High Court Judgment Template

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 :

BRITISH SKY BROADCASTING GROUP PLC

SKY IP INTERNATIONAL LIMITED

BRITISH SKY BROADCASTING LIMITED

SKY INTERNATIONAL AG

Claimants

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MICROSOFT CORPORATION

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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JudgmentMrs Justice Asplin :

This is an action for passing off and for infringement of two registered Community trade marks (CTMs) and two UK registered trade marks (UKTMs) for the mark SKY by which the Claimants seek to prevent the Defendants from using SkyDrive as the name for their cloud storage service throughout the European Union. By way of counterclaim the Defendants seek a declaration of partial invalidity in respect of all four SKY trade marks on the grounds of descriptiveness for cloud storage services and a declaration of invalidity in respect of CTM 411 in the light of what is alleged to have been its impermissible amendment. The counterclaim for the revocation of UKTM 176 on the grounds of lack of genuine use in relation to receipt, storage and provision of computerised business information data is no longer pursued.

The Parties

There are four Claimants for reasons connected with the ownership and licensed use of the various marks in issue. They are British Sky Broadcasting Group plc, Sky IP International Limited, British Sky Broadcasting Limited and Sky International AG. The first Claimant, British Sky Broadcasting Group plc owns and ultimately controls the activities of the others and nothing turns for present purposes on any distinction between them. Accordingly, I shall refer to the Claimants together as Sky.The Defendants, Microsoft Corporation and Microsoft Luxembourg Sarl are members of the world-renowned computing and software group, Microsoft, which is responsible for the Windows operating system, the Microsoft Office suite and the Bing internet search engine, as well as SkyDrive. The First Defendant is the parent corporation and the Second Defendant sells and markets its products within Europe. Nothing turns on the distinction between them and I shall refer to them together as Microsoft.Sky is a provider of television and communication products and services including broadband in the United Kingdom. In 2001, it produced a set-top box (Sky+) which includes digital storage for recording and replaying content. In 2005-6, it started transmitting its content over the Internet, available both through home broadband and mobile devices which include smart phones, iPads and similar devices. From 2006, it has itself been an Internet service provider. By the end of 2010, its broadband service was being used by over 3 million households and by 2012, the number of households had increased to 4.1 million.Over the years, Sky has adopted a whole series of trade marks, comprising the mark Sky followed by a descriptive element. This practice has been followed not only for its channels such as Sky Movies and Sky Sports, but also for its platforms such as Sky+, Sky Digital, Sky Broadband and for its computer software running on such platforms such as Sky Go, Sky Mobile, Sky Bet and Sky Photos. Two typical presentations of Skys sign are:

Between 2008 and 2011, Sky provided Sky Store & Share, which was an online storage service available for customers to upload and share their digital files and photos, and information about events and appointments. Sky Store & Share is no longer available to the public having been discontinued in December 2011.

The Acts complained of

Microsofts 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:

Microsofts use of the SkyDrive sign has since developed into what Sky characterises as a major stand-alone brand. Since 2012, SkyDrive has started to feature as one of the main start-up tiles on the Defendants Windows 8 operating system and SkyDrive apps are now available for platforms including Windows Desktops, Macs, iPhones, iPads, Android Phones, Windows Phones and the Xbox games machine.By June 2011 when this action was commenced, SkyDrive had over 3 million users in the UK, nearly 20 million in the EU and 92 million worldwide. The SkyDrive sign is now in the following form:

Copies of the sign used in relation to SkyDrive in all of the forms in which it has appeared are set out in appendix 1 to this judgment. As I have already mentioned, Sky contends that Microsofts use of the signs in all their forms in relation to cloud storage services has amounted to an infringement of their UKTMs and CTMs and amounts to passing off.

The Trade Marks

Sky relies on the following UK registered trade marks:UK 2 415 829 (UKTM 829) for the word SKY, was effective as of 6 March 2006. The mark is registered for a very large spectrum of goods and services. Although a wider variety were set out in the Particulars of Claim, Sky relied specifically, on the following:

Class 9 (goods): computer software to enable searching of data; computer programs; computer software; computer software to enable connection to databases and the Internet; computer software supplied from the Internet.

Class 38 (services): communications by means of or aided by computers; transmission of text, messages, sound and/or pictures; computer aided transmission of messages or images; telecommunication services relating to the Internet; telecommunication of information (including web pages); provision of telecommunications links to computer databases and websites on the Internet.

UK 2 302 176E (UKTM 176) for the word SKY, effective as of 5 June 2002. This mark is also registered for a range of goods and services. However, for the purposes of this action, Sky relied on:

Class 35 (services): receipt, storage and provision of computerized business information data.

In relation to UKTM 829, Microsoft challenges its validity on the basis that it is invalid insofar as [it is] held to cover goods and services pertaining to cloud storage, the assertion being that the mark is devoid of distinctive character or consists exclusively of descriptive matter. In relation to UKTM 176 the same challenge is made as to validity. Sky also relies on the following Community Trade Marks (CTMs):

CTM 3,203,411

CTM 3 203 411 (CTM 411) for the word SKY, effective date 30 April 2003, registered on 14 October 2008. This mark is registered in a series of classes. As originally granted, the specification listed all the goods and services in the class headings published by WIPO under the Nice Classification of Trade Marks for classes 9, 35, 38 and 42. However, by a letter dated 12 April 2010, from Skys solicitors to the Office for Harmonization in the Internal Market (OHIM) Sky requested the amendment of classes 9, 35, and 42 pursuant to Article 50 of Council Regulation No: 207/2009. Article 50 reads as follows:

1.A Community trade mark may be surrendered in respect of some or all of the goods or services for which it is registered.

2.The surrender shall be declared to the Office in writing by the proprietor of the trade mark. It shall not have effect until it has been entered in the Register.

3.Surrender shall be entered only with the agreement of the proprietor

A Notification of Deficiency of what was termed an Application to Register a Declaration of Partial Surrender was issued by OHIM on 6 July 2010 in which it was stated that the proposed amendments are not acceptable as they are considered as being a widening of the specification of the list of goods and services. Two months was given in which to submit any observations. In the event, an extension of that period was granted until 6 November 2010 and after the receipt of a further Notice of Deficiency dated 14 October 2010, a further extension was granted. Following telephone discussions with the examiner, Soledad Palacia Montilla, in order to understand the objections raised and further discussions with Thom Clarke, changes were made to the initial application for amendment in the form set out in a letter from Skys solicitors to OHIM of 11 January 2011. The relevant passage in the letter is as follows:

In our telephone discussion with Mr Clarke, we agreed that the following changes would be made (the changes insofar as they offer from the initial amendment request are indicated in capitals)

Class 9

Scientific, nautical, surveying, photographic, cinematographic, optical, weighing, measuring, signalling, checking (supervision), life-saving and teaching apparatus and instruments, apparatus and instruments for conducting, switching, transforming, accumulating, regulating or controlling electricity; apparatus for recording, transmission or reproduction of sound or images; magnetic data carriers, recording discs; automatic vending machines and mechanisms for coin-operated apparatus; cash registers, calculating machines, data processing equipment and computers; fire-extinguishing apparatus; including data storage apparatus and instruments, software and data storage software, and software for video-conferencing, but excluding car batteries.

