word and each of its goods and services always follows separately. This was apparent from Mr Gatta’s researches. He says that in the case of SkyDrive two ordinary words have been conjoined in order to create a single sign which is not descriptive but denotes a service from a particular provider.
In this regard, Mr Purvis says that Mr Bloch’s example of people thinking of BlackBerry as single word takes the matter no further and can be explained by the fact that it is a real single word. He was equally dismissive of Mr Bloch’s other examples such a VapoRub, PayPal and DreamWorks. Mr Purvis points out that there were examples, for example, the computer blogger “the Hermes Project” treating SkyDrive as two words and that oral use which would make no distinction, could equally be an infringement.
Putting the matter another way, Mr Bloch also submits that the comparison to be made is between the mark SKY and the sign SkyDrive as a whole and not just the constituent parts and that this is borne out by proposition (c) in the extract from the judgment of Kitchin LJ in the Specsavers decision to which I have referred in which he states that the average consumer normally perceives a mark as a whole. Mr Bloch states that there is no evidence that SkyDrive would be perceived by a member of the public as “brand+descriptor” in the absence of the significant reputation of the SKY mark. In this regard, he reminded me that under the head of infringement in relation to identical goods and services, Sky can only rely upon its reputation in relation to cloud storage which he says is minimal.
In order to see SkyDrive as Sky’s drive, Mr Bloch says that three steps are necessary: first the consumer would need to see SkyDrive as two separate words; second, they need to see Sky alone as arbitrary and thirdly, would need to see Sky as fulfilling a trade mark function only rather than as a distinctive element of the mark SkyDrive as a whole. He says that the reader is unlikely to embark upon each of those steps in order to deconstruct the mark unless the first part is truly arbitrary and the second really descriptive. In this regard, he says that Sky is not arbitrary in the sense that for example, Adidas, Kodak or Nokia are. In fact, it was Sky’s lawyer (Mr McLellan)’s evidence in chief, that it is a word which others seek to use in relation to their goods and services.
Mr Purvis says that the second argument that Microsoft falls back on namely that common presence of “sky” was a complete coincidence, is equally unhelpful to them. In any event, it can only be of assistance to them, he says, if one also accepts that “sky” is a term which would be understood by the average consumer as descriptive of the service or goods being offered. Obviously, the more descriptive and less inherently distinctive the registered trade mark, the less likely it is that confusion will arise.
He referred me to the evidence of the 132 other provides of online storage facilities which have been identified between 2005 and 2013, none of whom use “sky” in any part of their name or of the name of their service. Nor in their own descriptions of their operations or in the references to them found in Wikipedia which are also in evidence, is there any reference to them describing themselves as being in the sky or using the sky in any way to describe their services. Neither is there evidence outside the field of online storage but in a related field of a trader of which the public is likely to have heard, using “sky” to denote the internet. Nor, he points out does the word “sky” appear in any dictionary as meaning the internet.
In this regard, Microsoft relies upon the evidence of Ms Connolly who undertook internet research into the use of the business names, trade marks and brand names and signs incorporating the word “SKY” whether as a prefix or a suffix. She also researched the use of the word “SKY” in the names of applications available for download from the UK version of the Apple “appStore” and a search for articles in the press and online sources in which “SKY” or “SKIES” had been used in a descriptive manner in relation to cloud storage services. She searched the LexisNexis news database amongst other sources.
She found 148 SKY names and 429 SKY prefix apps which she had found on the internet. She also found numerous press articles which refer to “hard drive in the sky”, “locker in the sky” and “storage in the sky”. She found three examples of the use of “sky” in the period 2002-2003: in June 2002, in an article in the Guardian newspaper in London, there was an article about what was the new wireless internet or “wi-fi” phenomenon in which there was reference to “the idea of casting data clouds across the skies of London”; in February 2003 there was an article in “The Journal of Light Construction” which contained the following assertion, “In addition to hosting our website, we use the Internet like a giant floppy disk in the sky to back up our critical files . . .” and in an article in the Entrepreneur in December 2003, there was reference to “a distributed computer in the sky.”
She accepts that her searches were not exhaustive. Mr Purvis summarised her findings in this regard as approximately 27 uses over 8 years throughout the world, including hi-tech journals many of which repeat the same thing and therefore, suggested that it was far from meaningful. In cross examination although she was unwilling to put a number on it, Ms Connolly agreed that the number of publications in the target areas which she had searched within three databases were considerably higher than 15,000. As the period searched was of about ten years, Mr Purvis submits that the number of different issues or editions of the publications searched and the number of articles within them must have run into the millions.
In fact, Mr Purvis submits that if one removes literal uses and references such as “pie in the sky”, “reach for the sky”, ‘sky’s the limit”, “sky high” and “clear skies ahead” which I accept are not uses of “sky” in a descriptive sense to indicate the internet, one is left with about six uses of the term “sky” as a metaphor for the internet during the period from 2011 to January 2013. It is in this context that he says that the instances in which “sky” has been used as a metaphor for the internet is miniscule.
Mr Kroll who at the relevant time was the Director of Brand Strategy for Microsoft Online services, gave evidence that in 2007 he considered SkyDrive to be a descriptive name for cloud storage services. However, it was Microsoft’s own evidence that “cloud” was not being used in relation to online storage facilities in publicly available material until 2008. He acknowledged that before that date it was used within the confines of Microsoft and in the IT industry. He accepted that the reference was not as much descriptive as metaphorical or allusive, and was intended to refer to something remote and nevertheless available to be accessed from anywhere. He also accepted that he could not say what the public would or would not have recognised at the time.
Mr Bloch nevertheless submitted that the context of cloud storage in which SkyDrive was and is being used contributes to the allusive and descriptive quality of “sky” and he reminded me of the articles which Ms Connolly had found. He says that it is bizarre to suggest that all the journalists in question came up with “sky” by chance and in the knowledge that the public would not understand what they meant. He says it is obvious that the truth is the converse. They used the term because they knew what it would convey to the reader. He also says that what one derives from Ms Connolly’s evidence is that there is a significant and natural use of “sky” in an allusive sense. In addition, despite his severe criticisms of the Survey, he says that Microsoft can rely on it for this purpose. Mr Bloch says that it illustrates what people understand by “sky” and that 20% of them were aware of an allusion to the internet.
He submits therefore, that the descriptive/allusive nature of the Sky mark in the sphere of cloud storage detracts from Sky’s ability to denote the company, Sky. The likelihood of confusion and the ability to sustain detriment are correspondingly reduced. He goes as far as saying that the distraction caused to the average consumer in the field of cloud storage is such that Sky is not able to denote any particular undertaking offering such services.
In relation to the apps which Ms Connolly found, Mr Purvis points out that there is no evidence of use or of them having penetrated the consciousness of the public. He also draws attention to the fact that some are in entirely different fields such as astronomy and sky diving. And he reminded me of the third parties who have created apps derivative of SkyDrive which included SkyWallet. He also says that the dilution has naturally occurred since the push from 2011 to market SkyDrive separately.
Microsoft also put forward evidence of other entities which have adopted names which incorporate the word “Sky”. In this regard, Mr Purvis points out that they cannot impinge on the distinctive character of the SKY mark unless there is evidence that the average consumer in the UK would have known about them at the relevant time. As he rightly pointed out, there was no evidence before the court that the 148 third parties were businesses with customers in the UK. Ms Connolly accepted in cross examination that she did not research whether any of the third parties actually provided services or goods in the UK but considered it sufficient that she had found them in her search of internet databases.
In relation to the defence to infringement that, in fact, SkyDrive appears in a Microsoft context, Mr Purvis referred me to the evidence of Mr Hall and Ms Hegerty to which I have referred. It seems to me from that evidence that it is quite clear that there are many circumstances in which SkyDrive is seen by the public completely free from its Microsoft shackles and that that has been the case in all its forms.
As Mr Purvis explained, risk of confusion is not limited to confusion amongst customers who have purchased the product or services from the registered holder of the mark. It is clear from the Arsenal case and Anheuser Busch in the CJEU at [2004] ECR I-10989 that one is also concerned with confusion as a result of downstream exposure. The position is expressed at paragraph 60 of that decision in the following way:
“It must be established whether the consumers targeted, including those who are confronted with the goods after they have left the third party’s point of sale, are likely to interpret the sign, as it is used by the third party, as designating or tending to designate the undertaking from which the third party’s goods originate.…”
Mr Purvis says that that is analogous to the situation here of a recipient of a shared document through the SkyDrive link, or someone who sees the SkyDrive tile on an Xbox, a phone screen or a computer screen.
In this regard, however, Mr Bloch says that a distinction must be made between circumstances for which Microsoft is responsible and those over which they have no control. In the second category he places the way in which consumers may discuss or refer to SkyDrive other than in the course of trade, once Microsoft has placed it before them in a way which does not cause confusion. The cause of confusion in such a case he says is the use of the sign by the consumer. He says that the Arsenal and Anheuser Busch cases are not clear authority for the proposition that such circumstances can be categorised as infringement.
Equally, it is not disputed that the court is concerned with confusion at any time, including initial interest confusion. Therefore, one must take into consideration those who may be initially confused even if subsequently, perhaps during a signing up process, they realise that SkyDrive is part of the Microsoft brand.
Although it is not necessary to prove that actual confusion has occurred and what matters is whether the court considers that there is a likelihood of confusion, as Arnold J put it at [117] of the Och-Ziff case: “evidence of actual confusion supports the conclusion that there is a likelihood of confusion.” I also take account of Arnold J’s observation in Interflora v M&S [2013] EWHC 273 at [40] that:
“it is usually quite hard to find people who have been confused, because confusion by its very nature doesn’t come to light, and it is even harder to persuade confused people to come to court to give evidence.”
In fact, in this case, there were seventeen recorded incidents of Sky customers who rang Sky Customer Services because they were sufficiently confused when seeing the SkyDrive sign that they assumed that it was a service offered by Sky and rang the helpline to resolve their difficulty with the product. In addition to their witness statements, transcripts of their calls to the helpline were in evidence. Some of them were recipients seeking to access documents or photographs and in some cases they were the immediate user who was attempting to share the document or photograph.
The evidence was gathered by searching Sky’s call management data base, Chordiant, by visiting call centres and publishing a request on the Sky intranet. Mr MacLennan had to accept that there was very little response to his request.
Mr Mackay the Director of Customer Business Systems and Sky Subscribers Services Limited, gave evidence as to the means by which customers contact Sky and the volume of those contacts. His evidence was in some part confidential. However, he did explain that the vast majority of customers contact Sky by telephone, that overall approximately 45% of calls received are recorded and that the recordings are kept for around six months. Furthermore, because of the way in which the Chordiant data base operates and the way in which it can be searched, references are only thrown up where the call centre agent has made a note of the call in question. The agents are not required to make notes and in Mr Mackay’s experience are less likely to do so where the call is of no relevance to Sky itself. The search carried out therefore, was of necessity, of notes which had been made and was made in respect of specific references to SkyDrive. It did not include and could not capture general references to confusion about any unnamed non-Sky product. Mr Mackay concluded that one must expect that a much larger number of instances of confusion must have occurred and gone unrecorded. I accept his evidence in this regard.
It was Ms Baxter’s evidence that six interrogations of Chordiant returned 100 entries which referred to SkyDrive or Sky Drive. These were reviewed either by Ms Baxter or Mr MacLennan and between them they identified 35 potentially relevant entries, for example, because the caller had merely used ‘skydrive’ in their password or email address. A further five were discarded because it became clear that it was the call agent who mentioned SkyDrive, two were duplicate references, one used SkyDrive in the context of internet connectivity and another mentioned the installation of “Sky Drivers”. Ms Baxter then sought to contact the remaining 26 customers and the call agents concerned.
Only two of the callers were not willing to give a witness statement. One who had contacted the helpline as a result of difficulties in accessing attachments sent to her Hotmail account, had various issues with Sky and as a result, a witness statement was not obtained. The other had had difficulties printing documents for a meeting and had called the Sky helpline. Sky was her internet provider and because she saw “SkyDrive” Ms Baxter explained, the customer thought it was Sky. Ms Baxter stated that the caller, Ms Thorndike went on to explain that “it was like Walls Ice Cream, which she would expect to be connected with Walls”. Ms Baxter explained that Ms Thorndike had not wanted to become involved in proceedings but that the recording of her original call to the Sky helpline had been disclosed in the proceedings.
