Sky's the limit! Skype trade mark refused

The General Court of the European Union has ruled that Skype may not be registered as a trade mark because it is too similar to the trade mark for Sky. What lessons can be learnt from Skype's unsuccessful attempts to register its marks? Skype Ultd v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (Sky plc and Sky IP International intervening): T-423/12, T-183/13 and T-184/13

What is this case about?

This ruling from the General Court of the European Union is the latest stage in a long-running trade mark dispute between Skype, provider of internet-based video chat and voice calls and Sky plc and Sky IP International Ltd (together ‘Sky’ and formerly British Sky Broadcasting Group), a telecommunications company which provides television and internet services.Skype has been attempting to register its three Community trade mark (CTM) applications for SKYPE for about ten years. Skype filed its CTM applications in 2004 and 2005 for the figurative and word marks SKYPE in classes 9, 38 and 42 for various goods and services including peer-to-peer communications, high speed access to area networks, computer services and software development. Sky opposed Skype’s CTM applications based on its earlier CTM for SKY (word) registered in identical classes (9, 38 and 42). To date, Skype’s efforts to register its marks at the Office of Harmonisation in the Internal Market (OHIM) have failed on the basis that they are too similar to Sky’s marks and likely to cause confusion.This General Court ruling follows Skype’s appeal to the OHIM Board of Appeal. On 30 January 2013, OHIM dismissed Skype’s appeal and found that the goods and services covered by the marks in question were identical and the marks were similar (ie there was an average degree of visual, aural and conceptual similarity between the marks). OHIM viewed SKY as a brand which enjoys a high degree of distinctiveness in the UK. The conditions for establishing a reduction in the likelihood of confusion on account of a peaceful coexistence of the marks were not established.

On what grounds did Skype appeal to the General Court?

Skype appealed against OHIM’s decision on the following grounds:

  1. the SKYPE and SKY marks are not similar
  2. the SKYPE marks (word and figurative) acquired a secondary meaning for the goods and services in question, serving to counteract any similarity between the signs
  3. the marks have coexisted in the market for many years without confusion

How did the General Court apply the ‘average consumer’ test for the purposes of establishing likelihood of confusion?

In assessing likelihood of confusion between the marks, the Board of Appeal considered the views of the hypothetical ‘average consumer’ who is defined by case law as ‘reasonably well informed and reasonably observant and circumspect’. Skype argued that, in view of the specialist nature of the goods and services covered by the marks the ‘average consumer’ pays a higher degree of attention and is instead ‘circumspect and chooses the services covered by the mark applied for with care’. The General Court agreed that higher level of consumer attention would apply to computer services relating to software or the creation or hosting of websites because the consumer does not purchase them regularly and the price may be high. However, this higher level of attention would not apply to the average consumer of voice over internet protocol (VOIP). VOIP services are aimed at the general public and using them does not require any specific technical expertise. On these facts the usual test of the average consumer would apply.

How were the SKYPE and SKY marks compared?

Skype argued that the Board of Appeal had erred in finding similarity between the SKY and SKYPE marks. In the Board of Appeal’s view there was a medium degree of visual, phonetic and conceptual similarity:

  1. the relevant public would particularly notice the ‘sky’ element as it formed the beginning of the mark—this meant the marks were visually similar
  2. both signs were one syllable (pronounced ‘skaip’ and ‘skai’)—phonetically the only difference between the marks was the ‘p’ sound at the end of Skype’s mark
  3. although the term ‘skype’ has no meaning in English, the relevant public might recognise the word ‘sky’ within the mark which meant the marks were conceptually similar

The General Court was in full agreement with the Board of Appeal. It rejected Skype’s arguments concerning pronunciation and found that the letter ‘y’ was pronounced in the same way for both marks. The word ‘sky’ was easily recognisable within the SKYPE mark but this did not mean the ‘pe’ component of the mark had been artificially divided or ignored.

What was the significance of the high distinctiveness of the SKY trade mark?

The more distinctive the trade mark, the more likely there will be a likelihood of confusion. Consequently marks which enjoy a distinctive character benefit from a wider degree of protection than marks with less distinctive character. A mark may acquire distinctiveness through several routes—eg market share, longevity of use, marketing spend, geographical spread of use.

As the leading supplier of digital television in the UK, Sky was able to establish that its mark enjoyed a high level of distinctiveness in the UK market for certain services covered by its mark. The General Court rejected Skype’s arguments concerning dilution of the mark and inherently weak distinctiveness. Arguably, even if Sky could not establish its mark benefitted from enhanced distinctiveness the finding of identical services and similar marks would have been sufficient to prevent registration.

What was the impact of Skype’s arguments concerning peaceful co-existence of the marks?

Case law has established that, in limited circumstances, coexistence of marks can reduce the likelihood of confusion (see Grupo Sada v OHIM: T-31/03). On the facts of this case, Skype failed to make a case because coexistence concerned only one isolated and highly specific service (VOIP) among the numerous other services covered by the mark. The General Court could not rule out the likelihood of confusion for all those other services.

What can brand owners take away from this judgment?

It was a gutsy move on Skype’s part to invest heavily in a brand for several years based on a contested trade mark. Skype was acquired by Microsoft in 2011 and this case is not the first time the two companies have clashed on trade mark issues—Sky successfully asserted their trade mark rights against Microsoft’s SKYDRIVE in 2013.

Skype has announced that it will bring an appeal against the General Court’s decision to the Court of Justice of the European Union. Skype’s public view is that the ruling does not necessarily prevent continued use of the SKYPE mark in the EU because it is simply a refusal to register the mark rather than an issue of trade mark infringement.

This case does not raise any new points of law but it a useful illustration of the grounds on which CTMs are refused registration.

Jessica Stretch, Solicitor, Lexis®PSL IP & IT.

This article was republished with kind permission of WIPIT's sister subscription service Lexis®PSL IP & IT. For a free trial click here.

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