Class 35

Advertising business management business administration; office functions; including online storage of files, data, photographs, graphics, documents, videos, images, audio files, audio-visual files, visual files, computer files, computer applications and information for others, electronic data storage services for personal and business use, and services for the electronic storage and organisation of files, images, music, audio, video, photos, drawings, audio-visual, text, documents and data, but excluding business relocation services.

Class 38

Telecommunications, INCLUDING VIDEO-CONFERENCING SERVICES AND SHARING OF FILES, IMAGES, MUSIC, VIDEO, PHOTOS, DRAWINGS, AUDIO-VISUAL, TEXT, DOCUMENTS AND DATA; BUT EXCLUDING TELEGRAPH COMMUNICATIONS SERVICES.

Class 42

Scientific and technological services, and research and design relating thereto; industrial analysis and research services; design and development of computer hardware and software; legal services; including ONLINE TECHNICAL STORAGE FACILITIES, ONLINE TECHNICAL BACK-UP SERVICES AND ONLINE TECHNICAL BACK-UP FACILITIES, software as a service (SaaS) services, and electronic hosting of files, data, photographs, graphics, documents, videos, images, audio files, audio-visual files, visual files, computer files, computer applications, information for others and video-conferencing services but excluding the performance of chemical analyses.

We look forward to receiving confirmation of these changes. . . .

After further discussions between Mr Ladas of SJ Berwin LLP acting on behalf of Sky and Thom Clarke, a Notification of Entry in the OHIMs Database dated 16 March 2011 was received. The Notification recorded the partial surrender and set out the goods and services which remained within the registration. By a letter dated 28 March 2011, SJ Berwin LLP acknowledged the 16 March 2011 Notification described as amending the specification of the [above Registration] in respect of classes 9, 38 and 42 as per our letter of 11 January 2011 but noted that class 35 had not been amended in accordance with the original request. As a result, on 29 March 2011, a Correction of Mistakes and Errors in the Community Trade Mark Bulletin and on the Registration Certificate was received in which the amendment to class 35 was recorded. The upshot of all this is a specification in which the following is added at the end of each respective class heading:

Class 9: . . . . . .including data storage apparatus and instruments, software and data storage software, and software for video-conferencing, but excluding car batteries.

Class 35: . . . . . including online storage of files, data, photographs, graphics, documents, videos, images, audio files, audio-visual files, visual files, computer files, computer applications and information for others, electronic data storage services for personal and business use, and services for the electronic storage and organization of files, images, music, audio, video, photos, drawings, audio-visual, text, documents and data, but excluding business relocation services.

Class 38: . . . . . including video-conferencing services and sharing of files, images, music, video, photos, drawings, audio-visual, text, documents and data; but excluding telegraph communications service.

Class 42: . . . . . including online technical storage facilities, online technical back-up facilities, software as a service [SaaS] services, and electronic hosting of files, data, photographs graphics, documents, videos images, audio files, audio-visual files, computer applications, information for others and video-conferencing services, but excluding the performance of chemical analyses.

Neither the officers of OHIM nor Mr Ladas the senior assistant solicitor at SJ Berwin LLP who made the calls to them on behalf of Sky were available to give evidence, Mr Ladas having left that firm. His supervising partner, Mr David Rose gave evidence and was cross examined. He was unable to shed any light on the precise nature or content of the calls. However, I shall return to his evidence in this regard under the heading of bad faith below.

CTM 3,166,337

Community Trade Mark 3 166 337 (CTM 337), the effective date of which is 14 April 2003, was registered on 26 May 2008.This is for the mark SKY in the form of a device. The stylisation is of a very low level, and it essentially comprises, as Microsoft accepts, simply the word SKY written in capitals. It is accepted that the scope of protection of this mark will be little different from the scope of the word mark itself. The specification of goods and services covered by this mark is in exactly the same form as the specification of CTM 411 prior to the partial surrender process to which I have referred. In other words, it comprises the complete class headings for Class 9, Class 35, Class 38 and Class 42. Sky only alleges an infringement of this mark because Microsoft has sought revocation of CTM 411 in its entirety on the basis of bad faith in the partial surrender process. As I understand it, if either the application for revocation is rejected in its entirety; or revocation were only granted in relation to the material added as a result of the surrender process which it is alleged expands the registration, Sky does not rely on CTM 337 at all.

The Evidence

Before turning to the background, I must say a little about the evidence. First, I should say that I found all of those witnesses of fact who were cross examined to be honest, careful and truthful witnesses who endeavoured to assist the court.

