Most people, in the UK at least, will now be familiar with the Skype brand for one-to-one Internet messaging and calls. In fact, the brand has become so well-known that it has become part of the English language – ‘to Skype’ meaning to call/message (using the SKYPE communications service). You might say that it has actually become a victim of its own success!
The position was somewhat different back in 2005 when Skype Utld applied to register the trade mark Skype (stylised) for a wide range of goods in Class 9 and services in Classes 38 and 42, including tv receivers, set-top boxes and various other communications goods in Class 9, specific communications services in Class 38: VOIP communications, data transmission and Internet access services, as well as various computer services (mainly communications and software-related) in Class 42.
Skype filed two further CTM applications for the word mark SKYPE. These applications took the same course as the figurative mark application which is the focus of this article.
British Sky Broadcasting Group Plc (now Sky plc and Sky IP International Ltd) filed an opposition in 2006 on the basis of an earlier Community Trade Mark Registration for the word mark SKY in Classes 9, 38, 41 and 42 alleging likelihood of confusion and detriment to reputation. They also based their opposition on unregistered rights in SKY. The opposition was upheld under Article 8(1)(b) of the CTM Regulation for all of Skype’s goods and services. Skype appealed and the Fourth Board of Appeal rejected their appeal. Skype persisted with an application to the General Court (T-423/12) to annul the Board of Appeal decision based on a single plea of infringement of Article 8(1)(b) – due to the alleged overall dissimilarity of the signs SKY and Skype (stylised) (it was undisputed that the goods/services were identical).
Skype argued that their mark had itself, through extensive use, acquired a secondary meaning, serving to counteract any perceived similarity between the signs and that the signs had been coexisting for years without confusion. They argued that the relevant consumer chooses the claimed goods and services with care, and that, as a result, there would be no confusion. This argument was partially accepted by the General Court because the type of communications goods in question are not purchased regularly, they are expensive and both technical and specialised in nature. However, the Court held that the average consumer of Skype’s peer-to-peer communications services did not have greater technical expertise than the average end consumer.
Skype also argued that the goods and services they offered on the market were very different to the services sold by Sky. However, this, in the Court’s view, was irrelevant to the comparison of the wide range of goods and services applied for with the goods and services for which Sky’s mark was registered.
The Court upheld the Board of Appeal’s finding that the device element of the Skype (stylised) mark had a merely decorative function – a border around the word which creates no phonetic impression. Conceptually, if anything, the device was held to suggest ‘a cloud’. This argument was relied upon by Sky in their opposition to support their claim of similarity between the signs due to the association of clouds with the sky.
In the General Court’s opinion, the recognition of the word and trade mark SKY within the mark applied for (Skype (stylised)) was a strong point in Sky’s favour in this case, going against the “SpagO” judgement (Spa Monopole v De Franceso Import) in which it was held that the average consumer is unlikely to break down SpagO into ‘Spa’ and ‘go’. The Court added that if the figurative element in the Skype (stylised) mark was recognised as a cloud, the likelihood of the relevant consumer recognising the word SKY within the mark would increase further and the level of conceptual similarity between the signs would be raised.
In a case in which there is borderline similarity between the signs and/or the goods/services, an enhanced level of distinctiveness of the earlier mark as a result of the extensive use made of it has been found to compensate for the borderline similarity by increasing the likelihood of confusion. The SKY mark was found to possess an enhanced level of distinctiveness as a result of the reputation and market share gained in the digital television field and also taking into account their huge promotional investments and the recognition of the reputation in the mark by the UK Intellectual Property Office. In the Board of Appeal’s assessment of the level of distinctiveness of the earlier mark, there was a suggestion that reputation is a sub-set of enhanced distinctiveness, therefore one might infer from this that the burden of proving enhanced distinctiveness for the purposes of Article 8(1)(b) may be greater than the burden of proving reputation under Article 8(5). The Court agreed with the Board of Appeal’s assessment and their finding of enhanced distinctiveness.