Two examples of this evidence are the witness statement of Mr Long and Mrs Cushing. Mr Long a Sky customer who is registered blind uses software to read aloud the information displayed in his laptop and iPhone. On 20 March 2012 he was sent an email with attachments. When he clicked on them he was automatically redirected to a link which suggested that he download the SkyDrive application. He did so and when prompted to enter his username and ID, attempted to use his Sky ID. Despite the fact that the link mentioned Microsoft, he thought it was a Sky service. When his details were not accepted he rang Sky customer services. When he was informed that SkyDrive was a Microsoft product he commented to the call agent that it was totally misleading to call the product SkyDrive and that he had assumed that it was a Sky product because of its name.
Mrs Cushing was a user rather than a recipient. She was attempting to attach a curriculum vitae to an email using her Hotmail account, at a time when Microsoft was automatically requiring the use of SkyDrive for attachment of Office documents sent through Hotmail. She stated that she was totally confused by the appearance of the reference to SkyDrive having no recollection of having signed up for the service. She was also a Sky customer and assumed that she had been signed up by Sky without her permission. She rang Sky in order to ask how to remove SkyDrive from her computer and was amazed to discover that it was not provided by Sky at all.
Ms Baxter and Mr MacLennan also visited Sky call centres and asked 59 “Customer Experience Leaders” who are duty managers responsible for overseeing typically around 8 -12 call agents, to ask whether they had heard of SkyDrive. The upshot was that 27 call agents responded positively. Of them, ten thought that SkyDrive was associated with Sky. Two of them recalled taking a call from a customer in relation to SkyDrive. They were not amongst those which had been thrown up by the Chordiant research.
Some further examples are as follows:
Ms Carole Reid, a Customer Adviser within the Broadband technical team at Sky states in her witness statement that she took a call from a Mr Hanna who was trying to sign up to the Microsoft Flight Simulator. In order to do so he needed to register with Hotmail, Messenger or SkyDrive. He wanted to know whether he could sign in using SkyDrive and whether he was registered for it automatically as he was a subscriber to many other Sky services. Mr Hanna was looking at the SkyDrive webpage and explained that it asked for his Windows Live ID. She records him as commenting, “surely, they wouldn’t use the word “Sky” without your permission?”
Mr David Wierbicki, an employee of The Listening Company, to which Sky had outsourced work at a customer contact centre. His witness statement related to an incident in January 2012 when he received a call from a Sky broadband customer who said that she was having difficulties logging in to SkyDrive and was therefore, contacting Sky for assistance. She was informed that it was a Microsoft product.
Ms Dawn Deane, a Sky customer signed a witness statement having been contacted by Ms Baxter. (A Civil Evidence Act Notice was served in this regard). She contacted the Sky helpline in 2012 because she and her husband were having difficulty with SkyDrive. She is a Microsoft Hotmail account holder. Her husband had received an email with documents attached and was trying to forward them. The recipient had informed them that they could not open the documents which had been attached. She stated that she contacted Sky because she assumed that SkyDrive was a Sky product.
Ms Jacqui Canale, a Sky customer, encountered difficulties with recipients being unable to open documents attached to her emails. She discovered that SkyDrive had been installed on her Hotmail email account automatically and she could not work out how to turn it off. She stated in her witness statement that she automatically assumed that “SkyDrive” was a Sky product and was extremely frustrated because prior to joining Sky she had had no difficulties sending attachments by email. She assumed therefore, that the problem was caused by Sky. Whilst on the telephone to a Sky call agent about an unrelated matter, she asked for help in relation to SkyDrive and became annoyed because the call agent initially did not know what SkyDrive was. Subsequently, she was informed that SkyDrive was not a Sky product and stated that she was confused because it had “sky” in the title.
As I have already mentioned, Mr Bloch on behalf of Microsoft did not seek to cross examine any of these witnesses. However, first he submitted that the number of alleged incidences of confusion is miniscule whether taken alone or in the context of the huge volume of calls received and cannot be presented as a sample which is typical of the average consumer. In relation to Mr Long, he pointed out that as a result of his impaired eyesight, Mr Long cannot be an average consumer for the purposes of the global assessment which includes visual aspects of the SkyDrive sign which I accept.
I also accept Mr Bloch’s criticism of the inclusion of Mr Clark’s evidence which does not take the matter much further forwards. Mr Clark came across SkyDrive in the unusual context of a police report in relation to indecent images of his niece which had been stored on SkyDrive. This was clearly not an ordinary incidence of a consumer encounter nor was the sign presented as used by Microsoft. Equally, the inclusion of the evidence of Ms Steffani Ashworth in relation to an unidentified Live Chat user in Ghana is not relevant.
There are two incidences where there is no documentation to support the recollections of the call agent. Although Mr Bloch calls these into question on the basis of the huge volume of calls with which a call agent is required to deal, in my judgment, there is no reason to impugn that evidence as far as it goes. It is inevitably general but nevertheless records occasions on which a Sky call agent was required to deal with questions relating to SkyDrive.
There were also five examples where for one reason or another there was no documentation before the Court. They were merely examples of an entry on the Chordiant system. Nevertheless, although the weight to be attached to them is much less, in my judgment they should not be ignored altogether because they are references to SkyDrive on the Sky system.
Mr Bloch went on to seek to attack the probative value of the evidence of actual confusion on a number of bases. The first was that they had been led into giving evidence of their confusion by the way in which they had been contacted by Ms Baxter a solicitor acting on behalf of Sky when she was seeking witness statements from them. In this regard, I accept the evidence of Ms Baxter that although she did not have a script she avoided asking leading questions and only sought to introduce her call and efficiently to remind the individual of their call to the Sky Customer Services helpline by reference to SkyDrive.
In any event, it must be borne in mind that the individuals concerned had in fact, contacted the Sky Customer Services helpline in the first place quite spontaneously, in order to resolve their particular difficulty with SkyDrive. That they were merely reminded of that call in relation to SkyDrive in order to introduce the reason for Ms Baxter contacting them can hardly be reason to reject their evidence as being tainted. Nor, it seems to me, is the question, “why did you make the call?” unreasonable in the circumstances.
In any event, in my judgment, even if the content of the witness statements was influenced in some way by Ms Baxter’s form of questions, which I do not accept, it must be remembered that in most cases, the transcript of their original call to the Customer Services helpline, reveals their confusion. Those calls were unprompted and unsolicited, real world events.
Secondly, it was submitted that witnesses were a skewed sample of the kind rejected by the Court of Appeal in Interflora II and therefore, of no assistance at all. Mr Bloch submitted that the fact that some real people with particular characteristics are confused tells one nothing about whether such people are likely to be confused generally where they were selected precisely because they were confused. To put the point shortly, he says that the seventeen are not representative.
In Interflora a list had been compiled of over 100,000 people who had either bought flowers through Interflora’s website or who had participated in a previous survey. From that potential pool they had found 13 who they said gave evidence of real world confusion. In Interflora I Lewison LJ had observed:
“4. I also said (with the agreement of Hughes and Etherton LJJ) that the purpose of controlling evidence at the interim stage was: ”
"[70] … not merely to avoid irrelevant (i.e. inadmissible) evidence; it is also to avoid evidence which is unlikely to be of real value." (Emphasis added)
"[76] … But the remaining objections still hold good: viz. that the selected witnesses are not (or at least cannot be shown to be) a fair sample of the class of reasonably well-informed and reasonably observant internet users, with the consequence that there is no ground for any extrapolation on a statistical basis, or on the basis of any mathematical or logical probability, of the views of the selected witnesses as representing the effect of the M & S advertisement on the hypothetical reasonably well-informed and reasonably observant internet user. If evidence of this kind cannot form the basis for extrapolation on the basis of any mathematical or logical probability leading to a conclusion about the effect of M & S's advertisement on the hypothetical reasonably well-informed and reasonably observant internet user, then in the absence of special circumstances it cannot be useful. And if it cannot be useful, it should not be allowed to distract the focus of the trial even if it is technically admissible."
. . . . .
"[135] … Unless the court can be confident that the evidence of the selected witnesses can stand proxy for the persons or construct through whose perception the legal question is to be answered it simply represents the evidence of those individuals."
"[142] … even at an interim stage a judge who is asked for permission to adduce such evidence should evaluate it carefully in order to see (a) whether it would be of real utility and (b) whether the likely utility of the evidence justifies the costs involved." (Emphasis added)
"[143] … In the general run of cases it seems to me to place an undue and unfair burden on the other party for one party to tender in evidence witness statements from selected respondents to a questionnaire without even undertaking to produce a selection that demonstrates the full range of answers to the questions. As Mr Hobbs said, that places the burden on the defendant to disprove the validity of the selection, rather than on the claimant to validate it. Such a burden could in my judgment only be justified if the party tendering the evidence can show that it is likely to have a real impact on the outcome of the trial." (Emphasis added)
"[144] … The current practice… is to allow the evidence in unless the judge can be satisfied that it will be valueless. In my judgment that is the wrong way round. I consider that, even if the evidence is technically admissible, the judge should not let it in unless (a) satisfied that it would be valuable and (b) that the likely utility of the evidence justifies the costs involved."
"[146] In the present case I do not consider that Interflora has demonstrated that the evidence it wishes to call would be of real value. To put it bluntly, Interflora starts with an unreliable dataset from which it proposes to select the witnesses most favourable to itself. (Emphasis added)
[150] In deciding whether to give permission, the court must evaluate the results of whatever material is placed before it. Only if the court is satisfied that the evidence is likely to be of real value should permission be given." (Emphasis added)
5. Mr Hobbs QC rightly said that this judgment was intended to send the general message that evidence from consumers in this kind of case (i.e. trade mark infringement involving ordinary consumer goods or services) should only be admitted if it is of real value; and even then only if the value justifies the cost; and that judges should be robust gatekeepers in that respect.
6. In Interflora 1 I had also said that "different considerations may come into play where … evidence is called consisting of the spontaneous reactions of members of the relevant public to the allegedly infringing sign or advertisement"; and that "if there is evidence of consumers who have been confused in the real world, there can be no objection to calling it." This appeal engages that aspect of Interflora 1. “
Lewison LJ went on at [15] – [18] to deal with the question of whether the 13 witnesses were representative in the following way:
“15. In reaching that conclusion the judge first held that the evidence was evidence of real world confusion. He quoted from the witness statements of four of the witnesses, although he did not at that stage refer to the raw data themselves. I regret to say that in my judgment the judge was misled by the impression created by the witness statements when compared to the raw data on which they are based. The judge said at [40]:”
‘Where there is evidence of actual confusion, however, there have been many cases in which the courts have found it of assistance to hear from people who were confused and who are prepared to come to court. Usually, it is quite hard to find people who have been confused, because confusion by its very nature often doesn't come to light, and it is even harder to persuade confused people to come to court to give evidence. Thus the available sample is often a small one. But experience shows that it is rarely completely repetitious. On the contrary, it often shows a range of responses to the sign in issue. In my view, it is helpful for the court to receive first hand evidence of the range of responses from the people who had those responses.’
16. One problem in this case is that the evidence of the 13 witnesses is not representative of the range of responses to the questions. Interflora acknowledge that; because they have disclosed the answers to the questionnaires of a further 24 interviewees who thought that there was no connection between Interflora and M & S. The judge brushed aside M & S's complaint on that score. He said at [43]:
‘Counsel for Marks & Spencer complained that no statements had been obtained from those 24, but I see no need for Interflora to have done so. If Marks & Spencer wish to obtain statements from those witnesses, their contact details have been provided.’
17. In my judgment, with all respect, this is an inadequate ground for dismissing the complaint. Part of the concern about the admission of this kind of evidence is that it is too partisan (or, as I put it in Interflora 1, it is evidence from a skewed selection of witnesses). In Interflora 1 I said at [143]:
‘In the general run of cases it seems to me to place an undue and unfair burden on the other party for one party to tender in evidence witness statements from selected respondents to a questionnaire without even undertaking to produce a selection that demonstrates the full range of answers to the questions. As Mr Hobbs said, that places the burden on the defendant to disprove the validity of the selection, rather than on the claimant to validate it. Such a burden could in my judgment only be justified if the party tendering the evidence can show that it is likely to have a real impact on the outcome of the trial.”
18. In my judgment that is what the judge has done in this case. He has left it to M & S to amplify the range of responses to the questionnaire; and thus has imposed upon them the burden of disproving the validity of the selection. Mr Silverleaf submitted that any deficiencies in the witness statements could be explored and exposed in cross-examination for which Interflora had provided all the relevant material. But that, too, casts the burden on M & S to disprove the validity of the evidence rather than requiring Interflora to validate it at the "gatekeeping" stage.
19. The judge acknowledged that witness statements are rarely (if ever) the unmediated words of the witness himself. He continued at [49]:
‘It is often been remarked that one of the problems with witness statements is that they often contain, in effect, the answers to a series of leading questions. In some cases judges have passed comments about witness statements being "heavily lawyered", meaning that the wording of the statement was more the product of the lawyer than of the witness. That is, of course, to be deprecated. Nevertheless, witness statements are, and have for some years been, an established feature of English civil litigation procedure. That being so, it would not be justified to require higher standards for the admission of consumer evidence in trade mark cases. That is particularly so where the gathering of the evidence has been made as transparent as it is here.’