This was also true of the experts, Riccardo Baxter, a self employed market research professional who devised and conducted a survey on behalf of Sky, to which I shall refer, (the Survey) and produced three reports and Philip Ian Malivoire who produced three experts reports on behalf of Microsoft. Mr Malivoires evidence was in relation to the Survey and its reliability. He has extensive experience in the conduct of research projects for legal purposes and was involved in the surveys carried on in the Interflora litigation to which I shall refer. He now runs his own market research consultancy business. Both experts were cross examined at length about the Survey. It was quite clear that they were both concerned to protect the reputation of the field of market research and that Mr Malivoires strict approach arose from that concern. I shall deal with the Survey, its contents and its evidential value below. I should also mention that the witness statements of a number of individuals who contacted the Sky helpline seeking assistance in relation to SkyDrive were not challenged in cross examination. The only challenges made to that evidence were Mr Blochs cross examination of Ms Baxter, the solicitor who contacted them, seeking a statement from them and his submissions that the manner of that contact had included leading questions which may have distorted the evidence, that they amounted to a skewed sample, in individual cases were atypical and in any event, were of little assistance to the court. Simon Robert MacLennan is the Group Head of Intellectual Property for Sky. He is a solicitor and was appointed Head of Intellectual Property in 2006 and Group Head in 2012.Jonathan Karl Blumberg joined Sky as Head of Telephony in January 2006. He became Director of Product Management in December 2006 and in May 2010 became Commercial Director for Broadband and Telephony which is his current role. Bo Theodor Olofsson joined Sky as Director of Product Research Group in March 2010. The group focuses on emerging consumer technologies and their potential future application and implications for Sky. Mr Olofsson has 15 years of experience in the technology industry in market leading companies and 5 years of experience at a global digital media company. Victoria Clair Louise Baxter is an assistant solicitor with SJ Berwin LLP, solicitors for Sky. She assisted Mr David Paul Rose, a partner of that firm who had care and conduct of this matter. She was responsible for liaising with Skys customer call agents and customers in relation to enquiries made to Sky regarding SkyDrive. She also assisted in contacting the participants in the Survey. As I have already mentioned, Mr Rose is the solicitor with conduct of these proceedings on behalf of Sky. He gave evidence as to the commissioning of the Survey upon which Sky seeks to rely, the way it was set up and the responses. He was also cross examined as to the partial surrender exercise to which I shall refer below. Josephine Aisling Curry is also a solicitor working for Mr Rose in relation to these proceedings. Her evidence was unchallenged in cross-examination. She researched the different ways in which SkyDrive could be used and the user experience from the perspective of Microsoft Account holders and non- account holders, the use of DRIVE for online storage services, the use of SKY for online storage services, the integration of online storage services generally with third party goods and services and co-branding in the context of Microsoft SkyDrive and other Microsoft products. Scott Mackay has been Director of Customer Business Systems at Sky Subscribers Services Ltd (SSSL) since September 2009. SSSL is a subsidiary of British Sky Broadcasting Ltd which is part of Sky. In August 2008 he became Director of Business Enablement. In his present role, he operates and controls the customer management platform for Sky and undertook searches of call records held by Sky in respect of contacts made in relation to SkyDrive. Michael Benford Kroll is employed by Microsoft as a Director of Brand Strategy for Online Services and was involved in the naming of the SkyDrive service. His evidence focussed on how and why Microsoft decided to adopt the name. Gabrielle Maria Hegerty works in Marketing at Microsoft Ltd in the UK and has the job title Internet Explorer Lead. She joined in March 2011 as the Windows Live and Internet Explorer Lead for the UK in respect of marketing. She gave evidence as to the marketing, promotion and presentation of SkyDrive in the UK to July 2012 and any connection of which she was aware between SkyDrive and Sky. Andrew James Burton is a Senior Consumer Technology Account Manager at the UK communications consultancy firm, 3 Monkeys Communications. He has been in that role since 2009 and is one of the four managers of the Microsoft account at 3 Monkeys. He is concerned with Microsofts public relations. He gave evidence about what 3 Monkeys did in particular, in relation to SkyDrive and also dealt with feedback and comments received from press and public about SkyDrive. Elke Duncker is employed by Microsoft Ltd as Group Manager Delivery Community Support. She gave evidence on the feedback and support options available to users and potential users of Microsofts products and services and the nature and type of feedback it receives with particular reference to SkyDrive. Diana Pennock Connolly is the managing director of Findtech Limited, a company which provides information research services to the intellectual property professions. She is a mathematics graduate with over thirty years experience of conducting business, technical and patent and trade mark research. She presented the results of a research exercise which she had conducted on behalf of Microsoft. She had researched the use of business names, trade marks, other brand names and signs incorporating the word SKY as either a prefix or a suffix in relation to goods and services in certain technology related sectors. Her second task was to research the use of the word SKY in the names of applications available for download from the internet from the UK version of the Apple AppStore. Her final task was to search for articles in the press and online sources in which the term SKY or SKIES had been used in a descriptive manner in connection with cloud storage services, the internet and wireless communication generally. The evidence of Camillo Gatta, a solicitor employed by Redd Solicitors, acting on behalf of Microsoft was not challenged on behalf of Sky. He had carried out research aimed at reviewing the stylistic and/or presentational features of Skys advertising and marketing materials in the United Kingdom promoting the SKY branded goods , services and channels. The evidence of Claudia Bonatti, Pierre-Eric Daniel Jacoupy, and Anusch Mohadjer was not challenged. Ms Bonatti works for Microsoft as a Windows Business Group Lead at Microsoft Italia srl and gave evidence about SkyDrive in Italy. Mr Jacoupy is a Web Product Marketing Manager for Microsoft and gave evidence about SkyDrive in France. Mr Mohadjer is a Windows Product Marketing Manager for Microsoft Germany and gave evidence as to SkyDrive in Germany. The evidence of Peter Hamish Larmour Mercier was also unchallenged. He is Senior Director, Content Acquisition and Strategy Team at Microsoft Limited. He gave evidence as to the collaboration between Sky and Microsoft in relation to the Xbox. He also related an incident when having seen a Microsoft demonstration about SkyDrive at a conference at the Excel Centre in Londons 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 BSkyBs various consumer trademarks which are all prefaced clearly as Sky__. Other witnesses were cross examined more extensively and I refer to their evidence in more detail below.

History of development and use of SkyDrive

Having been developed in 2006, SkyDrive was launched in the UK in August 2007 as an addition to the Windows Live suite of services and at that stage was branded as Windows Live SkyDrive. Windows Live contained over twenty communication tools aimed at the individual computer or electronic device user. Mr Brian Hall, General Manager Business Planning Windows at Microsoft described Windows Live as a group of Windows online services that work well together and with the Microsoft Windows operating system. Prior to August 2007, SkyDrive was called Windows Live Folders. As Mr Hall explained in his evidence in chief, as with the other communications tools in the Windows Live suite, it was accessed by logging in to a Microsoft account through a web-based internet page. Folders provided the user with the ability to store files remotely on a server and to access them from other devices. Mr Hall described the core function of SkyDrive in more detail as the provision of protected online storage for the holder of a Microsoft Account or formerly a Windows Live Account, the ability to access online files from any browser, the ability to share folders and to post onto public networks. SkyDrive appeared at that stage in the menu bar within Windows Live. In February 2008 coverage was extended to Europe. On 20 November 2007, Microsoft applied to register the word mark SKYDRIVE in respect of the goods and services within classes 9 and 35 as a CTM. The application was published in the Community Trade Marks bulletin No 19/2008 of 13 May 2008 and on 13 August 2008, Sky filed a notice of opposition against all the goods and services of the contested trade mark application. The opposition was based on CTM 411. The opposition was upheld by the Opposition Division in a decision dated 30 September 2010 and an appeal was filed on 22 November 2010. At the time that SkyDrive was launched the two main Windows Live products in the UK were Hotmail and Messenger. As Gabrielle Hegerty, who works in marketing for Microsoft in the UK, observed, there was no particular fanfare for SkyDrive at that stage and no real focus from a marketing perspective. Ms Hegerty also explained that SkyDrive had its teething troubles and that nothing was done in relation to marketing until at least 2008 and in fact, it was not given much attention until around August 2010 when it became integrated with Hotmail in Wave 4 for Windows Live. However, by the middle of 2010 Microsoft started to market SkyDrive across its Windows Live, Hotmail and Messenger platforms and at this time it was also integrated with the Windows Phone. This meant that photographs or documents could be saved in SkyDrive and then shared by means of a link sent by email, rather than attaching the photographs or documents to the email itself. Mr Hall also described the process by which SkyDrive was integrated into Windows and the software pacakge known as Microsoft Office in order to make it available through franchise products and to make the SkyDrive developer code available to third parties in order to enable them to integrate their applications with SkyDrive. By the end of 2011 SkyDrive users could use the service to post direct to Facebook, Twitter and Linkedin and as a result of the iOS application and the Windows Phone application, SkyDrive files could be accessed from a phone or an iPad. The applications could be downloaded from the internet or could have been pre-loaded on a device. SkyDrive applications have also been launched for Android phones, Mac computers and Windows itself. It will be clear therefore, that by this time, the SkyDrive brand had separated from Windows. Ms Hegerty explained that In October 2011, the branding began to move away from Windows Live altogether for Hotmail and SkyDrive. The move was part of a strategy to focus on the individual product names rather than the Windows Live service.

