SKY trumps SKYPE – but not out of the blue

In a recent decision the General Court of the European Union confirmed that the trademarks SKY and SKYPE were confusingly similar. The decision is a setback for the popular Skype service, which allows users to call and chat over the Internet for free.

Facts
Skype, which became part of Microsoft in 2011, applied to register its name as a European Community trademark designating, among other things, services in the field of telecommunication services. Sky objected to this application and filed an opposition with the Office for Harmonisation in the Internal Market (OHIM) based on its earlier trademark SKY.

A third party can file an objection against a new application within a certain period if it believes that the newer application is confusingly similar to its prior right. This is called an ‘opposition’ and is a cost-efficient procedure to prevent others from registering a similar trademark. In short, an opposition could be successful if the newer trademark, assessed globally, may cause confusion to the public.

OHIM proceedings
Sky won the initial opposition proceedings, after which Microsoft appealed to the OHIM Board of Appeal. The board upheld the Opposition Division's decision was correct and confirmed that the trademarks were similar.

 OHIM held that the trademarks were confusingly similar because the prior right to the mark SKY was incorporated in its entirety in the first part of the newer SKYPE application. In several cases in recent years OHIM has confirmed that the public is likely to pay most attention to the first part of a trademark, and therefore this part has more impact. Further, OHIM decided that even though SKYPE was written as one word, the letters SKY would be recognised the most because the word has such a clear meaning.

On an phonetic level, OHIM found that there was similarity because both trademarks consisted of one syllable and the letters ‘pe’ in SKYPE were pronounced as a single ‘p’. Therefore, the trademarks were different by one letter only (phonetically: ‘skai’ versus ‘skaip’).

Appeal
Microsoft appealed to the General Court of the European Union and argued that the trademark SKYPE should be perceived as a whole and not as SKY-PE. The appeal was rejected. The court confirmed that the trademarks were similar on both a visual and a phonetic level. Even if SKYPE was perceived as a whole, it was still identical to the prior right for three of the five letters. In relation to a short trademark, this can be decisive.

Comment
Both parties have fought many legal battles regarding the trademarks SKY and SKYPE, but until now Microsoft never went as far an appeal to the General Court. At least 20 opposition cases have been handled at the EU level, with OHIM consistently deciding that SKYPE was confusingly similar to SKY.

Therefore, the General Court's recent judgment did not come out of the blue. The question now is whether Microsoft will appeal to the European Court of Justice. If it does not, it is unclear what the practical consequences will be. A short search in the national trademark registers shows that Microsoft holds trademark registrations for SKYPE in at least 20 of the 28 EU member states – including the United Kingdom, where the SKY trademark is considered well known. In order to cancel these national trademarks and to prohibit Microsoft from using the SKYPE trademark, Sky will have to go to court. This will lead to considerably higher costs compared to an OHIM opposition procedure.