56. It is not clear to me what the judge meant by referring to "higher standards" for the admission of consumer evidence in trade mark cases. As paragraph 18.1 of PD 32 makes clear, a witness statement "must, if practicable, be in the intended witness's own words." We know what the witnesses' own words were: they are recorded in the answers to the questionnaire. It is not a question of higher standards: it is a question of ensuring that standards are complied with. If, therefore, the judge thought that he was being asked to impose higher standards, I respectfully think that he was wrong. In addition, if the evidence proposed to be called is relied on as consumers' spontaneous reaction to an allegedly infringing sign, it is all the more important to eliminate answers to leading questions which almost by definition do not produce spontaneous reactions. This was at the heart of guideline (iv) of the Whitford guidelines (see Imperial Group plc v Philip Morris Ltd [1984] RPC 293 summarised in Interflora 1 at [61]):
‘…the questions asked must not be leading; and must not direct the person answering the question into a field of speculation upon which that person would never have embarked had the question not been put.’”
Mr Bloch emphasises the tiny number of calls and points out that Sky has not sought evidence from other callers whose Chordiant notes relate to SkyDrive but who were not confused. He says that Sky simply says that the Court must assume that since 0.000011% of calls to the helpline indicate confusion, callers generally are likely to be confused which cannot be correct.
In this regard, I accept Mr Purvis’ submissions. The reference in Interflora to a ‘skewed sample’ was to a ‘skewed sample’ of the respondents to a survey or questionnaire. By contrast, the seventeen callers to the Sky Customer Services helpline who have been identified, selected themselves and when they called the helpline as a result of which they spontaneously voiced their confusion, they were not made the subject of any particular mindset or series of questions. The fact that there may be more of them who were undetected in my judgment does not affect the validity of their evidence. This is not a case in which the party has chosen to put in evidence of only those responses to a survey which support its case. The original calls were not solicited and by their very nature and that of the helpline, there will not also have been calls from those who made no connection between Sky and SkyDrive.
In my judgment given the unprovoked circumstances in which they made contact, they are examples of evidence of consumers who have been confused in the real world. Lewison LJ dealt with this in Interflora I at paragraph 136 in the following way:
“One of the objections to the witness collection exercise .. is that the evidence thus collected is not the spontaneous reaction of members of the public who have been exposed to the allegedly infringing sign or advertisement, but is evidence obtained under artificial conditions by applying artificial stimuli. If there is evidence of consumers who have been confused in the real world, there can be no objection to calling it.
Lewison LJ went on to say:
“in the general run of cases where witnesses have been identified by a tailored series of questions they will have been led towards a particular mindset which no longer represents the unstimulated evidence of people in the real world.”
In this case, there are not only the witness statements drafted as a result of contact by Ms Baxter but also the recordings of the original call which they made to the helpline which I have taken into consideration. In Microsoft’s oral opening, the complaint seemed to be that the evidence of actual confusion should have been thrown away in favour of some kind of survey of all Sky’s customers, asking if they had been confused between Sky and SkyDrive, and then calling a cross-section of them to give evidence. In the face of the judgments in Interflora I and Interflora II and the existence of unsolicited real world evidence I do not consider that such an exercise was necessary.
Microsoft also sought to draw a statistical extrapolation from the numbers involved. In this regard, I accept Mr Purvis’ submissions. It is only Sky customers who will have phoned the helpline in the first place and would also be likely to be broadband customers which also reduces the size of the pool. In addition, the difficulties which were thrown up appear for the most part to have arisen from the automated use of SkyDrive for attachments to emails which was discontinued in February 2012 which will have had the effect of reducing the potential for direct complaint at that stage. It seems to me therefore, that one cannot make a statistical extrapolation and ought not to do so.
Conclusion
In my judgment, having taken into account all the learning in relation to the nature of the “average consumer” who 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 the average consumer in the sense that there is a risk that the public might believe that the services come from the same undertaking or one which is economically linked.
I come to this conclusion despite the fact that one of the principles to be borne in mind in the global assessment is that the average consumer normally perceives the mark as a whole. In my judgment, 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 sign. As Arnold J put it in Och-Ziff, given the distinctiveness of the mark, the identity of the services and the non-distinctiveness of the word “Drive”, I consider that there is a manifest likelihood of confusion on the part of the consumer with regard to the SkyDrive sign.
It follows that I do not accept Mr Bloch’s submission that the average consumer would be unlikely to undertake what he described as a three stage process. First, I consider that given the descriptive nature of “drive”, the average consumer would see SkyDrive as two words and would not characterise it in the same was as VapoRub or BlackBerry. That is how the computer blogger, “the Hermes project” treated it and how it would present itself in oral use.
Secondly, and in addition, I consider that “Sky” would be seen as arbitrary. I should say at this stage, that in my judgment, there was no evidence to support Microsoft’s contention that in 2002 and 2006 “sky” was descriptive in the sense that it is allusive of or a metaphor for the internet. In coming to this conclusion I rely upon Ms Connolly’s own evidence that it was not used at all in an allusive way before 2008 and the evidence of Mr Kroll to the effect that in 2007 he was trying out the reference on the public. Furthermore, after that date, it seems to me that the references which Ms Connolly was able to unearth in her extensive researches were insufficient from which to conclude that “sky” was recognised as allusive for the internet. I also take into consideration the evidence of the 132 providers of online storage facilities, identified between 2005 and 2013, none of whom use “sky” to denote the internet and the fact that the word “sky” does not appear in the dictionary as meaning the internet.
Lastly, if it were necessary, I would also rely upon the reactions of those who responded to the Survey to which I refer in more detail below. At best only eleven of the 515 interviewed, saw any allusion between “sky” and the internet. This was despite having been asked in the context of having had SkyDrive drawn to their attention as being an online service. I should add that I have considerable doubts as to the probative value of the Survey to which I shall refer.
To return to Mr Bloch’s three stage process, in my judgment, the average consumer would see “Sky” as fulfilling a trade mark function rather than as a composite part of the SkyDrive mark as a whole. This follows from my conclusion as to the descriptive nature of “drive”. It seems to me that the remainder of the sign would dominate and would be seen as “brand+descriptor” as Mr Bloch described it. I also take account in the global assessment of the identity of the services in this case.
In this regard, I also bear in mind that the sign is not to be stripped of its context. It seems to me however, that even before SkyDrive was set free in effect as a separate brand in 2011, the evidence clearly shows that it was often free of all Microsoft context. Mr Hall accepted that a recipient of documents or photographs was not necessarily a Windows Live or Microsoft account holder and would not have accessed SkyDrive through that filter. Those who received documents or photos by email were not necessarily aware of any Microsoft background. Since 2011 those who see the tile on a laptop, a Windows phone or an Xbox, watch product placement during TV series such as Hawaii-Five-O or as Mr Burton described, follow a feed on twitter, will have no reason to associate SkyDrive with Microsoft. Even in the case of the Windows phone advertising, the reference to Microsoft was relatively peripheral. It seems to me that this is precisely within the circumstances under consideration in the Arsenal and Anheuser Busch cases and there is no need to consider the further step to which Mr Bloch alluded where confusion may arise as a result of discussions between consumers, not in the course of trade.
My conclusion is supported by the examples of actual confusion which have come to light. First, as the authorities make clear, actual examples of confusion are rare. I take this into account along with the fact that they may well be the tip of the iceberg particularly as the call recordings are only kept for approximately six months. As I have already mentioned, I consider that each of the individuals who contacted the Sky helpline can be viewed as spontaneous real life examples of confusion. I also take the view that although they were not numerous, there were enough examples to give rise to the conclusion that confusion is sufficiently likely to warrant the court’s intervention. Although those who called the helpline were Sky customers, they nevertheless displayed confusion and sought to attribute the shortcomings of the SkyDrive system to Sky. In this regard, I take into account that in some cases, the person who telephoned was actually using their Microsoft Hotmail account at the time. Mr Hanna was actually looking at the SkyDrive webpage which was requesting a Windows Live ID, Ms Deane who wanted to assist a recipient of documents from her Microsoft Hotmail account and Ms Canale who wanted to know how to rid her Microsoft Hotmail account of SkyDrive.
In addition, I take into account in this regard, the evidence of Mr Burton in relation to his attempt to share files for the purposes of a meeting in the office which elicited the question as to whether there was a connection between Sky and SkyDrive.
Although, given my serious reservations about it, I place relatively little evidential weight upon it, my conclusion is also borne out by the responses to the Survey to which I refer below.
The global assessment which I have undertaken having taken account of the context in which the sign appears, has taken into account the visual, aural and contextual effect of the fact that the dominant component in the sign is the same as the mark.
Before turning to the next head of the claim I should make clear that given the way in which a recipient of an email receives the SkyDrive link to documents or photographs, free of Microsoft connections, I consider that infringement is made out under this head whether the mark is Windows Live SkyDrive, Microsoft SkyDrive or SkyDrive alone and that it is also made out whether the facility forms part of the Windows Live suite or in its independent form after 2011.
S10(2)(b) and Art 9(1)(b) - Infringement by similarity of goods and services
Under this head, Sky relies upon the non-identical goods and services covered by the trade marks which form part of the core of Sky’s reputation as an internet service provider and as a supplier of set boxes for the storage and management of digital content. For this purpose, Microsoft acknowledges that there is some similarity between broadband provision and cloud storage.
The registered goods and services upon which Sky relies in this regard are:
UKTM 829: Class 38 ‘computer aided transmission of messages or images… provision of telecommunications links to … websites on the Internet’ [this covers acting as an internet service provider and email service provider]
CTM 411: Class 9 ‘apparatus for recording, transmission or reproduction of sound or images…data storage apparatus and instruments’ [this covers set-top boxes etc.]
Class 35: ‘electronic data storage services for personal…use and services for the electronic storage and organization of files, images, music, audio, video’ [this covers Sky Plus services etc.]
Class 38 ‘telecommunications’ [this covers acting as an ISP and email service provider]
CTM 337: Class 9 ‘apparatus for recording, transmission or reproduction of sound or images’ [this covers set-top boxes etc.]
Class 35: The whole class [protected by the use of the class heading, this includes everything in the alphabetical list including the services specifically listed for CTM 411 above]
Class 38: ‘telecommunications’ [this covers acting as an ISP and email service provider]
Sky submits that the Board of Appeal at OHIM, when rejecting the Defendants’ application to register the word SkyDrive as a CTM in respect of classes 9 and 35, at paragraph 46 of the Decision, correctly regarded these core goods and services as having a ‘close and complementary connection’ with the services for which the SkyDrive application was made, namely ‘electronic storage of files and documents for others’. The Board of Appeal’s reasoning was that the contested services ‘do necessarily involve the use of data storage equipment of the kind covered by the earlier mark and require the use of telecommunication services.’ Sky submits that the reasoning applies equally to the precise products and services in relation to which the SkyDrive sign is being used (file storage, management and sharing software and services).
It is said that file storage, management and sharing software and services on the one hand and the broadband services in relation to which Sky has its core reputation are particularly complementary. Mr Purvis submits that the average consumer knows that broadband providers offer a range of services as well as simply offering access to the internet. In fact, it was Mr Blumberg, Sky’s Head of Telephony’s evidence that many broadband providers actually offer file storage, management and sharing services including BT’s ‘Digital Vault’, Virgin’s ‘Back Up and Storage’, AOL’s ‘X-Drive’, Orange’s ‘My Content Online’. Of course the same was also true of Sky itself until the end of 2011. Mr MacLennan also gave evidence before OHIM of TalkTalk Online Backup, NTL Broadband Plus and Tiscali.plus. However, this should be balanced against Mr Olofsson’s acceptance that Sky is an entertainment company and that Sky HD and Sky Anytime, for example, relate to television entertainment, albeit that he pointed out that it is now necessary to be active in both media and technology in order to deliver entertainment.
After cross examination had been concluded, Sky disclosed some further documents in the form of market research stated to have been conducted between 10 and 15 October 2007. It was prepared by ICM Research. It is stated that 1147 interviews were conducted via an online panel and that the sample included 205 Sky Broadband customers and 528 Sky TV customers. It revealed that 58% of those who responded considered it appropriate for internet providers also to provide online data backup services and 45% stated that they would consider using such a service. Although it has some probative value, in the absence of any cross examination, it would not be appropriate to give it a great deal of weight.