By this time, the SkyDrive link was also used automatically by default in Hotmail if the user was attaching more than seven photographs or was attaching any Microsoft Office document. Mr Hall described this phase as not a complete success because there were difficulties in recipients opening attachments. Microsoft abandoned the sending of SkyDrive links by default in Spring 2012. However, Mr Hall explained that it is still an option for the Hotmail user. In 2012 SkyDrive was integrated into Windows 8 which is very widely used as the operating system for personal computers and devices. Windows 8 has a user interface made up of pre-loaded tiles visible on the opening screen, one of which is the SkyDrive tile. A copy of a screen shot depicting the tiles is in the second appendix to this judgment. Lastly, in December 2012, Microsoft released a SkyDrive application for Xbox. The way in which the tiles appear when selecting the SkyDrive application for installation on an Xbox is depicted in Appendix 2 to this judgment. The pictorial time line depicting the way in which the SkyDrive logo developed, was set out very helpfully by Mr Hall in his witness statement and in fact, it is what I have reproduced it in the first appendix to this judgment. It is clear that from February 2012 the mark being a number of clouds with SkyDrive beside it, was used universally. I should mention that the First Board of Appeal gave its decision in relation to the opposition proceedings to the registration of SkyDrive as a CTM in respect of goods and services within class 35 on 19 January 2012 and upheld the opposition. I shall refer to its reasoning below. There is no dispute that the recipient of an email with a SkyDrive picture link attached neither sees Windows Live branding nor anything to indicate that SkyDrive is connected with Microsoft. It was also accepted by Mr Hall that in such circumstances, the recipient was not necessarily a Microsoft or Windows Live Account holder and therefore had not accessed SkyDrive through the filter of a Microsoft account.I should add that Mr Hall also accepted that even in the case of the Microsoft Account holder using SkyDrive through certain Windows versions, it is possible to remain signed in for some time. Mr Andrew Burton, a senior consumer Technology Account Manager at 3 Monkeys Communications, a UK consultancy firm where he is one of four managers who deal with a Microsoft public relations account, was involved in running an event on the London Eye in January 2012. It was designed to target technology journalists and bloggers whom it was hoped would influence the public. The event was entitled Is your head in the Cloud? The journalists were encouraged to test the features of SkyDrive whilst on the London Eye and the intention was to tie SkyDrive to the clouds and the sky. Many of the participants used the features in order to send messages on twitter and Mr Burton accepted that the only connection with Microsoft which would be apparent to a follower was the live.skydrive link. He also accepted that that would only be a connection for anyone aware of the Windows Live brand. Mr Burton also stated that although he had never had feedback to suggest that the public or the press drew a connection between Sky and SkyDrive, on one occasion he had used SkyDrive in the office in order to share a report with clients. He uploaded it to SkyDrive and sent the clients an email to tell them that he had done so. He shared with them the link which he used to access the SkyDrive login page (www.skydrive.com) and included the user name and password. As a result one of the client representatives at the meeting asked him whether SkyDrive was anything to do with Sky.Returning to the history and use of SkyDrive, it is not disputed that the free-standing SkyDrive application appears as a separate tile on the device to which it has been downloaded or pre-loaded and may appear together with any number of applications which are unconnected with Microsoft or Windows, although Mr Hall pointed out that the Microsoft product tiles were generally together on one side of the screen. Ms Hegerty explained that nevertheless, if the individual user is a SkyDrive customer they will have been exposed to the sign in the Microsoft context but if a person were to see a SkyDrive tile on someone elses Apple Mac or android phone for example, they would not be aware of the Microsoft connection. She also accepted that a clip from the American television program known as Hawaii Five O which was played to the court and in which SkyDrive was mentioned expressly and depicted in relation to sharing photographs on a mobile phone, appeared to be product placement. It made no reference to Microsoft. However, the Windows Phone app store purchase page for the SkyDrive app from which a consumer would choose and purchase the app before download to their device, displays the SkyDrive name and a prominent representation of the cloud sign and in the bottom corner in relatively small print states Publisher Microsoft Corporation. Mr Hall accepted in cross examination that whether a purchaser saw the reference to the publisher at all would depend on the screen size of their device and whether they bothered to scroll to the bottom. However, he also added that at the outset most of the users of phone apps were already Hotmail, Microsoft Messenger or users of SkyDrive on their personal computers and therefore, were already aware of the Microsoft context. He also accepted, however, that once the SkyDrive app was in use on a Windows Phone there no was reference to Microsoft which showed at all. By contrast, the advertisements for the HTC Windows phone, featuring SkyDrive and its capabilities made reference albeit peripherally, (in the corner of the page) both to Microsoft and O2. However, the advertisements themselves were prominently for SkyDrive itself. It was also the evidence of Mr Long, one of the individuals who called the Sky Customer Services helpline asking for assistance with SkyDrive, that despite the fact that he had noticed the reference to Microsoft in relation to SkyDrive he had assumed that there was some sort of partnership with Sky. Mr Hall fairly accepted in cross examination that in the circumstances in which it is not plain that SkyDrive is a Microsoft product, it was certainly possible that ordinary consumers familiar with Skys position as a provider of broadband internet might think that there was a connection between Sky and SkyDrive and that it was not plain to a recipient of an email with a SkyDrive attachment that it is a Microsoft product. Mr Hall who had overall responsibility for marketing in relation to Windows Live and SkyDrive in 2007 and was based in the USA, recalled that Windows Live SkyDrive had been sent for legal clearance in April 2007 and that clearance was received in May of that year. He stated in cross examination that sky was known in IT circles as a reference to the internet but could not say what the publics perception had been in 2007. He also accepted that at the time he had had no knowledge of Sky other than as a broadcaster and was not aware that it was a broadband provider. I should make clear at this stage that the mark with which Mr Purvis on behalf of Sky is concerned for the purposes of infringement is SkyDrive however it appears. His case is that it is just as much an infringement in the form of Windows Live SkyDrive or Microsoft SkyDrive as it is when it appears alone. He accepts that the perception of the sign is that of the average consumer and that the context in which it appears and the likelihood of confusion are all part of the global assessment.

