Case No: HC11C01968

Neutral Citation Number: [2013] EWHC 1826 (Ch)

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY
COMMUNITY TRADE MARK COURT
Rolls Building, 7 Rolls Building,
Fetter Lane, London, EC4A 1NL

Date: 28/06/2013

Before :

MRS JUSTICE ASPLIN

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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
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---------------------

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

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Judgmen
tMrs Justice Asplin :

1. 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.

2. 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.

3. 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

4. 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’.

5. 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’.

6. 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.

7. 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:
 8. 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.

9. The Acts complained of

10. 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:

11. 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.

12. 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:

13. 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

14. Sky relies on the following UK registered trade marks:

i) 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.”

ii) 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.”

15. 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.

16. Sky also relies on the following Community Trade Marks (CTMs):

CTM 3,203,411

17. 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.

18. 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…”

19. 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. . . .”

20.

21. 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.

22. 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.

23. 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.””

24. 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

25. Community Trade Mark 3 166 337 (‘CTM 337’), the effective date of which is 14
April 2003, was registered on 26 May 2008.

26. 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.

27. 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.

28. 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

29. 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.
30. 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.

31. 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.

32. 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.

33. 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.

34. 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.

35. 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.

36. 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.

37. 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.

38. 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.

39. 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.

40. 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.

41. 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.

42. 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.

43. 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.

44. 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.

45. 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.

46. 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.

47. 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__.”

48. Other witnesses were cross examined more extensively and I refer to their
evidence in more detail below.

History of development and use of SkyDrive

49. 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.

50. 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.

51. 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.

52. 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.

53. 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.

54. 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.

55. 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.

56. 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.’

57. 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.

58. 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.

59. 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.

60. 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.

61. 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.

62. 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.

63. 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.

64. 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.

65. 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.

66. 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.

67. 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.

68. 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.

69. 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.

70. 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.

71. 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

72. 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:

Section 10 TMA:

“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.”

73. 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.

74. 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.

75. 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

76. 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.

77. 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.
78. 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).

79. 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’.

80. 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.

81. 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.

82. 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).”

83. 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.’

84. 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. . . ”

85. 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.”

86. 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.

87. 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”.

88. 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’:

a) the likelihood of confusion must be appreciated globally, taking

account of all relevant factors;

b) 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;

c) the average consumer normally perceives a mark as a whole

and does not proceed to analyse its various details;

d) 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;
 e) 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;

f) 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;

g) 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;

h) 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;

i) mere association, in the strict sense that the later mark brings
the earlier mark to mind, is not sufficient;

j) 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;

k) 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.”

89.

90. 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.”

91. 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.”

92. 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”.

93. 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.

94. 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.”

95. 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.

96. 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.

97. 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.”

98. 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

99. 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).

100. 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?

101. 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.

102. 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.

103. 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.

104. 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.

105. 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.

106. 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).”

107. 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.
108. 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.

109. 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.

110.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.

111.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.

112.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.

113.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.

114.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.”

115.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.

116.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.

117.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.

118.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.

119.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.

120. 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.

121. 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.

122. 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.

123. 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.…”

124. 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.

125. 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.

126. 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.

127. 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.”

128. 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.

129. 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.

130. 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.

131. 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.

132. 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.

133. 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.

134. 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.

135. 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.

136. Some further examples are as follows:

iii)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?”

iv)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.

v) 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.

vi)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.
137. 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.

138. 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.

139. 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.

140. 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.

141. 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.

142. 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.

143. 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.

144. 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.

145. 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."

146. .....

"[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. “
147. 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.’”

148. 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.

149. 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.

150. 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.”
 151. 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.

152. 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

153. 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.

154. 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.

155. 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.

156. 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.

157. 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.

158. 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.

159. 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.

160. 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.

161. 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.

162. 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.

163. 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.

164. 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

165. 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.

166. The registered goods and services upon which Sky relies in this regard are:

167. 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]

168. 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.]

169. 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.]

170. 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]

171. 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).

172. 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.

173. 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.

174. 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.

175. 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.

176. 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.

177. 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.

178. 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.

179. 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.

180. 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.

181. 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.
 182. 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.

183. 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

184. 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.

185. 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.

186. 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.

187. 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.

188. 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.

189. 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.

190. 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

191. 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).

192. 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. ”

193. 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’.

194. 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’.

195. 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”.

196. 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.

197. 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”

198. 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.”

199. 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.”
 200. 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.

201. 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).”

202. 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

203. 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).

204. 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”.

205. 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.’
206. 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.

207. 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.

208. 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.

209. 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?”

210. 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%.

211.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.

212. 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.

213. 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.”

214. 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.

215. 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.”

216. 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.”
217. 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.

218. 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.

219. 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.

220. 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.

221. 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.

222. 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.”

223. 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.

224. 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.

225. 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.’

226. 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.

227. 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.

228. 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.

229. 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.

230. 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.

231. 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.

232. 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.

233. 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.

234. 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

235. 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.

236. 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.

237. 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.

238. 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.
 239. However, I do take account of the fact that it was a survey conducted
without the prior approval of the Court.

240. 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.

241. 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.

242. 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.

243. 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.

244. Accordingly, in my judgment, this head of claim is also made out.

Passing Off

245. 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.

246. 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. “

247. 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”.

248. 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”.

249. 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).”

250. 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.”

251. 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.

252. 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."
 253. 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.

254. 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.

255. Conclusion

256. 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.

257. 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.

258. 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.

259. 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.

260. 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.

261. Therefore, in my judgment, Sky’s claim in passing off also succeeds.

Counterclaims - Invalidity
(i) Descriptiveness for cloud storage

262. 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,

263. 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;”

264. 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.”

265. 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:

vii) 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

viii) 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’.

266. 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.

267. 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.

268. 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.
269. 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.

270. 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.

271. 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.”

272. 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.

273. 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.

274. 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.
 275. 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.

276. 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.

277. 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.

278. Accordingly, in my judgment, the counterclaim as to invalidity as a result of

descriptiveness fails.

(ii) Impermissible amendment – bad faith

279. 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.”

280. 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.
281. 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.

282. 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.”

283. 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.
 284. 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.

285. 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.

286. 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.

287. 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.

288. 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.

289. 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.

290. 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.

291. 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.”

292. 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.”

293. 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.

294. 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.

295. 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.

296. 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.

297. 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.

298. Appendix 1
Appendix 2

ix) The Windows 8 initial desktop showing the SkyDrive app tile:
x)

xi)

xii)

xiii)

xiv)

xv)

xvi)

xvii)

xviii)

xix) Selecting the SkyDrive Application for installation on the Xbox:

299.