Sky put in evidence an article which lists the best five free cloud storage service providers the first two of whom were BT and Virgin which are also broadband providers. On the other hand, Microsoft introduced an article from the magazine “PCAdvisor” listing the top 20 cloud storage services which did not reveal the same correlation. It highlighted services such as those offered by Dropbox, SugarSync, flickr and MediaFire. Furthermore, Mr Blumberg accepted in cross examination that despite significant numbers of customers having been given Sky Store and Share accounts automatically, the usage was low. In fact, there were only 40,000 users when the service was discontinued in 2011 despite the number of households which subscribe to Sky Broadband services. Mr Blumberg observed that the Store and Share service had not been actively marketed.
Under this head, evidence of actual confusion can be relied upon. I have set that out under the “Infringement by Identity” heading above and I will not repeat it here.
I should also mention that Microsoft drew attention to what was said to be “missing evidence’ from Sky. They say that there ought to be evidence from within Sky expressing concern about the presence of SkyDrive in the market. It is said that this is a striking omission given Sky’s insistence that SkyDrive has caused it detriment.
In answer to this, Sky points out that it was not until 2011 that SkyDrive was launched and marketed separately and by that time, the litigation had commenced and in any event, Sky’s Store & Share had ceased. All communications after this action was commenced in 2011 and at a time when SkyDrive’s separate presence in the market was greater, would be likely to be with the legal department and therefore, privileged.
It is also said that there is no evidence from Sky customers on the closure of the Store & Share service. Microsoft contends that some of them should have asked whether SkyDrive was a sister service to which they could transfer.
It is also said that the fact that Mr MacLennan only sent out a note on the intranet to call agents in March 2012 asking them to look out for confusion with SkyDrive indicates that this is a synthetic dispute and if there had been a real problem he would have done so in 2007.
In my judgment these points do not take the matter much further forwards. As Mr Purvis submits, SkyDrive was only marketed and launched separately in 2011. Furthermore, as the authorities show, evidence of actual confusion and deception is often decisive, but its absence is not.
Microsoft also relied upon the evidence of Ms Duncker whose job title was Group Manager Delivery Community Support. She researched Microsoft customer feedback for reference to SkyDrive of which there was none. In fact, in cross examination she accepted that the community help forum deals with technical problems and that the customer support telephone number merely channels callers to the forum or to the complaints department. The only other source was the feedback page on the Microsoft website. Ms Duncker also accepted that the feedback spreadsheets had not been searched for “sky” but rather for BSkyB or British Sky Broadcasting Group. In the circumstances, it seems to me that a lack of evidence from this source is not surprising and is not indicative of very much.
Furthermore, Ms Hegerty in cross examination accepted that the student ambassadors recruited by Microsoft to spread the word about its products in universities had not been asked about instances of confusion between SkyDrive and Sky. She also accepted that although she had stated in her witness statement that she was sure that any concerns about a Windows Live product would have come to her or to her colleague Fiona Fyfe’s (who also said that she had heard nothing) attention, she had not heard of the concerns of Mr Mercier a senior director Content Acquisitions and Strategy Team at Microsoft Limited who saw a Microsoft demonstration about SkyDrive in September 2010 and as a result sent an email to the internal Microsoft product testing group, known as Windows Live Dogfood Discussion Group asking whether they had checked out Sky’s various trade marks given the use of Sky in the title. She was also unaware of the Hermes Project blog referring to SkyDrive as a confusing name.
Mr Hall, Ms Hegerty and Mr Weeks confirmed that they would have expected to have heard of any issue arising if people were confused by the SkyDrive name or were perceiving a link with Sky but that they had not had such feedback. Ms Bonatti, Mr Jacoupy and Mr Mohadjer’s evidence as to the reasons why they would have expected to have heard of negative feedback in Italy, France and Germany respectively but had not done so was unchallenged.
Conclusion
As I have already mentioned, for the purposes of this head of the claim, Microsoft accepts that there is some similarity between broadband provision and cloud storage. It is also said that file storage, management and sharing software and services on the one hand and the broadband services in relation to which Sky has its core reputation are particularly complementary. Mr Blumberg’s evidence was that many broadband providers also provide file storage and management services although it is not true to say that there is a complete correlation by any means.
It seems to me that the evidence reveals that there is a close connection between file storage, management and sharing software and the provision of broadband services, including the provision of email services which are included in Class 38 both for UKTM 829 and CTMs 337 and 411. Not all data storage providers are broadband providers but it seems to me that the evidence reveals that a significant number of broadband providers also provide data storage and I consider it significant that the complementary services are provided by both BT and Virgin. Accordingly, I agree with the conclusion reached by the Board of Appeal of OHIM that there is a close and complementary connection between the core goods and services for which the CTMs are registered and those to which the SkyDrive mark relates. I also consider that the same is true in relation to UKTM 829. As the authorities made clear, the close connection is a matter to be taken into account in the global assessment.
Given the evidence of actual confusion manifested in calls to the Sky helpline and Mr Burton’s experience of sharing documents in the office, to which I have referred, it seems to me that if one undertakes a global assessment, given all the matters to which I referred under the “identity” head which are also relevant here, together with the similarity in goods and services to which the UKTM and the CTMs and the sign relates, the descriptive nature of “drive” and the dominant remaining part of the sign being “Sky”, there is a likelihood of confusion in the average consumer who is a reasonably well informed and reasonably observant user of the relevant internet services. This is all the more so in the light of Sky’s very considerable marketing budget for its core services which is not in dispute.
In this regard, I have taken into account in the global assessment, in particular, the conceptual similarity of the goods and services which it seems to me is close and the aural similarity between the mark and the sign.
In addition to the evidence of actual confusion, I also rely upon Mr Hall’s evidence, that it was certainly possible that ordinary consumers familiar with Sky’s position as a provider of broadband internet might think that there was a connection between Sky and SkyDrive and that it was not plain to a recipient of an email with a SkyDrive attachment that it is a Microsoft product. Just as under the “Identity head” it is important to bear in mind the context in which the sign appears. As I mentioned under that head, the context includes for example, the appearance of SkyDrive as a pre-loaded tile on a laptop, as an app on a mobile phone or on an Xbox in circumstances in which it is difficult if not impossible for the consumer to appreciate that there is any Microsoft connection.
Under this head, I also place some, albeit only slight, reliance upon the responses to the Survey. As I said under the “Identity head” they give some indication of the reaction of the public.
I should add that given the fact that this head of claim concerns the non-identical goods and services which form the core of Sky’s reputation, I consider that Sky’s case under this head is if anything, stronger than under the “Identity” head.
S10(3) and Art 9(1)(c)
The applicable law
This purpose of this section and Article (which are equivalent in wording to Article 5(2) and 4(4)(a) of the Trade Marks Directive 2008/95/EC) was explained by the ECJ in Intel Corp v CPM United Kingdom [2008] ECR I-8823 in the following terms:
“26. Article 4(4)(a) of the Directive establishes, for the benefit of trade marks with a reputation, a wider form of protection than that provided for in Article 4(1). The specific condition of that protection consists of a use of the later mark without due cause which takes or would take unfair advantage of, or is or would be detrimental to, the distinctive character or the repute of the earlier mark (see, to that effect, in respect of Article 5(2) of the Directive, Marca Mode, paragraph 36; Adidas-Salomon and Adidas Benelux, paragraph 27, and Case C-102/07 Adidas and Adidas Benelux [2008] ECR I-0000, paragraph 40).”
27. The types of injury against which Article 4(4)(a) of the Directive ensures such protection for the benefit of trade marks with a reputation are, first, detriment to the distinctive character of the earlier mark, secondly, detriment to the repute of that mark and, thirdly, unfair advantage taken of the distinctive character or the repute of that mark.
28. Just one of those three types of injury suffices for that provision to apply.
29. As regards, in particular, detriment to the distinctive character of the earlier mark, also referred to as 'dilution', 'whittling away' or 'blurring', such detriment is caused when that mark's ability to identify the goods or services for which it is registered and used as coming from the proprietor of that mark is weakened, since use of the later mark leads to dispersion of the identity and hold upon the public mind of the earlier mark. That is notably the case when the earlier mark, which used to arouse immediate association with the goods and services for which it is registered, is no longer capable of doing so.
30. The types of injury referred to in Article 4(4)(a) of the Directive, where they occur, are the consequence of a certain degree of similarity between the earlier and later marks, by virtue of which the relevant section of the public makes a connection between those two marks, that is to say, establishes a link between them even though it does not confuse them (see, in relation to Article 5(2) of the Directive, General Motors, paragraph 23; Adidas-Salomon and Adidas Benelux, paragraph 29, and adidas and adidas Benelux, paragraph 41).
It is not necessary for the trade mark proprietor to establish a likelihood of confusion in order to succeed in such a claim. However, it is necessary to establish that the mark has a ‘reputation’ in the relevant territory. As Arnold J said in Och-Ziff at ¶125: ‘this is not a particularly onerous requirement.’ The relevant test is set out by the ECJ in General Motors v Yplon [1999] ECR I-5421 at ¶26 as follows:
“.. the degree of knowledge required must be considered to be reached when the earlier mark is known by a significant part of the public concerned by the products and services covered by that trade mark.”
This is to be assessed by taking into consideration:
“all the relevant facts of the case, in particular the market-share held by the trade mark, the intensity, geographical extent and duration of its use, and the size of the investment made by the undertaking in promoting it.’ [General Motors at ¶27].”
As Arnold J pointed out in Och-Ziff at ¶125:
“Moreover, although the mark must be known by a significant part of the public in a substantial part of the territory of the European Union, in an appropriate case the territory of a single Member State may suffice for this purpose: see Case C-301/07 Pago International GmbH [2009] ECR I-9429. ”
It is also necessary to establish as Arnold J explains in Interflora v M&S [2013] EWHC 1291 (Ch) that the use of the sign complained of gives rise to a “link” between the sign and the trade mark in the mind of the average consumer, even if the average consumer does not confuse them. The CJEU in Intel confirmed that the necessary ‘link’ originally referred to in the Adidas case was satisfied when ‘the later mark [or sign] calls the earlier mark with a reputation to mind’.
The third requirement is that the trade mark proprietor must establish the existence of one of three kinds of injury which were described by the court of Justice in L’Oreal v Bellure. The only form of injury that is relied on in this case is the loss of distinctiveness, referred to by the CJEU in ¶29 of the passage cited above as ‘dilution, whittling away, or blurring’.
In Intel at ¶42, the CJEU laid down a number of factors which should be taken into account when assessing whether the sign was likely to bring the trade mark to mind:
“.. - the degree of similarity between the conflicting marks;
- the nature of the goods or services for which the conflicting marks were registered, including the degree of closeness or dissimilarity between those goods or services, and the relevant section of the public;
- the strength of the earlier mark's reputation;
- the degree of the earlier mark's distinctive character, whether inherent or acquired through use;
- the existence of the likelihood of confusion on the part of the public. [Interflora at para 190]”
They pointed out (at ¶¶57-58) that the last of these was not necessary but was sufficient to prove “calling to mind”.
As Mr Purvis pointed out, it is clear from Intel at ¶38 that it is not necessary to prove that ‘dilution’ has actually occurred, merely that there is a serious risk of it happening in the future. Furthermore, the same paragraph makes clear that dilution is to be considered from the point of view of the relevant public which comprises average, reasonably informed consumers of the goods or services for which the registered trade mark is registered and not average consumers of the Defendants’ services.
The fact that the sign ‘calls the mark to mind’ does not automatically give rise to liability. A serious risk of dilution must be shown. However, it is to be assessed on the basis of (inter alia) the same factors set out above for establishing the ‘link’ in the first place – see Intel ¶68. In particular,
“The more immediately and strongly the earlier mark is brought to mind by the later mark, the greater the likelihood that the current or future use of the later mark is taking unfair advantage of, or is detrimental to, the distinctive character or the repute of the earlier mark”
It is a formal requirement of a case under s10(3)/Article 9(1)(c) that the Claimant proves its case on detriment. However, when considering ‘dilution’ (particularly a serious likelihood of dilution in the future) it is well-established that the Courts may proceed on the basis of obvious inferences from the facts of the case. In particular, it is not the case that the registered proprietor must bring evidence, in a dilution case, to show an actual change in the economic behaviour of customers. See the judgment of the General Court in Environmental Manufacturing v OHIM (Wolf Head) T-570/10:
“52 Accordingly, the proprietor of the earlier mark must adduce prima facie evidence of a future risk, which is not hypothetical, of detriment (SPA-FINDERS, cited above in paragraph 26, paragraph 40). Such a finding may be established, in particular, on the basis of logical deductions made from an analysis of the probabilities and by taking account of the normal practice in the relevant commercial sector as well as all the other circumstances of the case (Case T-181/05 Citigroup and Citibank v OHIM - Citi (CITI) [2008] ECR II-669, paragraph 78).”