Relevant legal principles infringement of trade marks

It is accepted that the provisions of the Trade Marks Act 1994 (TMA) in relation to infringement contained in section 10 and in Article 9 of Council Regulation 40/94/EC of 20 December 1993 on the Community trade mark which was replaced by a codified version Council Regulation 207/2009/EC of 26 February 2009, with effect from 13 April 2009 (the Regulation) are for all practical purposes identical. The relevant provisions are as follows:

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.

The types of infringement with which this case is concerned are set out in TMA s10(2)(b) and Regulation Article 9(1)(b) and in TMA s10(3) and Article 9(1)(c) respectively. In relation to section 10(2)(b) TMA and Article 9(1)(b), the claim is based first upon identity between the goods and services for which the sign is used and those for which the mark is registered and the sign is similar to the mark and secondly, upon what has been termed double similarity, between mark and sign and between the goods and services. In either of the circumstances, it is accepted that in order to amount to infringement, the identity/similarity must be such as to be likely to cause confusion on the part of the public.In relation to s10(3) TMA and Regulation Article 9(1)(c) infringement will occur without the need to show a risk of confusion, if the sign is sufficiently similar to the trade mark to bring it to mind, and (inter alia) where this causes detriment to the distinctive character or repute of the mark.

s10(2)(b) and Art 9(1)(b) infringement by identity of goods and services and by similarity

The applicable law

I shall turn first to the claims for infringement under s10(2)/Article 9(1)(b) and the aspects of the law which are of relevance for the purposes of this head of the claim.It is not disputed that the scope of a trade mark registered for a word as opposed to a device (as in the case of both UKTMs and CTM 411) is not limited to the form of the mark as it appears on the Register (in this case, in capitals). It extends to any representation of the word: the General Court in Present-Service T-66/11 at 57.A registered category of goods or services is treated as a compendious claim to all the individual types of goods or services included within its scope. So where a mark is registered for a category that includes the goods or services being provided under the sign, the goods or services must be treated as being identical. See Aventis Parma v OHIM [2008] ECR II-229 (35).The likelihood of confusion is determined by comparison between the Defendants 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 developeda reputation and goodwill for the specification of goods and services.To put the matter shortly it is clear from [50] of Jacob LJs judgment in the Reed case that the precise manner in which Sky actually presents its Sky brand to the public whether in capitals or lower case letters, or whether it presents the mark in the form of a particular logo is not material to this inquiry, since a trade mark gives monopoly protection regardless of whether or how it is actually used. Similarly, it is made clear at [45] of the Present Service case that the comparison is not with the precise goods and services in respect of which a Claimant actually uses its mark but with the goods and services for which its mark is registered.The question is whether, by reason of the identity/similarity between the mark Sky and the sign, SkyDrive (however presented) and the identity/similarity of the goods or services for which the sign is used and those for which the mark is registered, being software for the online storage and sharing of files, there is a likelihood of confusion on the part of the relevant public which includes the likelihood of association. It is clear from [29] of the judgment of Canon v MGM [1999] RPC 117 that association means the belief that the goods or services provided under the sign originate with an undertaking which is economically linked in some way with the trade mark proprietor. I also remind myself that the likelihood of confusion is to be assessed from the perspective of the:

average consumer who is deemed to be reasonably well informed and reasonably circumspect and observant, but who rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind, and whose attention varies according to the category of goods or services in question. (Lloyd Schuhfabrik v Meyer [1999] ETMR 690 26-7).

The concept of the average consumer has been revisited at some length by Arnold J in Interflora v M&S [2013] EWHC 1291 (Ch). Having conducted a detailed consideration of the authorities, he went on:

208.Against this background, a number of points are common ground between the parties. First, the average consumer is, as Lewison LJ put it in Interflora (CA I) at [44] and [73], a legal construct.

209.Secondly, the average consumer provides what the EU legislature has described in recital (18) of the Unfair Commercial Practices Directive as a benchmark. As counsel for M & S put it, the test is a normative one. By assessing matters from the perspective of a consumer who is reasonably well-informed and reasonably observant and circumspect, confusion on the part of those who are ill-informed or unobservant is discounted.

210.Thirdly, as Lewison LJ stressed in Interflora (CA I) at [45]-[56], in a case concerning ordinary consumer goods and services, the court is able to put itself into the position of the average consumer without requiring expert evidence or a consumer survey. As Chadwick LJ said in BACH and BACH FLOWER REMEDIES Trade Marks [2000] RPC 513 at [41], in a passage which Lewison LJ emphasised in Interflora (CA I) at [41]-[43]:

The task for the court is to inform itself, by evidence, of the matters of which a reasonably well informed and reasonably observant and circumspect consumer of the products would know; and then, treating itself as competent to evaluate the effect which those matters would have on the mind of such a person with that knowledge, ask the [relevant] question.

211.Fourthly, the average consumer test is not a statistical test in the sense that, if the issue is likelihood of confusion, the court is not trying to decide whether a statistical majority of the relevant class of persons is likely to be confused.

212.There is nevertheless a significant dispute between the parties with regard to the average consumer (and the reasonably well-informed and reasonably observant internet user, as to whom see below). Counsel for M & S submitted that the effect of the Court of Justices 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 Justices 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 Reeds use of the sign Arsenal was liable to jeopardise the trade marks 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 defendants 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 partys trade name is understood by the relevant public, or at least a significant section of that public, as indicating a link between the third partys goods and the trade-mark proprietor or a person authorised to use the trade mark, and secondly of the extent to which the third party ought to have been aware of that. Another factor to be taken into account when making the assessment is whether the trade mark concerned enjoys a certain reputation in the Member State in which it is registered and its protection is sought, from which the third party might profit in selling his goods.

The Court of Justice repeated this in Cline 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 QCs 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 thingforming 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 protectionto 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 Justices 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 courts intervention. . .

It is also common ground that it is now well-established that initial interest confusion is sufficient to give rise to infringement. Thus there will be infringement where the use of a sign in an advertisement gives rise to a risk of confusion amongst average consumers, even if that confusion would be expected to be dispelled at the point of sale of the goods or services in question. In this regard, Arnold J came to the following conclusion in OCH-ZIFF Management Europe Limited v OCH Capital LLP [2010] 2599 (Ch) at [97]:

It again seems clear from this that there can be a likelihood of confusion within the meaning of Article 9(1)(b) at the point when a consumer views an advertisement, whether or not the advertisement leads to a sale and whether or not the consumer remains confused at the time of any such sale.

