UK: When The Sky Became Off Limits: The Sky v Skype Decision

Last Updated: 26 May 2015
Article by Rosalyn Newsome

The long-running battle initiated by Sky UK against the Microsoft-owned company Skype for the use of "SKY" in its mark has come to a head in the EU.

Although Microsoft had managed to overcome the onslaught of oppositions by Sky UK in Switzerland, Turkey and Brazil, it has failed to convince the General Court of the European Union that there was no likelihood of confusion amongst consumers between 'SKYPE' and 'SKY'.  Therefore the court ruled that Sky's successful challenge to the registration of Skype trade marks should be upheld.

This is not the first such encounter between Sky UK and Microsoft. The previous disagreement was in relation to Microsoft's cloud service, SkyDrive. Following a High Court ruling in favour of Sky UK, Microsoft had renamed its cloud service as OneDrive.

Background to the dispute

Skype Ultd (established in Dublin, Ireland and currently owned by Microsoft) had on 28 June 2005 applied to register the SKYPE word mark and its related logo, where the word is surrounded by a borderline in the shape of a cloud, as Community trade marks.

Upon publication of the marks in the Community Trade Marks Bulletin, Sky plc (Sky) commenced an opposition proceeding on the basis of its earlier Community trade mark registration for SKY. This challenge was in decided in favour of Sky. This decision was appealed by Skype at the time but the appeal was dismissed by the Fourth Board of Appeal at the Community Trade Marks Registry OHIM, stating that there was a likelihood of confusion between Skype's marks and the registration for SKY.

Skype appealed this decision up to the EU General Court. The main arguments raised by Skype were:

a)      The marks are not similar.

b)      The SKYPE mark has acquired distinctiveness through its extensive use.

c)       Both the marks have been co-existing in the market without confusion for many years.

The decision

The court had to decide who the relevant public was, to assess whether there was confusion. Although the court agreed that the consumers using Skype's product are specialised in using Voice Over Internet Protocol (VOIP), this does not mean that this section of public is more circumspect and better informed and therefore less likely to be confused. It was also noted that a successful challenge only required the ground of attack to be valid in part of the EU and therefore the approach of the Board of Appeal to consider just the UK public was appropriate. In essence, the SKY mark had a high level of distinctiveness in the UK, on account of its reputation there for 'apparatus for recording, transmission or reproduction of sound and images' in Class 9, 'telecommunications' in Class 38 and 'entertainment' in Class 41. Therefore within this part of the EU there was greater likelihood of confusion.

The global assessment of the likelihood of confusion, in terms of the visual, phonetic or conceptual similarity of the signs in question, must be based on the overall impression given by the signs, bearing in mind, in particular, their distinctive and dominant components. 

The assessment depends on the public's recognition of the trade mark in question. The more distinctive the trade mark, the greater the likelihood of confusion; therefore marks with a high distinctive character result in broader protection than marks with less distinctive character.  High distinctive character can either be inherent or because of their recognition by the public.

The court held that:

"The term 'sky' which makes up the earlier mark appears in full in the beginning of the mark applied for. It thus represents three fifths of the letters of the mark applied for and its single syllable is fully heard in the mark applied for when it is pronounced. Contrary to the applicant's assertions, the pronunciation of the vowel 'y' in 'skype' is not any shorter than it is in 'sky'. The latter term remains clearly recognisable within 'skype' despite the fact that the mark applied for is written as one word, without there being any 'artificial separation', as the applicant claims. It is the very fact that the letters 'sky' are found in the beginning of the mark applied for that makes the term 'sky', which is a part of the basic vocabulary of the English language, easily identifiable therein."

Therefore although Skype argued that the attack would mean artificially dissecting the word SKYPE to 'SKY' and 'PE', the strength of the SKY brand in the UK led to the conclusion that the average UK public looking at the mark SKYPE would associate it with SKY.

The additional element of a cloud like shape around the word was held not to contribute to the overall distinctiveness of the logo. Indeed, the Court held that:

"Conceptually, the figurative element conveys no concept, except perhaps that of a cloud. [It] would further increase the likelihood of the element 'Sky' being recognised within the word element 'Skype', for clouds are to be found 'in the sky' and thus may readily be associated with the word 'sky'."

Therefore, in this case, the stylisation/figurative elements did not draw the logo mark away from the earlier mark, because of the connections that would naturally come to mind in view of the dictionary meaning of the earlier word mark. By associating clouds with the trade mark 'SKY' the court has opened up arguments that marks containing elements such as stars, moon and the sun could also be associated with SKY. What about a bird or an aeroplane? It will be interesting to see the extent to which this line of argument is used in other cases where there is a word mark that arguably brings to mind certain images.

With regard to the Skype's argument of acquired distinctiveness, the court held

".. the alleged 'secondary meaning' of the mark applied for is in reality nothing other than the distinctiveness of the sign acquired through use, that is to say, a link established by consumers between that sign and the applicant's provision of the services covered. However, it is not a question of conceptual content being conveyed by the sign itself, which would be independent of the applicant. In addition, in the event that the term 'skype' had actually acquired a meaning of its own for identifying the services covered by the mark applied for, it would thus be a generic term, and therefore a descriptive one, for that type of service."

In relation to the co-existence argument, the court pointed out that at the time when the mark was applied to be registered it had only been used for 22 months, which was not seen as sufficient time to show acquired distinctiveness. Moreover the coexistence was only in relation to VOIP communication services, and not any of the other goods and services applied for by Skype. The court stated that:

"Coexistence concerning only one isolated and highly specific service among a long list of goods and services covered by the marks at issue cannot diminish the likelihood of confusion for the entirety of those goods and services."

In light of the above, the court held that the marks are confusingly similar and thus dismissed Skype's appeal.

The emphasis placed by the court above on the existence of the word SKY in a newly coined and invented word SKYPE might feel like a cause for alarm, as many of the invented marks in existence today are made at least in part from existing dictionary words. It is the final result of the combination of these words with additional letters that makes a mark unique, such as Coca-Cola, Walmart, Nescafe and eBay. However, it is important to note that the decision here does not stem from the fact that the mark Skype tried to register included a known word, but from the fact that this was a well-known trade mark in its own right which, at least in the UK, had a very strong and powerful reputation.

The decision therefore illustrates the need to assess all elements of the proposed branding in completing pre-launch clearance checks, and to carefully consider whether there are existing marks that are well-established, with a strong reputation, with which your mark might be confused.  It shows that including some figurative elements is certainly not a safe way of avoiding problems, as there can still be seen to be confusion.

What's to come

This decision has not stopped Microsoft from battling on; a statement has been issued that it will be appealing this decision. Furthermore, the company has successfully registered the SKYPE word mark and logo in the UK, Ireland, Germany and Spain.  At the moment, there is no need for Skype to rebrand, because Sky has not launched an infringement action; the challenge has only been against Skype registering the marks. We will now wait to see what Sky's next move will be in the ongoing saga.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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