53 It cannot, however, be required that, in addition to those elements, the proprietor of the earlier mark must show an additional effect, caused by the introduction of the later mark, on the economic behaviour of the average consumer of the goods or services for which the earlier mark was registered. Such a condition is not set out in Article 8(5) of Regulation No 207/2009 or in Intel Corporation, cited above in paragraph 27.
54 So far as concerns paragraph 77 of Intel Corporation, cited above in paragraph 27, it is apparent from the choice of words 'it follows' and from the structure of paragraph 81 of that judgment that the change in the economic behaviour of the consumer, to which the applicant refers in support of its claim, is established if the proprietor of the earlier mark has shown, in accordance with paragraph 76 of Intel Corporation, that the mark's ability to identify the goods or services for which it is registered and used as coming from the proprietor of that mark is weakened, since use of the later mark leads to dispersion of the identity and hold upon the public mind of the earlier mark.”
The ECJ in Intel said the following in relation to the relevance of the ‘uniqueness’ of the brand seeking to show dilution and the proof of detriment:
“72. Lastly, as regards, more particularly, detriment to the distinctive character of the earlier mark, the answer to the second part of the third question must be that, first, it is not necessary for the earlier mark to be unique in order to establish such injury or a serious likelihood that it will occur in the future.
73. A trade mark with a reputation necessarily has distinctive character, at the very least acquired through use. Therefore, even if an earlier mark with a reputation is not unique, the use of a later identical or similar mark may be such as to weaken the distinctive character of that earlier mark.
74. However, the more 'unique' the earlier mark appears, the greater the likelihood that the use of a later identical or similar mark will be detrimental to its distinctive character.
. . . . .
77. It follows that proof that the use of the later mark is or would be detrimental to the distinctive character of the earlier mark requires evidence of a change in the economic behaviour of the average consumer of the goods or services for which the earlier mark was registered consequent on the use of the later mark, or a serious likelihood that such a change will occur in the future.
79. . . . Article 4(4) (a) of the Directive is to be interpreted as meaning that whether a use of the later mark takes or would take unfair advantage of, or is or would be detrimental to, the distinctive character or the repute of the earlier mark must be assessed globally, taking into account all factors relevant to the circumstances of the case.
80. The fact that:
- the earlier mark has a huge reputation for certain specific types of goods or services and
- those goods or services and the goods or services for which the later mark is registered are dissimilar or dissimilar to a substantial degree, and
- the earlier mark is unique in respect of any goods or services, and
for the average consumer, who is reasonably well informed and reasonably observant and circumspect, the later mark calls the earlier mark to mind,
is not sufficient to establish that the use of the later mark takes or would take unfair advantage of, or is or would be detrimental to, the distinct character or the repute of the earlier mark, within the meaning of Article 4(4)(a) of the Directive.”
Lastly, section 10(3)/Article 9(1)(c) infringement requires that the Defendant’s use of the sign must be ‘without due cause’. The burden to establish ‘due cause’ is on the Defendant: see Intel ¶39 and Premier Brands v Typhoon [2000] FSR 767.
The defence has gained some significance in the difficult area of ‘internet keyword’ cases, where the CJEU in Interflora v Marks & Spencer C-323/09 noted that the use of a third party’s trade mark by a competitor as a keyword for the purpose of offering consumers an alternative competitive product:
“.. without causing dilution or tarnishment and without, moreover, adversely affecting the functions of the trade mark concerned…falls, as a rule, within the ambit of fair competition in the sector for the goods and services concerned and is thus not without ‘due cause’ for the purposes of…Article 9(1)(c).”
It is notable that the CJEU seem to have considered that in a case where dilution was being caused, the use of a sign which would otherwise infringe would not be ‘with due cause’. Outside the peculiar case of internet keywords, the scope of the defence is extremely limited. The scope was discussed in detail by Neuberger J in Premier Brands v Typhoon Europe [2000] FSR 767 at 789-791. At p791, he cited with approval a passage from the decision of the Benelux Court in Lucas Bols [1976] I.I.C. 420 at 425 in the context of the very similar wording in the Uniform Benelux Trade Mark Act (‘without justifiable reason’), in a section generally regarded as a blueprint for the extended protection given by Article 9(1)(c):
“What this requires, as a rule, is that the user (of the mark) is under such a compulsion to use this very mark that he cannot honestly be asked to refrain from doing so regardless of the damage the owner of the mark would suffer from such use or that the user is entitled to the use of the mark in his own right and does not have to yield this right to that of the owner of the mark.”
The Argument
It is said on behalf of Sky that the evidence in relation to the double similarity case under s10(2) and Art 9(1)(b) inevitably satisfies the lesser test of “calling the mark to mind” for the purposes of section 10(3) and Art 9(1)(c).
In this regard, Mr Purvis also draws attention to the admission contained in Microsoft’s written closing argument that some consumers may call SKY to mind when encountering SkyDrive in use and that those consumers who do so call SKY to mind are not people who should be regarded as especially unobservant or lacking in “circumspectness”.
In addition it is said that SkyDrive will inevitably cause dilution in the sense of the ‘mark’s ability to identify the goods or services for which it is registered and used as coming from the proprietor of the mark is weakened, since use of the later mark leads to dispersion of the identity and hold upon the public mind of the earlier mark.’
In support of the contention that dilution will occur, Mr Purvis relied upon unchallenged evidence as to subsidiary apps to SkyDrive which have been developed by third parties to enable users to manage their materials stored on SkyDrive. They are Sky Manager, Sky Wallet, Sky Music and Sky Player.
Further, in relation to dilution, Mr Purvis points out that the General Court in Wolf Head made clear that detriment in the sense of a change of economic behaviour on the part of customers was not a separate hurdle but that once dilution is established, that is sufficient for liability.
Mr Purvis then went on to refer me to the Survey conducted on behalf of his clients in late 2010. This was carried out without any prior reference to the Court or to the Defendants. He says that it is more help here under s10(3) and Art 9(1)(c) than in relation to the identity and similarity claims because under this head, the association of names and the creation of a link is enough.
As I have already mentioned, the Survey was devised and supervised by Mr Riccardo Baxter. It was carried out by briefed and trained interviewers provided by a leading custom market research firm. The Survey involved presenting approximately 515 members of the public with a flash card with the word “SkyDrive” on it in font size 160. The following substantive questions were asked:
Q1: “What do you think of this as the name of an online storage service for photos, music and other files?
Q2: “Why do you say that?”
Mr Malivoire considered that these questions and in particular the second question, encouraged speculation and therefore, were unhelpful. In cross examination, Mr Baxter pointed out that there were two views about whether it is better merely to use an open ended question such as “what do you think if anything?” as the follow up question. He said that the second question was more likely to illicit a response and avoid people failing to take part in the survey. The Survey was conducted in various locations throughout the United Kingdom and it was not disputed that there was a good geographic spread. Quotas were imposed on the sample so that it would be broadly representative of the adult population. Interviews were conducted across all adult age ranges and the male/female mix of interviewees was 48.5%/51.5%.
The interviewer was required to write down the answers verbatim and to record the interview. It was intended that the interviews be conducted outside and that when asked the questions, the interviewee should have before them the flash card. The recordings and the transcripts of them are before the court. In fact, a number of the recordings have been played to the court.
The findings of the Survey were not put forward as empirical data or finite percentages but as Mr Baxter described, from a qualitative perspective to indicate the scale and range of potential association between SkyDrive and Sky.
A rough and ready reading of the findings from the Survey reveals that about 100 people mentioned Sky in their answers in a way which implied that they make a link with the Claimants. Some examples of those responses are in the following form:
‘1007:
Q1 – It’s ok and it makes me think of Sky TV though.
Q2 – I think Sky is quite a prominent trade mark and when I see Sky that’s what I think of. “
“1011:
Qu 1- It would confuse me actually.
Qu 2 – You said it was for photos and videos and the sky made me think about the Sky TV package. It wouldn’t make me think of photos.
“1022:
Qu 1 – It sounds alright but is it anything to do with Sky?
Qu 2- Because I’m with Sky and I don’t know anything about this one.”
“1026:
Qu 1 - Too closely associated with Sky
Qu 2 – Anything with Sky in seems to remind me of Rupert Murdoch and I don’t like him. “
“3007:
Qu 1 – It’s just SkyDrive so I would assume it is something to do with the Sky the company. Obviously I’d have to read what’s there to know whether it is or it isn’t with Sky tying into a major brand.
Qu 2 – Sky is one of the largest brands in the world at the moment. As simple as that.”
A number of the interviewees also made witness statements explaining their answers to the Survey. They had been contacted by telephone by SJ Berwin LLP staff including Ms Baxter. Her evidence was that she informed the interviewee that she was working from SJ Berwin LLP and was working on proceedings connected with the Survey in which they had recently participated. She read the original questions and the interviewee’s responses to them and asked them to confirm whether they could recall their responses. They were asked whether they would elaborate further on their answers and if they would provide a witness statement.
One such interviewee who was contacted in fact by Mr Kevin Carpenter of SJ Berwin LLP swore a witness statement in which she set out the process by which she was contacted after the Survey. It matches up with Ms Baxter’s evidence in this regard. Her answers to the Survey had been:
“Qu 1 – You think of drive as hard drive, I would know what it was.
Qu 2 – You think of online because Sky is a big company that is all over the Internet.”
She was then asked what she had meant by Sky being a big company and responded:
“I presumed the front half of the word “SKYDRIVE” was to do with Sky television and that “drive” meant hard drive and that my reference to the “big company” was Sky television.”
Microsoft draws attention to a variety of other responses given by interviewees, a sample of which are as follows:
“1001:
Qu 1 – SkyDrive quite good.
Qu 2 – It’s unique, no one else has got and its all like with the internet. The internet is in the air, its about putting the files in the sky up on the internet.”
1014:
Qu 1 – Its fine yes.
Qu 2 – I guess drive indicates you’re linking up with something on the internet.”
“2008:
Qu 1 – quite a good name its quite appropriate I first thought it was transport of some sort.
Qu 2 – Because of sky’s the limit your hard drive its something to do with computers.”
`’4012:
Qu 1 – Yes I suppose it would possibly go with it.
Qu 2 – well you are storing on a virtual hard drive it’s a play on words. Some people may find it confusing if they are not IT literate.
2017:
Qu 1 – Think it’s a good name. It’s a drive to store files. Catch on SkyDrive take it you can share stuff. Popular.
Qu 2 – Catchy name, not long, not forget it, it will do what it says.”
Mr Purvis’ submission is that particularly in relation to section 10(3)/Article 9(1)(c) where infringement depends on “making a link” or “calling to mind” this is very significant given that around 20% of participants mentioned Sky.
He accepted that for the purposes of section 10(2)/article 9(1)(b) however, it is of limited use because it is impossible to say exactly how many of the participants would actually have been confused into assuming that SkyDrive was actually a Sky product when they saw it in context. Nevertheless, he says that it supports Sky’s primary evidence from customers who were actually confused.
The Survey has been subject to serious criticism by Mr Malivoire on behalf of Microsoft. Having reviewed the transcripts and listened to the recordings, he appreciated that in a number of instances, interviews had in some cases not been conducted outside and in one case, it had been conducted on the telephone. In another case it was clear that the interviewee was the son of the interviewer and in another that the interviewee was not within the age range recorded in the relevant report. In other examples, it was relatively clear that the interviewer rather than adhering to the script had prompted the interviewee and in others that the interview had been rehearsed before it was recorded. He took the view that such interviewers had displayed such unreliability that all of their interviews should be excluded from the results of the Survey.
In cross examination, Mr Malivoire was unable to state that the kind of shortcuts and deviations from instructions revealed by the recordings had not occurred in all or any of the surveys which he himself had been involved in presenting to the court in other cases of this kind.
Mr Purvis says that all the criticism does not change the position. The statistics remain the same. He says that the questions were non-leading and a reasonable cross section of the public were questioned. He also pointed out that Microsoft had been provided with all relevant materials in compliance with the Whitford Guidelines and submitted that as a result of the availability of recordings and transcripts the findings were perhaps the most reliable or at least, the most helpful to the court of the many surveys conducted, evidence of which is presented in cases such as this.
He says that Mr Malivoire’s approach is excessively critical and focuses on interviewers who had failed to carry out their instructions, something which was only discovered as a result of the recordings. Mr Maliviore then took the position that all of such an interviewer’s results should be discounted despite the fact that in the 15 -20 surveys which Mr Malivoire had commended to the court in other cases, the absolute measure of recordings had not been available. He says that in those cases it was just as likely that short cuts were being taken. In fact, it was more likely because the interviewer was not aware that he could be checked on. Mr Malivoire did not deny this but relied upon his trust in his interviewers whom he used as an “article of faith.”