The case law makes clear that likelihood of confusion is established by a risk that the public might believe that the goods or services in question come from the same undertaking or, as the case may be, from economically-linked undertakings. It is not necessary to show that the public would be confused: Thomson Holidays v Norwegian Cruise Lines [2003] RPC 32 at 56.Nor is it necessary for Sky to show that all average consumers will be confused, or even that a majority of average consumers will be confused. Arnold J pointed out in the extract from his most recent Interflora judgment which I have quoted at some length, that the Court is not being asked to resolve a simple binary question is the average consumer confused or not? The question is whether confusion is sufficiently likely to warrant the courts intervention:

The fact that many consumers of whom the average consumer is representative would not be confused does not mean that the question is to be answered in the negative if a significant number would be confused.

The assessment of likelihood of confusion involves a global assessment taking into account all factors relevant to the circumstances of the case see Canon v MGM [1999] RPC 117 at 16 and Case C-533/06 O2 Holdings Ltd v Hutchinson 3G UK Ltd [2008] ECR I-4231. The Trade Marks Registry has developed the following summation of the guidance of the CJEU on some aspects of the global assessment, which was approved by the Court of Appeal in Specsavers v Asda [2012] FSR 19 at 52 as a useful and accurate summary of key principles sufficient for the determination of many of the disputes coming before it:

the likelihood of confusion must be appreciated globally, taking account of all relevant factors;

the matter must be judged through the eyes of the average consumer of the goods or services in question, who is deemed to be reasonably well informed and reasonably circumspect and observant, but who rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind, and whose attention varies according to the category of goods or services in question;

the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details;

the visual, aural and conceptual similarities of the marks must normally be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components, but it is only when all other components of a complex mark are negligible that it is permissible to make the comparison solely on the basis of the dominant elements;

nevertheless, the overall impression conveyed to the public by a composite trade mark may, in certain circumstances, be dominated by one or more of its components;

and beyond the usual case, where the overall impression created by a mark depends heavily on the dominant features of the mark, it is quite possible that in a particular case an element corresponding to an earlier trade mark may retain an independent distinctive role in a composite mark, without necessarily constituting a dominant element of that mark;

a lesser degree of similarity between the goods or services may be offset by a greater degree of similarity between the marks, and vice versa;

there is a greater likelihood of confusion where the earlier mark has a highly distinctive character, either per se or because of the use that has been made of it;

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

the reputation of a mark does not give grounds for presuming a likelihood of confusion simply because of a likelihood of association in the strict sense;

if the association between the marks causes the public to wrongly believe that the respective goods [or services] come from the same or economically-linked undertakings, there is a likelihood of confusion.

In making the global assessment, the Court is considering the degree of visual, aural and conceptual similarity between the marks. Furthermore, the assessment must be based on the overall impression given by the marks, bearing in mind in particular their distinctive and dominant components.: Sabel v Puma [1998] RPC 199 at 224. The effect is to strongly discount the significance of distinguishing matter in a sign which is essentially descriptive of the goods or services in question and is in common use in the field in question. In Lloyd Schuhfabrik the CJEU stated at paragraph 21:

Furthermore, the more distinctive the earlier mark, the greater will be the likelihood of confusion (SABEL, paragraph 24), and therefore marks with a highly distinctive character, either per se or because of the recognition they possess on the market, enjoy broader protection than marks with a less distinctive character (see Canon, paragraph 189).

As Millett LJ observed in The European v The Economist [1998] FSR 283 at 289, the converse is also true. He went on to state:

. . . Where descriptive words are included in a registered trade mark, the courts have always and rightly been exceedingly wary of granting a monopoly in their use.

In Alejandro v OHIM [2004] ETMR 15 (General Court: BUD v BUDMEN for clothing) for example:

53. Accordingly, the suffix " MEN" in the mark claimed is likely to carry a suggestive or even descriptive connotation for the relevant public that the " clothing, footwear and headwear" covered by that mark are intended for male customers. The Court notes that the public will not generally consider a descriptive element forming part of a complex mark as the distinctive and dominant element of the overall impression conveyed by that mark.

54. It follows that, from a conceptual viewpoint, the first syllable "BUD" must be viewed as the dominant element of the mark claimed.

This approach has been consistently applied in the UK Courts. See for example Compass v Compass Logistics [2004] RPC 41 at 25:

there can be little doubt that a likelihood of confusion exists between the defendant's use of the sign or mark COMPASS LOGISTICS in relation to its business consultancy services and the notional use of the mark COMPASS used in relation to business consultancy services, including those in relation to which the defendant specialises. The dominant part of the defendant's mark is the word compass. For many customers, the word logistics would add little of significance to it. It alludes to the type of area of consultancy in which the services are carried out.

More recently, Arnold J expressed the principle in the Och-Ziff case in the following way at 105-6:

105the essential difference between each of the signs and the trade mark is the addition of the word CAPITAL. (Counsel for the defendants did not suggest that the presence of the coat of arms in the logo made any difference.)

106 Counsel for the defendants submitted that the addition of the word CAPITAL sufficed to avoid a likelihood of confusion. I disagree. As discussed above, CAPITAL is descriptive, or at least non-distinctive, for financial services, and in particular investment services. Given the distinctiveness of the trade mark, the identity of the services and the non-distinctiveness of the word CAPITAL, I consider that there is a manifest likelihood of confusion on the part of both types of consumer in the case of all five signs.

It must also be borne in mind that the closer the goods or services are, the lesser the degree of similarity which will give rise to a risk of confusion. This was expressed in the leading case of Canon v MGM [1999] RPC 3 at 17 as follows:

A global assessment of the likelihood of confusion implies to interdependence between the relevant factors, and in particular a similarity between the trade marks and between these goods and services. Accordingly, a lesser degree of similarity between these goods and services may be offset by a greater degree of similarity between the marks, and vice versa.

It was also made clear in Canon v MGM at [18] that the degree of distinctiveness of the registered trade mark, either because it is inherently distinctive or because it has acquired distinctiveness in the mind of the public through extensive use (or both) is a relevant factor in the global assessment.

When assessing likelihood of confusion, the circumstances of the use of the sign alleged to infringe are relevant to the inquiry. As put by the Court of Appeal in Specsavers v Asda at 87: the Court

.. must take into account all the circumstances of that use [the use alleged to infringe] that are likely to operate in that average consumers mind in considering the sign and the impression it is likely to make on him. The sign is not to be considered stripped of its context.

As Mr Bloch submitted, in my judgment, the context here is the context in which the sign is used and does not include things which might or would happen after the initial exposure to the sign. See Och-Ziff at 76-78.