Another interesting finding of the Board of Appeal which was upheld by the Court was that the enhanced distinctiveness of the SKY mark for television broadcasting services may be extended to other related goods/services because some use had been made of the mark for these goods and services at the date of filing of the application, suggesting that the scope of enhanced distinctiveness should not be narrowly defined.
There is a sense that Skype were doomed to fail in this case. The Court upheld the Board of Appeal’s dismissal of Skype’s argument that their mark had acquired a secondary meaning (which is often applied to marks of weak inherent distinctive character having acquired additional distinctiveness as a result of use).
In this case, Skype were trying to show that their mark had become distinguished, but this was a difficult argument to run because, as the Court stated, “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”.
The Court disagreed with the Board of Appeal that SKY could not be perceived as descriptive, but it found that even if SKY was inherently weak for some goods and services, this weakness was overridden by enhanced distinctiveness for those goods and services.
Skype argued that Sky’s rights in its SKY mark were diluted as a result of use of the term ‘sky’ by third parties, but they did not adequately support this contention because they did not specify what in their evidence proved dilution or how it was proven. This serves as a warning to both applicants and opponents that documentary evidence needs to be supported with clear submissions pointing out what the evidence demonstrates.
Skype’s coexistence argument fell down because the coexistence only concerned one specific service – peer-to-peer communications which was not a core SKY service. Skype were seeking registration for many other goods and services and the coexistence in respect of the only coinciding service over 22 months was not considered sufficient. The Court commented that coexistence needed to be based on a likelihood of confusion whereas Skype’s (not unreasonable) contention was that peaceful coexistence was an indication that there was no likelihood of confusion. It is rather ironic that during the period since they filed opposition and before the case was brought to the General Court, Sky advertised Skype’s services on their tv channels. Sadly for Skype, this implied eventual acceptance by Sky of the SKYPE brand was irrelevant to the proceedings because the relevant date for assessment of likelihood of confusion was the filing date of Skype’s application.
For all of these reasons, the General Court dismissed Skype’s appeal in the Skype (stylised) case (T-423/12), as well as their appeals in the related cases involving the word mark SKYPE (T-183/13 and T-184/13).
The reality is that today SKY and SKYPE are both well-known brands in the UK which coexist in the communications market – one for tv broadcasting, the other for Internet calls and messaging services. Sometimes the intricacies of trade mark law are meaningless in the real world. On the other hand, Skype may eventually have some success in registering their mark if they restrict their specifications to the goods and services for which the mark is actually used and for which it has now coexisted with the SKY mark in the EU market for up to 10 years.
But not yet, it seems. A number of more recently filed CTM applications for SKYPE, each covering a much narrower range of goods and services, essentially the products that they sell in the European Union, have been rejected by OHIM, in each case by the Fourth Board of Appeal. Skype’s claim that the two marks (SKYPE and SKY) have coexisted in the EU (now for up to ten years) are always rejected by the Board on the basis that the coexistence has not been “peaceful”. They (the Board) rely on the fact that Sky keep opposing Skype’s CTM applications for their house mark as evidence of a lack of “peaceful” coexistence.
In trade mark terms, use is 95% (or more) of the story. Having a trade mark registration is useful, sometimes important, but it is the use of (and the freedom to use) a mark that really counts. Skype has used its house mark in the EU alongside the trade mark SKY in some countries, for up to ten years. If that does not amount to “peaceful” coexistence of two branded products, it is not entirely clear how such a “peaceful” coexistence could ever be established to OHIM’s (or the European Court’s) satisfaction.
Of course, before the UK Trade Mark Office, where coexistence on the market is treated more seriously Microsoft (who now owns Skype) has UK trade mark registrations for SKYPE (word) and Skype (stylised) covering the core goods and services provided by the US corporation.
It would therefore be surprising if Microsoft does not continue to appeal Fourth Board rejections of their CTM applications (for SKYPE and Skype (stylised)) hoping that the Court might eventually take a more market based approach to reaching its decision on a likelihood of confusion.