Mr Purvis submitted therefore, that the Survey was more reliable than previous surveys and that the results should be accepted save for those in which the instructions were breached blatantly, which is a very small number. In any event, even if one adopts Mr Malivoire’s more radical approach of rejecting all of the interviews of such an interviewer, Mr Purvis says that the results are not materially affected. The statistics remained the same.
In fact, there were 107 mentions of Sky and 103 after adjustments and of 38 responses which made reference to allusions, 9 referred to “cloud” or “sky” and 11 referred to the internet.
Mr Purvis also referred me to Laddie J’s comments in Associated Newspapers in respect of a survey subject to major and justified criticism. He held nonetheless: ‘not withstanding the Defendants’ criticisms, the survey does give a feel for the reaction of members of the public to the Defendants’ proposed newspaper.’
It is accepted that for the purposes of dilution, Sky’s reputation as a broadcaster in addition to its reputation in the field of broadband can be taken into consideration.
In relation to calling to mind, Mr Bloch reminded me that everything should be taken into account including the distinctive way in which Sky uses its mark, in accordance with its brand guidelines, designed to ensure instant recognition. He says that consumers who are used to seeing the Sky marks in a particular font and colour way will be much less likely to bring that mark to mind if they see SkyDrive presented in a different way.
He also says that the Survey does not assist Sky in relation to spontaneous calling to mind because the questions put were designed to encourage the interviewees to think about matters which they might not otherwise have done. He couples this with the very large font of the SkyDrive sign which was shown. He also submits that the evidence of confusion is at a de minimis level.
Mr Bloch went on to refer me to evidence which Ms Connolly had collected of the number of apps in the app store which used “Sky” in their title which numbered more than four hundred and a table which she had compiled which showed a considerable and increasing use of the term “sky” in names to be found on the internet. This he says is relevant under art 9(1)(b) on the issue of likelihood of confusion but also here under art 9(1)(c) because it is relevant to what people will bring to mind and also to the issue of detriment by dilution.
He also refers me to paragraph 54 of the Wolf Head decision and submits that it is clear that in fact detriment must be proved and is not altogether synonymous with dilution. He says that Sky’s case under this head is necessarily hopeless because detriment simply has not been established. In particular, he says that Sky do not enjoy a monopoly in the word SKY nor should they and that the courts have always been slow to assist a party where the word is descriptive.
He says that in this case it is misleading to talk of dilution at all. Sky chose a descriptive mark which is widely used. The Defendants’ use is merely one more drop in the ocean and could not give rise to serious dilution such that it could give rise to a change in economic behaviour.
In this regard, he also reminded me of the evidence of Mr Hall of SkyDrive marketing throughout the period 2007 to 2012. According to Conscore data there were 58m users of SkyDrive by August 2011, 2.032m of them were in the UK and considerable numbers in France, Spain, the Netherlands and Germany. Nevertheless, there appears to be a complete lack of commercial concern about SkyDrive activity in Sky. There was no evidence to this effect which Mr Bloch characterises as quite extraordinary.
Mr Bloch says therefore, that Sky’s case in relation to SkyDrive alone must fail and that as the other signs, being Windows Live SkyDrive, SKYDRIVE without distinctive capitalisation and Microsoft SkyDrive are so much less similar, they must fail too. The Microsoft context and/or related indicia, it is said, can only improve Microsoft’s position.
With regard to Windows Live SkyDrive and Microsoft SkyDrive it is said that the sign is just not similar to the mark either visually or aurally, Sky does not come near the beginning of the sign and the concepts are completely different. Furthermore, it is said that there is no prospect of the average consumer considering such signs to be a sub-brand and there is no evidence of it.
Conclusion
Under this head, it is not necessary to show a likelihood of confusion. However, it must give rise to a “link” between the sign and the mark in the mind of the average consumer. Furthermore, it is necessary to show that the mark has a reputation in the relevant territory. I shall deal with that element first.
As Mr Bloch pointed out, there is no evidence as to the mark other than in the UK. However, as I understand it, it is not in dispute that Sky has a considerable marketing budget and that its trade marks are well known. As Arnold J pointed out, in an appropriate case, the territory of a single Member State may suffice to satisfy the requirement that the mark is known by a significant part of the public in a substantial part of the territory of the European Union. It seems to me that given the strength of Sky’s mark within the UK, that test is satisfied.
It also seems to me that it is clear given the conclusions which I have already reached, that the average consumer would make a link such that SkyDrive calls to mind the “Sky” mark. The case in this regard seems to me to be strong given my findings in relation to the descriptive part of the SkyDrive sign and the mark’s distinctive character. I also take account of the existence of evidence of actual confusion in this case.
In this regard, I do not rely heavily upon the Survey, although I do not discount it altogether. I accept Mr Bloch’s justified criticisms of it. However, I do not consider that the cases of failure to comply with instructions which were only apparent because of the availability of the recordings should lead to the results being discounted altogether or that all of the results of the particular interviewer should be discounted. I also take account of the fact that even if one makes the adjustments which Mr Malivoire proposed, the overall results remained much the same. It does not seem to me that the size of the font on the flash card is likely to have had much impact in relation to the questions asked nor that the second question necessarily materially affected the responses.
However, I do take account of the fact that it was a survey conducted without the prior approval of the Court.
As a result, it seems to me that as I have already mentioned, it should not be given much weight, but as Laddie J pointed out in the Associated Newspapers case, despite its shortcomings, it gives at least a feel of the reaction of members of the public to SkyDrive.
However, when this is coupled with the similarity of the goods and services, the strength of Sky’s reputation, the similarity of the marks, the evidence of actual confusion and my conclusions about the way in which the sign would be appreciated conceptually, aurally and in context, it seems to me that the average consumer would call Sky to mind when seeing SkyDrive and given the way in which Windows Live SkyDrive and Microsoft SkyDrive was presented to the consumer, they too would be likely to call Sky to mind.
Has Sky also established that there is a serious risk of loss of distinctiveness in the sense of “dilution, whittling away or blurring” in the minds of average, reasonably informed consumers of the goods and services for which the mark is registered? It seems to me that such a dilution is an obvious inference from the facts of this case. The creation of the subsidiary apps, such as SkyWallet supports such a conclusion. I do not consider that the fact that Ms Connolly found a large number of apps which use sky in the title detracts from such a conclusion. There was no evidence that the fruits of her researches were necessarily connected with the area of Sky’s activities at all.
Lastly, was the use of the sign “without due cause”? The burden to show due cause is on Microsoft. In this regard, I take account of the passage in Lucas Bols to which I have referred. It seems to me that it cannot be said that Microsoft is under such a compulsion to use this very mark that it cannot honestly be asked to refrain from doing so. After all, it has repackaged/branded its service three if not four times already. Although it has expended a great deal of energy and money on advertising, I do not consider that it can make out “due cause” and I did not understand Mr Bloch to seek to do so.
Accordingly, in my judgment, this head of claim is also made out.
Passing Off
It is Sky’s case that all the elements of a passing off claim are also made out. Mr Purvis submits that the “classical trinity” of goodwill, misrepresentation (whether or not intentional) leading to likelihood of confusion and damage are all present. Sky submits that the passing off case is very similar to the case for trade mark infringement under s10(2) based on double similarity. Sky relies upon its reputation and goodwill across its entire business, but specifically, in relation to its broadband business and the digital content storage and management services represented by its set-top boxes.
It is not in dispute that the legal basis of the cause of action in passing off was explained by Lord Oliver in Reckitt & Coleman v Borden [1990] RPC 341 at 406 as follows:
“The law of passing off can be summarised in one short general proposition – no man may pass off his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number. First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying “get-up” (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff's goods or services. Secondly, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff's identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. For example, if the public is accustomed to rely upon a particular brand name in purchasing goods of a particular description, it matters not at all that there is little or no public awareness of the identity of the proprietor of the brand name. Thirdly, he must demonstrate that he suffers or, in a quia timet action that he is likely to suffer, damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the source of the defendant's goods or services is the same as the source of those offered by the plaintiff. “
The question is whether there is likely to be confusion amongst any substantial proportion of the public. Any significant degree of confusion amongst real consumers will suffice and as Lord Oliver explained in Reckitt & Coleman v Borden at 415:
“The essence of the action for passing off is a deceit practised on the public and it can be no answer, in a case where it is demonstrable that the public has been or will be deceived, that they would not have been if they had been more careful, more literate or more perspicacious”.
Lord Jauncey in the same case stated at 423:
“There is ample authority for the view that you must take customers as you find them including the imprudent and the unwary”.
However, as Jacob J in Neutrogena explained at p482 ultimately, the question is one for the court and not for the witnesses. As he put it:
“. . . . It follows that if the judge’s own opinion is that the case is marginal, one where he cannot be sure whether there is a likelihood of sufficient deception, the case will fail in the absence of enough evidence of the likelihood of deception. But if that opinion of the judge is supplemented by such evidence then it will succeed. And even if one’s own opinion is that deception is unlikely though possible, convincing evidence of deception will carry the day…It was certainly my experience in practice that my own view as to the likelihood of deception was not always reliable. As I grew more experienced I said more and more “it depends on the evidence”.
It is also not in dispute that the ultimate question of ‘likelihood of confusion amongst a substantial number’ does not admit of quantitative definition. Confusion of even a relatively small proportion of people will suffice. Thus in Neutrogena at p484, having considered the evidence of letters written in protest at an advert for the Defendant’s product, some 9 of which showed that the writers thought it was for the Claimant’s product, Jacob J said this:
“It should not be thought that the 9 out of 158 letters evincing confusion represents the totality of it (though if representative of the degree of confusion amongst the public as a whole it would certainly be enough).”
Furthermore, it is clear from the judgment of Jacob LJ in Phones4U Ltd & Ors v Phone4u.co.uk Internet Ltd & Ors [2006] EWCA Civ 244, that there is no requirement for special proof of damage where confusion is likely to occur, even in separate fields of activity. In particular, Mr Purvis referred me to paragraphs 11 to 14 of the judgment of Jacob LJ, the relevant parts of which are as follows:
“11. It must be noted that Lord Oliver does not limit damage to a particular sort of damage, particularly direct diversion of sales caused by misrepresentation. If that were so, passing off would fail in one of its key purposes – protection of the property in the goodwill. The books are full of cases where the action has succeeded where there has not been, and even could not be, direct loss by diversion of sales.
12. A good example is Ewing v Buttercup Margarine [1917] 2 Ch . The plaintiff had an established retail business in Scotland and Northern England. It traded under the name Buttercup Dairy Company and was known as Buttercup Dairy or simply Buttercup. The Defendant was a new company called the Buttercup Margarine Company, the name having been chosen without knowledge of the plaintiff. Its directors intended to make and deal in margarine, though its objects were wider. There was no intention to use Buttercup for the margarine. Passing off was established before Astbury J. In the Court of Appeal the respondents were not even called upon, Lord Cozens Hardy MR saying the case was “well over the line”. . . .
13. Warrington LJ put it in this way:
“ . . . . . Looking at those two names, it seems to me obvious that a trader or a customer who has been in the habit of dealing with the plaintiff might well think that the plaintiff had adopted the name Buttercup Margarine Company, Limited, as his own name for the purpose of the margarine branch if his business, or for the purposes, if you will, of doing what it is said the defendants are going to do, namely to make their own margarine instead of buying it in the market. If that be so, it seems to me that the plaintiff has proved enough. He has proved that the defendants have adopted such a name as may lead people who have dealings with the plaintiff to believe that the defendants’ business is a branch of or associated with the plaintiff’s business. To induce the belief that my business is a branch of another man’s business may do that other man damage in various ways. The quality of goods I sell, the kind of business I do, the credit or otherwise which I enjoy are all things which may injure the other man who is assumed wrongly to be associated with me. And it is just that kind of injury that what the defendants have done here is likely to occasion.”
14. A more modern statement of the kind of damage which , if caused by misrepresentation, is actionable, was given by Slade LJ in Chelsea Man v Chelsea Girl [1987] RPC 189 at p 202:
“(a) by diverting trade from the plaintiffs to the defendants;
(b) by injuring the trade reputation of the plaintiffs whose men’s clothing is admittedly superior in quality to that of the defendants; and
(c) by the injury which is inherently likely to be suffered by any business when on frequent occasions it is confused by customers or potential customers with a business owned by another proprietor by or is wrongly connected with that business.”
Mr Purvis prays in aid all of the evidence which is relevant under the other heads of claim. However, he puts particular emphasis upon the callers to the Sky Customer Services helpline.