In Levi-Strauss & Co v Casucci [2006] ECR I-3703, the CJEU considered the question of the date at which infringement should be assessed. The specific context of that dispute was a trade mark which had been granted on the basis of distinctiveness acquired through use. The Defendant argued that by the date of trial, the distinctiveness had been lost or reduced (at least in part by its own use of a similar sign). The CJEU considered that the position of the trade mark owner should be protected by considering infringement at the date the Defendant commenced its use.

This authority was recently considered by Arnold J in Stichtung BDO v BDO Unibank [2013] EWHC 418 at 89-98. Most relevantly, he said this at 94:

This leaves open a number of points. First, neither that case nor any subsequent case has considered the relevant date where there are different types of use of the sign each giving rise to different issues on likelihood of confusion (e.g. because they are used in a quite different context). Counsel for the Defendants submitted that Levi Strauss should be read in the light of the CJEU's subsequent decision in Case C-533/06 O2 Holdings Ltd v Hutchison 3G UK Ltd [2008] ECR I-4231, which requires a contextual assessment of the use of the sign, to mean that likelihood of confusion was to be judged at the date the sign in question began to be used in the particular manner and context complained of. If the defendant used the sign in a materially different manner or context at a later date, a new global assessment had to be made as of that date. I accept that submission.

It seems to me therefore that where the defendant has used the sign in a materially different manner or context after the initial use, the right approach is to undertake a new assessment at the date of each material change. In this case such an assessment will be necessary therefore, in relation to Windows Live SkyDrive, Microsoft SkyDrive and SkyDrive alone. It is also necessary in relation to use in order to share documents as a result of email contact, as a tile in the Windows 8 armoury and as an application which can be downloaded or pre-loaded onto a mobile phone or an iPad.

S10(2)(b) and Art 9(1)(b) - Infringement by Identity of Goods and Services

Although at one stage, Microsoft sought to make a distinction between goods and services and to contend that the SkyDrive mark was being used not in relation to computer programs or software but in relation to the services which are available if one uses those programs, this distinction was abandoned by Mr Bloch at the beginning of the closing speeches. It is now accepted that the sign is being used in relation to software and accordingly, it is common ground that there is an identity of goods and services for the purposes of s10(2)(b) and Art 9(1)(b).

I have already set out the relevant principles to be distilled from the authorities in this regard. In summary, the comparison is between Microsofts sign and any normal and fair use of the registered trade mark in relation to any of the goods and services for which it is registered. Therefore, in this case, one assumes the use of sky as a trade mark for computer software including the storage of files on remote drives and storage services under the same name. One also assumes that the mark has developed a reputation and goodwill for those goods and services. It is then necessary to consider the notional average consumer confronted by computer software for the storage of files on a remote drive under the name SkyDrive and the question for the court in those circumstances is: is there a risk that such consumers might believe that the two were from the same source or from a connected source?

Mr Purvis on behalf of Sky submits that the answer is obviously yes. He says that the mark says that this is Skys drive by which is meant a remote storage program. It is not disputed that there are numerous examples of drive used in this way. For example, evidence of the use of Google Drive, AOL Xdrive, ElephantDrive and ZumoDrive amongst others were before the court. In fact, Microsoft put in evidence a list of 132 providers of online storage facilities of whom approximately twenty per cent used the word drive in their title.

Mr Purvis submits that the term drive has become entirely descriptive and generic and certainly is of no assistance to Microsoft in distinguishing their mark and product. In this regard, he referred me to a an article in 2010 PC World entitled Free Services that Store, Sync and Share Your Files which made reference to the fact that cloud based syncing services usually use a virtual drive that exists on your desktop in some manner, and it is linked directly to your online storage space. The contents of this virtual hard drive remain in sync across all of the desktops, notebooks and mobile devices on which you have installed client software. The article makes a number of further references to virtual drive and then goes on to choose five cloud storage services to review, three of which used drive in the name, being DriveHQ, OpenDrive and ZumoDrive.

Once one accepts that drive is descriptive, which Mr Purvis says is inevitable and which Microsoft, in fact, have done, he says that Microsoft is left with no distinguishing matter at all. In such circumstances he says that the average consumer aware that Sky is operating in this field would take SkyDrive to be another Sky operation and be uncertain as to which is being referred to. Alternatively, he says that the average consumer would view SkyDrive as a sub-brand.

On the other hand, Mr Bloch on behalf of Microsoft submits that there is no reason why the average consumer should perceive the SkyDrive sign as a sub-brand at all, especially where the brand of which it is supposed to be a sub is little known in the field in question.

Mr Purvis says that Microsofts defence that one would not read SkyDrive as being sky followed by the description drive even though they say that that is exactly why they coined the name, is very weak indeed. He referred me to the evidence of Mr Kroll that he liked the name because it alluded to the idea of a computer drive removed from the desktop. He also referred me to the decision of the Board of Appeal of OHIM which had no difficulty in concluding that SkyDrive as presented to them was sky followed by drive even though it was presented to them as a single capitalised word.

Paragraphs 30 to 36 of the Board of Appeals decision which appear under the heading Visual comparison are as follows:

30.When comparing the signs, the Board notes that the word SKY which is the sole element of the earlier mark, is perfectly recognizable at the beginning of the mark applied for. In this regard, the fact that a mark consists exclusively of the earlier mark, to which another word has been added, is an indication that the two trade marks are similar (see, to that effect, judgment of 4 May 2005, T-22/04, Westlife, para 40).

31.Moreover, the common elements appear at the beginnings of the marks at issue. In this regard, one has to recall that consumers generally pay greater attention to the beginning of a word sign than to the end (see judgment of 25 March 2009, T-109/07, Spa Therapy, para 30).

32.The word element SKY may also be perceived by a substantial portion of the relevant consumers as playing an independent role in the mark applied for (see, to this effect, judgment of 6 October 2005, C-120/04, Thomson Life, para 37). It may thus remain in the overall visual impression made by the mark or the imperfect picture which the relevant consumer will keep in mind.

33.In determining the existence of likelihood of confusion, the comparison of the conflicting signs must be based on the overall impression given by the marks, bearing in mind, in particular, their distinctive and dominant components.

34.The marks under comparison have no elements which could be considered clearly more dominant (visually eye-catching) in comparison to other elements. The element DRIVE contained in the contested sign will be associated with the concept A device that spins disks or tapes in order to read and write data: for example, a hard drive, floppy drive, CD-ROM drive or tape drive (Computer High-tech Dictionary accessible online, as of 11 January 2012).

35.Bearing in mind that the relevant services are related to data storage, it is considered that this element is weak for these services. The part of the relevant public who understands the meaning of that element will not pay as much attention to this weak element as to the other more distinctive elements of the mark. Consequently, the impact of this weak element is limited when assessing the likelihood of confusion between the marks at issue. (see judgment of 14 July 2011, T-160/09, Oftal Cusi, para 89).

Mr Bloch submits nevertheless that SkyDrive would be read naturally as a single mark and therefore, neither confused nor even associated with SKY. He also pointed out that but for MySky and Skyscape, Sky uses its mark as a separate word and each of its goods and services always follows separately. This was apparent from Mr Gattas researches. He says that in the case of SkyDrive two ordinary words have been conjoined in order to create a single sign which is not descriptive but denotes a service from a particular provider.

In this regard, Mr Purvis says that Mr Blochs 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 Blochs other examples such a VapoRub, PayPal and DreamWorks. Mr Purvis points out that there were examples, for example, the computer blogger the Hermes Project treating SkyDrive as two words and that oral use which would make no distinction, could equally be an infringement.

Putting the matter another way, Mr Bloch also submits that the comparison to be made is between the mark SKY and the sign SkyDrive as a whole and not just the constituent parts and that this is borne out by proposition (c) in the extract from the judgment of Kitchin LJ in the Specsavers decision to which I have referred in which he states that the average consumer normally perceives a mark as a whole. Mr Bloch states that there is no evidence that SkyDrive would be perceived by a member of the public as brand+descriptor in the absence of the significant reputation of the SKY mark. In this regard, he reminded me that under the head of infringement in relation to identical goods and services, Sky can only rely upon its reputation in relation to cloud storage which he says is minimal.

In order to see SkyDrive as Skys 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 Skys lawyer (Mr McLellan)s evidence in chief, that it is a word which others seek to use in relation to their goods and services.

Mr Purvis says that the second argument that Microsoft falls back on namely that common presence of sky was a complete coincidence, is equally unhelpful to them. In any event, it can only be of assistance to them, he says, if one also accepts that sky is a term which would be understood by the average consumer as descriptive of the service or goods being offered. Obviously, the more descriptive and less inherently distinctive the registered trade mark, the less likely it is that confusion will arise.

He referred me to the evidence of the 132 other provides of online storage facilities which have been identified between 2005 and 2013, none of whom use sky in any part of their name or of the name of their service. Nor in their own descriptions of their operations or in the references to them found in Wikipedia which are also in evidence, is there any reference to them describing themselves as being in the sky or using the sky in any way to describe their services. Neither is there evidence outside the field of online storage but in a related field of a trader of which the public is likely to have heard, using sky to denote the internet. Nor, he points out does the word sky appear in any dictionary as meaning the internet.

In this regard, Microsoft relies upon the evidence of Ms Connolly who undertook internet research into the use of the business names, trade marks and brand names and signs incorporating the word SKY whether as a prefix or a suffix. She also researched the use of the word SKY in the names of applications available for download from the UK version of the Apple appStore and a search for articles in the press and online sources in which SKY or SKIES had been used in a descriptive manner in relation to cloud storage services. She searched the LexisNexis news database amongst other sources.

She found 148 SKY names and 429 SKY prefix apps which she had found on the internet. She also found numerous press articles which refer to hard drive in the sky, locker in the sky and storage in the sky. She found three examples of the use of sky in the period 2002-2003: in June 2002, in an article in the Guardian newspaper in London, there was an article about what was the new wireless internet or wi-fi phenomenon in which there was reference to the idea of casting data clouds across the skies of London; in February 2003 there was an article in The Journal of Light Construction which contained the following assertion, In addition to hosting our website, we use the Internet like a giant floppy disk in the sky to back up our critical files . . . and in an article in the Entrepreneur in December 2003, there was reference to a distributed computer in the sky.

She accepts that her searches were not exhaustive. Mr Purvis summarised her findings in this regard as approximately 27 uses over 8 years throughout the world, including hi-tech journals many of which repeat the same thing and therefore, suggested that it was far from meaningful. In cross examination although she was unwilling to put a number on it, Ms Connolly agreed that the number of publications in the target areas which she had searched within three databases were considerably higher than 15,000. As the period searched was of about ten years, Mr Purvis submits that the number of different issues or editions of the publications searched and the number of articles within them must have run into the millions.

In fact, Mr Purvis submits that if one removes literal uses and references such as pie in the sky, reach for the sky, skys the limit, sky high and clear skies ahead which I accept are not uses of sky in a descriptive sense to indicate the internet, one is left with about six uses of the term sky as a metaphor for the internet during the period from 2011 to January 2013. It is in this context that he says that the instances in which sky has been used as a metaphor for the internet is miniscule.

Mr Kroll who at the relevant time was the Director of Brand Strategy for Microsoft Online services, gave evidence that in 2007 he considered SkyDrive to be a descriptive name for cloud storage services. However, it was Microsofts own evidence that cloud was not being used in relation to online storage facilities in publicly available material until 2008. He acknowledged that before that date it was used within the confines of Microsoft and in the IT industry. He accepted that the reference was not as much descriptive as metaphorical or allusive, and was intended to refer to something remote and nevertheless available to be accessed from anywhere. He also accepted that he could not say what the public would or would not have recognised at the time.

Mr Bloch nevertheless submitted that the context of cloud storage in which SkyDrive was and is being used contributes to the allusive and descriptive quality of sky and he reminded me of the articles which Ms Connolly had found. He says that it is bizarre to suggest that all the journalists in question came up with sky by chance and in the knowledge that the public would not understand what they meant. He says it is obvious that the truth is the converse. They used the term because they knew what it would convey to the reader. He also says that what one derives from Ms Connollys evidence is that there is a significant and natural use of sky in an allusive sense. In addition, despite his severe criticisms of the Survey, he says that Microsoft can rely on it for this purpose. Mr Bloch says that it illustrates what people understand by sky and that 20% of them were aware of an allusion to the internet.

He submits therefore, that the descriptive/allusive nature of the Sky mark in the sphere of cloud storage detracts from Skys ability to denote the company, Sky. The likelihood of confusion and the ability to sustain detriment are correspondingly reduced. He goes as far as saying that the distraction caused to the average consumer in the field of cloud storage is such that Sky is not able to denote any particular undertaking offering such services.

In relation to the apps which Ms Connolly found, Mr Purvis points out that there is no evidence of use or of them having penetrated the consciousness of the public. He also draws attention to the fact that some are in entirely different fields such as astronomy and sky diving. And he reminded me of the third parties who have created apps derivative of SkyDrive which included SkyWallet. He also says that the dilution has naturally occurred since the push from 2011 to market SkyDrive separately.

Microsoft also put forward evidence of other entities which have adopted names which incorporate the word Sky. In this regard, Mr Purvis points out that they cannot impinge on the distinctive character of the SKY mark unless there is evidence that the average consumer in the UK would have known about them at the relevant time. As he rightly pointed out, there was no evidence before the court that the 148 third parties were businesses with customers in the UK. Ms Connolly accepted in cross examination that she did not research whether any of the third parties actually provided services or goods in the UK but considered it sufficient that she had found them in her se