Mr Bloch on behalf of Microsoft points out that descriptiveness is an important factor weighing against a finding of passing off. Reference was made in his opening to A& E Television Networks LLC and Anor v Discovery Communications Europe Ltd [2013] EWHC 109 (Ch) in which Peter Smith J quoted the speech of Lord Simonds in Office Cleaning Service Ltd v Westminster Window and General Cleaners Ltd (1946) 63 RPC 39. In the A&E Television case, the claimant sought to claim passing off by use of he signs “HISTORY” and MILITARY HISTORY” in relation to television channels providing exactly such subject matter. Peter Smith J’s judgment at [21] and [22] was as follows:
“PASSING OFF
There are significant overlaps between this area and the trade marks but it is to be noted that AETN claim to restrict under passing off (inter alia) the use of the specific word HISTORY and the specific words MILITARY HISTORY or any name or names confusingly similar thereto. This in my view was and is a bold claim.
It is bold because of the observation of the House of Lords in Office Cleaning Service Ltd v Westminster Window and General Cleaners Ltd (1946) 63 RPC 39 where for example Lord Simonds said (page 43):-
"So long as descriptive words are used by two traders as part of their respective trade names, it is possible that some members of the public will be confused whatever the differentiating words may be. I am ready to believe that in this case genuine mistakes were made. I think they ought not to have been made. In the Vacuum Cleaner case it appeared that ninety per cent of its customers had addressed the Plaintiffs, in the British Vacuum Cleaner Coy., Ltd as the "Vacuum Cleaner Coy". In spite of this fact and of instances of actual confusion Parker J refused to grant an injunction to restrain the New Vacuum Cleaner Coy., Ltd from using the word "vacuum cleaner" in conjunction as part of its registered or other name. So in Turton v Turton (42 Ch. D. 128) the possibility of blunders by the public was held not to disentitle the defendant form trading in his own name though the plaintiff had long traded in the same name. It comes in the end, I think, to no more than this, that where a trader adopts words in common use for his trade name, some risk of confusion is inevitable. But that risk must be run unless the first user is allowed unfairly to monopolise the words. The Court will accept comparatively small differences as sufficient to avert confusion. A greater degree of discrimination may fairly be expected from the public where a trade name consists wholly or in part of words descriptive of the articles to be sold or the services to be renered.
I have not troubled your Lordships with many of the numerous cases on this topic. The principles of law are, as I have said, very clear and their application will depend on the facts of each case."
Mr Bloch also emphasises that deception has not been established. He says that it is even clearer in the case of passing off that where the claimant has a descriptive mark the court will be loath in effect to grant them a monopoly right. He also stresses that the complete absence of any of the indicia of the SKY brand in the use of SkyDrive serves to ensure that there could be no deception caused by Microsoft as a result of any of the activities which have been complained of. He says that this head of claim is an afterthought by Sky and should be dismissed.
In relation to “HISTORY” and “MILITARY HISTORY” Mr Purvis says that it is obvious that the terms are descriptive and that the case only serves to highlight how different it is from the situation here.
Conclusion
It seems to me that for this purpose, the existence of goodwill is not really in dispute. As a result of its considerable marketing budget, Sky has reputation and goodwill across its entire business including its digital content storage and management services by way of set top boxes and in broadband.
Is there a misrepresentation likely to lead to confusion and damage? I have already found that although “drive” is a descriptive term, “sky” is not descriptive of the internet. It follows therefore, that in my judgment, the circumstances are different from those under consideration in the A&E Television Networks case where the words “HISTORY” and “MILITARY History” were clearly descriptive. As I have found that “sky” is not descriptive or allusive of the internet, the situation is also different from that to which Lord Simonds referred in the Office Cleaning case. In my judgment, “sky” cannot be characterised as a descriptive term used by two traders as part of the trading names in relation to which it is possible that some of the public will be confused but which will lead only to low level confusion which should be tolerated.
Taking into account all of the evidence upon which I have relied under the other heads together in particular, with the responses to the Sky helpline I also consider that it follows therefore, that in my judgment there has been a misrepresentation whether intentional or not.
Although I accept that there was no use of the Sky get up or indicia in SkyDrive, it seems to me that the evidence revealed confusion amongst real people. Was there sufficient evidence to satisfy me that there is a likelihood of confusion amongst a substantial number of the public? In this regard, I note what Lewison LJ said most recently in Interflora and Jacob J as he then was, in Neutrogena. Although the test is different from that in infringement, it seems to me that on the basis that the evidence of confusion given the way in which the Chordiant system works and the fact that records are only kept for six months, may well be the tip of an iceberg, Mr Burton’s evidence when sharing a document with clients in the office and Mr Hall’s acceptance of the effect upon a recipient of an email with a SkyDrive link, that the test is made out.
It seems to me that damage in the general sense identified in the passages from Phones 4U Ltd & Ors v Phone4u.co.uk Internet Ltd & Ors, inevitably follows. Damage is inherently likely where frequently the customers of a business wrongly connect it with another. This must be all the more so given the range of difficulties which SkyDrive was encountering in 2011/12 and in my judgment, is clear from the very fact that the callers to the Sky helpline who were enquiring about SkyDrive were having serious difficulties with the product which they believed to be connected with Sky.
Therefore, in my judgment, Sky’s claim in passing off also succeeds.
Counterclaims - Invalidity
(i) Descriptiveness for cloud storage
Microsoft’s pleaded objection to the UK trade marks is under s3(1)(b) and (c) of the TMA. These are in the following terms:
3 – (1) The following shall not be registered –”
…
(b) trade marks which are devoid of any distinctive character,
(c) trade marks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of services, or other characteristics of goods or services,
They take the same stance on the same basis in relation to the CTMs and contend that they are partially invalid under Article 7(1)(b) and (c) of the Regulation which are in the following terms:
“Article 7 ”
Absolute Grounds for Refusal
The following shall not be registered:
. . . . .
(b) trade marks which are devoid of any distinctive character;
(c ) trade marks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin or the time of production of the goods or of rendering of the service, or other characteristics of the goods or service;”
In Fine & Country v. Okotoks [2012] EWHC 2230 at 216, (which has since been upheld in the Court of Appeal) Hildyard J said as follows in relation to these sub-sections of the TMA and their equivalents in the Regulation:
“The principle enshrined in these provisions is the public interest in preventing the registration of trade marks devoid of any distinctive character, or consisting exclusively of descriptive signs or indications; as was explained in Koninklijke KPN Nederland NV v Benelux-Merkenbureau (C-363/99) [2004] E.C.R. I-1619 (“the Postkantoor case”):
“55 That public interest requires that all signs or indications which may serve to designate characteristics of the goods or services in respect of which registration is sought remain freely available to all undertakings in order that they may use them when describing the same characteristics of their own goods. Therefore, marks consisting exclusively of such signs or indications are not eligible for registration unless article 3(3) of the Directive applies.”
Microsoft contends that the word ‘sky’ is not registrable by virtue of s3(1)(b) and 3(1)(c) in relation to a subset of the goods and services for which the UKTMs are registered, namely ‘goods and services pertaining to cloud storage’. It is alleged that:
the word ‘sky’ is a convenient and common word used by traders to describe or allude to a cloud storage system (be that system a good or a service) such that (a) it is incapable of distinguishing a cloud storage system of one undertaking from that of another, and (b) it should be kept free for use by all traders offering such systems;
and
the word ‘sky’ would be recognized by the average consumer as descriptive of a characteristic of a cloud storage system, namely by indicating that the system is for the storage of data remotely, being notionally in ‘the cloud’ or ‘the sky’.
As the Claimants point out, this amounts to an allegation that the mark should never have been registered. The question of validity must be judged as at the effective date of registration of the mark, namely the date of application. In the case of UKTM 176 the relevant date is 5 June 2002. In the case of UKTM 829 it is 6 March 2006.
The question of whether a mark lacked distinctiveness and/or was descriptive under Article 7(1)(b) or (c) of the Council Regulation (EC) No 207/2009 on the Community Trade Mark at the relevant date is to be judged ‘by reference to the presumed perception of an average consumer of the category of goods and services in question, who is reasonably well informed and reasonably observant and circumspect.’ See for example the General Court in Spectrum Brands v OHIM T-544/11 at ¶19.
By reference to the perception of such a person at the relevant date, the question must be asked whether the sign ‘may serve in normal usage … to designate, either directly or by reference to one of their essential characteristics, the goods or services for which registration is sought’. See Procter & Gamble v OHIM [2001] ECR I-6251, ¶20.
This will only be the case where there is a ‘sufficiently direct and specific relationship between the sign and the goods or services in question to enable the public immediately to perceive, without further thought, a description of the goods and services in question or one of their characteristics.’ See Lisstoschenko and Henze v OHIM [LIMO] ECR II-2957 ¶30.
As I have already mentioned, although at the outset Microsoft contended that the word ‘sky’ was a descriptive term which the public would be familiar with as meaning ‘remote storage’, in their closing it appeared that they relied more upon the contention that the public would recognise the word ‘sky’ as allusive to a ‘cloud storage system’, and therefore deduce some descriptive intention from its use. Despite his serious reservations about the Survey, Mr Bloch placed reliance in this regard, upon the responses to the Survey which he says revealed that 20% of those who responded understood there to be an allusion.
Reliance was also placed upon Starbucks v BSkyB [2012] EWHC 3074 (Ch) in which Arnold J upheld Sky’s descriptiveness counterclaim under article 7(1)(b) and 7(1)(c) CTMR. The judge concluded that taking all the evidence into account, “NOW” would be understood by the average consumer as a description of a characteristic of the service, namely the instant, immediate nature of the service. He placed weight upon the evidence adduced by Sky that the word NOW had been widely used in a descriptive way in the relevant sector. He put it this way at [112]:
“ . .. . the word NOW has been widely used entirely descriptively in this sector. For example, it is commonly used in electronic programme guides and online programme guides to identify the programme currently showing, as well as in television continuity announcements and graphics. It is also commonly used in advertising and promotional materials, in particular for on-demand services such as those offered by the likes of Netflix, Lovefilm and BlinkBox.”
However, in this case, as I have already mentioned, following an exhaustive trawl of published articles available online, Ms Connolly, on behalf of the Defendants, reveals that the terms ‘cloud’, ‘cloud storage’, ‘cloud computing’ etc. only began to appear after 2008. It is not disputed that the relevant dates for this inquiry are 2002 in respect of the UKTM and 2006 for the CTM. Mr Hall’s evidence was that “sky” was used amongst IT professionals in or around 2007 to mean the internet but that he had no knowledge of its use amongst the public in that way and Mr Kroll’s evidence that prior to 2008 it was used in trade journals and within the industry and that the term was used internally at Microsoft but that in coining the name for online storage, he was trying to explain a new concept to the public.
In the circumstances, it seems to me that the contention that the average consumer would immediately have perceived from the word ‘sky’ as an allusion to ‘cloud computing’ or descriptive of the internet in 2002 or 2006 cannot succeed.
The only references which have been found prior to 2006 in which the word ‘sky’ is used in relation to anything to do with computing are either the ‘pie-in-the-sky’ or ‘blue-skies thinking’ style phrases or they refer to a plan for providing internet by satellite. They did not necessarily relate to online storage.
Furthermore, it seems to me that the position is different from that considered by Arnold J in the Starbucks “NOW” case. As the judge pointed out, the term was widely used entirely descriptively in the sector. Although Ms Connolly’s researches unearthed a relatively large number of apps using the term SKY within their titles, they related to a wide range of sectors which even included skydiving. Given the outcome of her research in relation to cloud storage and the fact all of the evidence to which I have referred suggests that the term was not used in relation to cloud storage prior to 2008 and was not a name which had been used to explain the concept of data storage in the public domain at that time, it seems to me that there is no basis upon which it can be said that the average consumer would have understood “Sky” as either a reference to or an allusion to online data storage prior to 2008.
Even if one takes account of the results of the Survey, which was not conducted until late 2010 and in relation to which the first question serves expressly to connect the term SkyDrive with the relevant services, only 20% of responses can be characterised as containing a recognition of some kind of allusion to cloud storage. Putting aside the doubts as to the probative value of the Survey in the first place and the suggestive nature of the first question, I consider such a level of response to be insufficient.
This is not a case in which there is a ‘sufficiently direct and specific relationship between the sign and the goods or services in question to enable the public immediately to perceive, without further thought, a description of the goods and services in question or one of their characteristics.’ See Lisstoschenko and Henze v OHIM [LIMO] ECR II-2957 ¶30.
Accordingly, in my judgment, the counterclaim as to invalidity as a result of descriptiveness fails.
(ii) Impermissible amendment – bad faith
Microsoft counterclaim that the amendment of the registration for CTM 411 by the partial surrender route to which I have referred is sufficient basis for a declaration that the mark is invalid pursuant to Council Regulation 207/2009 Article 52(1)(b) which is in the following form:
“A Community trade mark shall be declared invalid on application to the Office or on the basis of a counterclaim in infringement proceedings: . . . .
(b) where the applicant was acting in bad faith when he filed the application for the trade mark.”
As I have already mentioned Mr Ladas, a senior assistant solicitor at SJ Berwin LLP and an Intellectual Property specialist who made the calls to the officers of OHIM was not available to give evidence, having left that firm. His supervising partner, Mr David Rose gave evidence that he had not written the letters to OHIM or made the calls himself but was kept informed by Mr Ladas. He also explained that searches had been made for notes of the calls and had any been found they would have been disclosed.
Mr MacLennan who is Group Head of Intellectual Property for Sky accepted in cross examination that the amendments included the goods and services provided by SkyDrive and that the application had been made in order to avoid the issue which might arise as a result of the IP Translator decision which was imminent. He stated that he was not aware of anyone else having made an application of this kind. He did not accept however, that the words which were added had the effect of an extension of the registration and had given no thought to whether an advantage was being obtained. His evidence was that he considered what had been done to be legitimate which I accept.
It is not disputed that the effect of the use of class headings at the relevant date is set out in Communication No. 4/03 of the President of OHIM:
“The 34 classes for goods and the 11 classes for services comprise the totality of all goods and services. As a consequence of this the use of all the general indications listed in the class heading of a particular class constitutes a claim to all the goods and services falling within this particular class.”
Similarly the use of a particular general indication found in the class heading will embrace all of the individual goods or services falling under that general indication and properly classified in the same class. For example, the use of the general indication ‘Pharmaceutical and veterinary preparations’ in class 5 will embrace all pharmaceutical preparations regardless of their composition or indication.
Furthermore, where it may not be obvious under which of several general indications particular goods or services fall, there is nevertheless a classification-based reasoning for the proper classification. For example, ‘computer software’ is classified in cl. 9 because of the presence of the general indication ‘data processing equipment and computers’ in that class, because computer software is seen as directly related to the corresponding apparatus or equipment. Therefore, when a specification contains ‘data processing equipment and computers’ as a general indication, this will be considered as embracing also computer software. On the other hand, where a specification lists general indications in class 9 but not ‘data processing equipment and computers’, computer software will not be considered as falling within the specification.”
The published practice of OHIM at the relevant date in terms of classification and the scope of specifications must be determinative as to the construction of the specification of a mark granted by OHIM. This is hardly a startling proposition but accords with the approach of the Court of Appeal in Altecnic’s Trade Mark Application [2002] RPC 34 in particular at ¶42.
As Mr MacLennan fairly acknowledged in cross examination, the application was made in anticipation of the decision of the CJEU in IP TRANSLATOR [2012] ETMR 42. In that case in which OHIM itself was represented the CJEU considered the practice of OHIM and required a change. Applicants, in future, must indicate specifically when using class headings whether they intend to cover all goods and services within the alphabetical list produced by WIPO of the goods and services in that class. The relevant parts of the decision are as follows:
“… the goods and services for which the protection of the trade mark is sought [must] be identified by the applicant with sufficient clarity and precision to enable the competent authorities and economic operators, on that basis alone, to determine the extent of the protection conferred by the trade mark.
…
An applicant for a … trade mark who uses all the general indications of a particular class heading… to identify the goods or services for which the protection of the trade mark is sought must specify whether its application for registration is intended to cover all the goods or services included in the alphabetical list of that class or only some of those goods or services. If the application concerns only some of those goods or services, the applicant is required to specify which of the goods or services in that class are intended to be covered.”
This has led to a new President’s Communication 2/12, implementing this change of approach.
In this regard, Microsoft submits that it is clear that the partial surrender was only a device by which to insert additional wording in order to gain additional protection against Skype and Microsoft by a means which could not be challenged and of which neither they nor anyone else had notice. That was something which it is said that Sky knew that they were not or would not necessarily be entitled to as a result of the IP TRANSLATOR case and the consequent changes in OHIM procedure which might be necessary.
Mr Bloch characterises the process adopted by Sky as an extension of the goods and services for which the mark was registered which was obtained by persuading an officer of OHIM to do something which was contrary to law and as such constitutes bad faith. He says that it was plainly arguable that it was wrong in law and was an improper advantage taken at a time when the law was being tested. In this regard, he says that the sub-article 52(b) should be read purposively and that the conduct in question in this case is a vice within a class of vices.
Mr Purvis on behalf of Sky submits that as well as specifically excluding certain goods and services the amendment specifically identified other goods and services which are said to be included within the class. This was ultimately permitted by OHIM after discussions in correspondence and orally with their examiners (which themselves led to adjustments to the wording). As OHIM made clear in that correspondence, they would not permit any wording which would have the effect of widening the specification, but they were ultimately satisfied that the wording did not have that effect because the goods and services which were being specifically identified were already covered by the scope of the registration. He submits therefore, that there can be no basis for an allegation of bad faith.
In this regard, he also points to the decision of Patten J in Hotpicks Trade Mark [2004] RPC 42 in which he decided that the reference “if or to the extent that the application is made in bad faith” in s3 TMA, was a reference to the application for registration itself. He also decided at [29] that it was entirely clear that for the purposes of Article 51 the relevant date for testing bad faith was the date of the filing of the application for registration. Sky submits therefore, that if there were bad faith involved in the partial surrender process in 2010/2011, which is denied, the remedy in Article 52 is not available because it post dates the application for registration itself by a number of years.
Furthermore, Mr Purvis submits that the partial surrender cut down the class relied upon and defined what was left by the addition of the descriptions after “including”. He says that there is no room for bad faith. The application is made under Article 50 and the OHIM either allows or refuses it. There is no discretion involved.
I was also referred to the decision of the Second Board of Appeal in Saga Furs of Scandinavia Case R 585/2008-2. In that case, the proprietor of a CTM had applied to amend the specification of the goods in Class 18 by the addition of “including handbags, bags, carryalls, cosmetic bags, purses, briefcases, suitcases, and travelling bags” at the end. The application was rejected and that rejection was appealed. It was held that the application to amend the list in Class 18 was neither a limitation nor an extension of the goods and as a result to completely redundant in terms of clarifying the scope of the protection as shown on the Register. It was pointed out that once registration has taken place the only way to change the list of goods and services is by way of surrender.
The issues have been considered most recently by Arnold J in Och-Ziff Management Europe Ltd & Anr v Och Capital LLP and Ors [2011] Bus LR 632 at [34] – 37] in the following terms:
34. I considered the law at some length in Hotel Cipriani SRL v Cipriani (Grosvenor Street) Ltd [2009] EWHC 3032 (Ch); [2009] RPC 9 at [166]-[193].
35. Subsequently, the Court of Justice of the European Union (as it now is) ruled in Case C-529/07 Chocoladenfabriken Lindt & Sprüngli AG v Franz Haüswirth GmbH [2009] ECR I-0000 as follows:
“In order to determine whether the applicant is acting in bad faith …, the national court must take into consideration all the relevant factors specific to the particular case which pertained at the time of filing the application for registration of the sign as a Community trade mark, in particular: (i) the fact that the applicant knows or must know that a third party is using, in at least one Member State, an identical or similar sign for an identical or similar product capable of being confused with the sign for which registration is sought; (ii) the applicant’s intention to prevent that third party from continuing to use such a sign; and (iii) the degree of legal protection enjoyed by the third party’s sign and by the sign for which registration is sought.”
36. In Hotel Cipriani SRL v Cipriani (Grosvenor Street) Ltd [2009] EWCA 110 Civ, [2010] RPC 16 at [52] Lloyd LJ, with whom Jacob and Stanley Burnton LJJ agreed, summarised the guidance of the Court of Justice in Lindt as follows:
“Attention is to be focussed on the position at the time of the application for registration, and the intention and state of mind of the applicant at that time, although they are subjective factors, are to be determined by reference to the objective circumstances of the particular case. ... The court regarded it as relevant that a third party had long used a sign for an identical or similar product capable of being confused with the mark applied for, and that that sign enjoyed some degree of legal protection. In such a case the applicant's aim in obtaining registration might be to compete unfairly with a competitor who is using a sign which had gained some degree of legal protection. The court also regarded it as relevant that the registered mark consisted of the entire shape and presentation of the product, that being restricted for technical or commercial reasons (in respect of which it no doubt had in mind, for example, the essential shape of a rabbit or a hare), so that the registration, if valid, would prevent competitors not only from using a particular sign but also from marketing similar products at all.”
37. Counsel for Och-Ziff submitted that neither the judgment of the Court of Justice in Lindt nor that of the Court of Appeal in Cipriani had affected the validity of what I had said in Cipriani in the following paragraphs, in particular in the passages emphasised:
“189. In my judgment it follows from the foregoing considerations that it does not constitute bad faith for a party to apply to register a Community trade mark merely because he knows that third parties are using the same mark in relation to identical goods or services, let alone where the third parties are using similar marks and/or are using them in relation to similar goods or services. The applicant may believe that he has a superior right to registration and use of the mark. For example, it is not uncommon for prospective claimants who intend to sue a prospective defendant for passing off first to file an application for registration to strengthen their position. Even if the applicant does not believe that he has a superior right to registration and use of the mark, he may still believe that he is entitled to registration. The applicant may not intend to seek to enforce the trade mark against the third parties and/or may know or believe that the third parties would have a defence to a claim for infringement on one of the bases discussed above. In particular, the applicant may wish to secure exclusivity in the bulk of the Community while knowing that third parties have local rights in certain areas. An applicant who proceeds on the basis explicitly provided for in Article 107 can hardly be said to be abusing the Community trade mark system.
190. Nor in my judgment does it amount to bad faith if what the applicant seeks to register is not the actual trade mark he himself uses but merely the distinctive part of his trade mark, the other part of which is descriptive or otherwise non-distinctive, and third parties are also using the distinctive part with different non-distinctive elements. It is commonplace for applicants to apply to register the distinctive elements of their trade marks, and with good reason. Moreover, in such a case the applicant would be unlikely to have an Article 9(1)(a) claim against the third parties, yet as noted above counsel for the Defendants accepted that the ability to make an Article 9(1)(b) claim was not enough to constitute bad faith.”
In addition, as Arnold J held in the Hotel Cipriani case, at [170] there is a presumption of good faith. He set out the usual test for bad faith at [166]. There must be dealings which
“fall short of the standards of acceptable commercial behaviour observed by reasonable and experienced men [sic] in the particular area being examined.”
It seems to me that the authorities are quite clear that both in the case of the TMA and Article 52, attention is to be focused at the time of the application for registration of the mark. Given the actual wording of Article 52 it does not seem to me that this is particularly surprising. Article 52(1)(b) is specifically directed to the time at which the application for registration is filed. The express wording directs one to bad faith “when he [the applicant] filed the application for the trade mark.” In my judgment, there is nothing in that language which would enable one to construe the sub-article sufficiently widely to encompass the exercise of partial surrender and amendment in this case, which occurred some years after registration.
Even if that were not the case, I find it extremely difficult to characterise the making of an application prior to a judgment which was anticipated by all, in circumstances in which the application is tried and tested by OHIM and ultimately accepted, as falling short of the standards of acceptable commercial behaviour observed by reasonable and experienced men in this area. The process took a number of months and was tested by OHIM which insisted on various changes before the change was permitted. I consider this to be the case even if the application was made with a view to strengthening the position in relation to this litigation. There is no evidence of or suggestion of deception having been practised upon OHIM.
In this regard I also take into account that the amendments were actual goods and services being provided by Sky under the mark. It was not as if this was merely an academic exercise or as Mr Bloch would have it, a good wheeze in order to strengthen Sky’s hand in the litigation. In my judgment, such conduct is entirely different from that under consideration in the Lindt case to which I have referred. There, the application was made for marks with no intention of use.
It seems to me that whether in the light of the Saga Furs case, the amendment should have been permitted was a matter for OHIM and cannot reflect upon the conduct of Sky in making the application. If there was no power to make the amendment, it seems to me that there is likely to be an appropriate process by which the decision of OHIM can be challenged. Mr Bloch submits that it was plainly arguable that it was wrong in law. Even if that is the case, to seek to characterise an application for such partial surrender and amendment as bad faith goes much too far.
It will be clear from the approach which I have taken that I do not consider it necessary to determine whether in fact, the amendment made to the registration as part of the partial surrender process had the effect of narrowing or widening the registration itself.
Appendix 1
Appendix 2
The Windows 8 initial desktop showing the SkyDrive app tile:
Selecting the SkyDrive Application for installation on the Xbox: