27 July 2013

Bilateral Investment Treaties: Claiming Compensation from Foreign Governments under Bilateral Investment Treaties for failing to provide adequate IP Protection

In Novopharm Ltd v. Eli Lilly & Co 2010 FC 915 Mr. Justice Barnes of the Federal Court of Canada declared that Canadian patent no. 2,209,735 for the second medical use of the drug atomoxetine to treat attention deficit hyperactivity disorder in adults was invalid for inutility. His judgment was upheld by the Federal Court of Appeal in Eli Lilly & Co. v. Teva Canada Ltd 2011 FCA 220. Eli Lilly & Co. applied for leave to appeal to the Canadian Supreme Court but that was refused on 8 Dec 2012.

Similarly, in Eli Lilly Canada Inc. and Others v Novopharm Ltd 2011 FC 1288 Mr. Justice O'Reilly threw out Eli Lilly's claim against Novopharm for infringement of its Canadian patent no. 2,041,113 for olanzapine on the ground of invalidity. Again, Eli Lilly appealed but the Federal Court of Appeal upheld the court below in Eli Lilly Canada Inc v Novopharm Limited, 2012 FCA 232. Again, Eli Lilly sought leave to appeal to the Supreme Court and, again, it was refused.

End of story one might think.

Well possibly not because Eli Lilly served on the 13 June 213 a notice of intent to claim C$500 million damages from the Canadian government for the loss and damage that it claims to have sustained from the invalidation of its patents by the courts of Canada.

Canada, the United States and Mexico are party to an agreement to set up the North American free trade area known as "NAFTA". Chapter 11 of NAFTA requires each party to that agreement to respect investments in their territories by the nationals of the other.   

Art 1102 (1), for instance, requires each party to 
"accord to investors of another Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments."
Art 1105 (1) further requires parties to
"accord to investments of investors of another Party treatment in accordance with international law, including fair and equitable treatment and full protection and security."
 Finally, art 1110 (1) protects investors from appropriation of their investments:
"No Party may directly or indirectly nationalize or expropriate an investment o f an investor of another Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment ("expropriation"), except:
(a) for a public purpose;
(b) on a non-discriminatory basis;
(c) in accordance with due process of law and Article 1105(1); and
(d) on payment of compensation in accordance with paragraphs 2 through 6."
The term "investment" is defined very broadly by art 1139 NAFTA and specifically includes
"(g) real estate or other property, tangible or intangible, acquired in the expectation or used for the purpose of economic benefit or other business purposes;"
Art 1116 (1) of  NAFTA enables an investor of any of the parties to the agreement to submit to arbitration a claim that another party to the agreement has breached an obligation under the agreement whereby the investor has incurred loss or damage.   The first step is for the aggrieved investor to serve notice of intent to submit a claim to arbitration under art 1119 at least 90 days before the submission of the claim.   If the dispute is not resolved within that time the complainant can institute proceedings in ICSID ("the International Centre for the Settlement of Investment Disputes"), an adjunct of the World Bank in Washington.

Eli Lilly claims that the invalidation of its patents by the Canadian courts amounts to expropriation of its investment in Canada:
"Through the measures in issue, Canada has directly expropriated Lilly's exclusive rights conferred by the the Strattera and Zyprexa patents. Canada took away these rights with respect to Strattera on September 14, 2010 and with respect to Zyprexa on November 10, 2011. The effect of the measures was to void the patents ab initio, thereby depriving Lilly of its exclusive rights to prevent third parties from making, using or selling its patented products during the patent term or to enforce those rights. In the alternative, Canada has indirectly expropriated Lilly's exclusive rights conferred by the Strattera and Zyprexa patents through the measures in issue. The foremost consideration when an indirect expropriation is alleged is the effect of the measures complained of and whether they have deprived the investor of substantially all of the value of its investment. The measures in issue have had the effect of destroying the value associated with Lilly's investments, namely, the exclusive rights to prevent third parties from making, using or selling the patented product during the patent term and to enforce those rights."
The company also contends that the Canadian government has infringed other provisions of Chapter 11 including arts 1102 and 1105 as well as an obligation under art 1709 NAFTA to
"make patents available for any inventions, whether products or processes, in all fields of technology, provided that such inventions a re new, result from an inventive step and are capable of industrial application. For purposes of this Article, a Party may deem the terms "inventive step" and "capable of industrial application" to be synonymous with the terms "non-obvious" and "useful", respectively."
As a result of those alleged breaches, Eli Lilly claims to have suffered losses of at east 500 million loonies.

Now the basis of the claim is that the Canadian courts have developed a doctrine whereby the utility of a pharmaceutical invention is judged by reference to the promise made in the specification.   Eli Lilly contends that this doctrine, which is known as "the promise doctrine", exists nowhere else in the world and results in the invalidation of patents that would be allowed elsewhere.   It says that the Canadian courts had no business to develop doctrines at variance with US and European patent law, that if the courts of Canada don't see the error of their ways then the Parliament of Canada should change the law and, in the meantime, the Canadian taxpayer should pay Eli Lilly C$500 million at the very least.

If this sounds like chutzpah then remember that this case is the latest in a spate of claims by private companies against sovereign governments that followed a claim by the US waste disposal company Metalclad Insulation Corp.against the Mexican government for compensation for the refusal of the state and local governments to grant planning permission to use a landfill site that Metalclad had acquired in the small town of Guadalcázar, San Luis Potosi for the disposal of toxic waste.  Metalclad's claim was based on the same provisions of NAFTA as Eli Lilly's.  In the arbitration, the tribunal which consisted of Professor Sir Elihu Lauterpacht, QC, CBE, Mr Benjamin R. Civiletti and Mr JosĂ© Luis Siqueiros sitting in Vancouver, British Columbia held at paragraph [101] of its award of 30 Aug 2000 that Metalclad had not been treated fairly or equitably under NAFTA and succeeded on its claim under art 1105.and at paragraph [112] that Mexico had indirectly expropriated Metalclad’s investment without providing compensation to Metalclad for the expropriation and had thereby violated art 1110.  The arbitrators awarded Metalclad damages of US$16,685,000.  The award was reduced slightly on appeal to the British Columbia courts but generally the result was seen as a success for the comparatively little chap against foreign governments.

"What's all that got to do with us?" I hear you say. "We are not yet part of NAFTA though there have been calls by politicians and journalists on both sides of the Atlantic for us to join it (see, for example, Ian Murray and James Bennett "Britain's Future Lies With America, Not Europe" 29 Dec 2011, Wall Street Journal).  However, we do have bilateral investment treaties ("BITs") with 102 governments around the world and each of those agreements contains provisions that are very similar to those of Chapter 11 of NAFTA. Many of those agreements are with countries that supply clothing, electronic gizmos and all sorts of other goodies to Western consumers.   A complaint that I often hear from small and medium enterprises ("SME") in this country is that they subcontract the manufacture of their product to South East Asia only to find unlicensed copies flooding back to them because nobody in those countries respects foreigners' (or at least their) IP.  Furthermore they add, there doesn't seem to be anything anybody can do about.

Well maybe now there is. If the refusal of planning permission by the council of a little town in Mexico  and the invalidation of a US company's Canadian patent amounts to expropriation then surely it can be argued with equal force that the failure to provide a proper remedy to a British company for the infringement of its IP rights amounts to expropriation of that company's rights.  If the local legislation is inadequate, if IP infringement proceedings are slow, uncertain or expensive, if officials are corrupt then maybe you should claim compensation from the government of the country concerned through arbitration in ICSID.
Main Street, Salinas California  Source Wikipedia

For the SME a claim in ICSID is nothing like as daunting as might be supposed.   Metalclad was
represented very effectively not by well known Wall Street or Los Angeles attorneys but by a Mr. Clyde C Pearce who practises on his own account in Salinas which is a town that is about the same size as Huddersfield.

If you want to know more about the topic I have developed my ideas in an article which I have just submitted to the EIPR for publication and I have just had a very nice email back from Hugh Brett which suggests that it will be accepted.   I shall also try to catalogue as many materials about the Eli Lilly claim and other materials on IP claims relating to BITs and NAFTA as possible.  You can give me a ring on 020 7404 5252 during office hours, fill out my contact form, send me a tweet, write on my wall or send me a message through G+, Linkedin or Xing.

Further Reading

Jane Lambert "Eli Lilly and Co. v Government of Canada: Latest Developments" 24 Nov 2014
Jane Lambert "Dispute Resolution in the Proposed North Atlantic Free Trade Area" 25 May 2014
Jane Lambert "Bilateral Investment Treaties: Eli Lilly and Co. v Government of Canada" 2 Jan 2014
Jane Lambert "Bilateral Investment Treaties: A Remedy for SME?" (Dec 2013) [2013] EIPR 759
Jane Lambert  "The UAE's Bilateral Investment Treaties" 28 July 2013 NIPC-Gulf
Jane Lambert  "Claims against States: Czech Republic v European Media Ventures SA" 9 Dec 2007

24 July 2013

IP Bar Association Garden Party

Prof. Tanya Aplin

I have been a fan of Professor Tanya Aplin for some time, originally because of her transformation of Gurry on Breach of Confidence and more recently because of her part in the Submission to the UK IPO on the issue of criminal sanctions for the deliberate copying of designs by Sir Robin Jacob and the Professors of IP law at the Universities of Oxford, Cambridge, Glasgow, Edinburgh and Bournemouth. Like Francis Gurry, the Director-General of the WIPO, she is an Australian which is almost a qualification in itself as the courts of that island continent are a laboratory for the development of the common law positively fizzing with bright ideas some good and others not so good.

Professor Aplin was guest of honour at the Intellectual Property Bar Association garden party on Monday which I attended with Robert Griffiths QC, the IPBA's latest recruit, and our pupil Nicola Strachan. Before we could taste our pudding metaphorically speaking we had to eat our greens. In other words we had to listen to a talk before we could go to the party. But this talk by Professor Aplin was the educational equivalent of broccoli, courgettes and okra rather than limp lettuce and institutional cabbage.  We were treated to a swipe at a notion that is even more misguided than clause 13 of the Intellectual Property Bill, namely the motions in the bowels of the Commission towards a directive on harmonizing trade secrets law.

The Professor sought to persuade us that such a directive was a bad idea.   I don't think many of us needed much persuasion but then what do our opinions matter? Over drinks and canapes in the gardens of Gray's Inn I discussed the Intellectual Property Bill and in particular clause 13 with several colleagues. Not a single member of the IP bar had a kind word for the proposal. Apparently we like the judges, the International Chamber of Commerce, the IP Federation and the professors of our oldest universities made submissions against criminalizing registered design infringement only to be told that ours is a minority view.  If that is the case, who constitutes the majority?  Is it merely a head count of the subscribers to ACID? One eminent silk with excellent political collections and sensitive antennae pinned the blame on Cable.  I do hope that is not the case because I have long been an admirer of the Business Secretary with whom I have much in common. He has already been demonized (not altogether fairly) for his part in the student fees fiasco and his indiscretions to journalists over Rupert Murdoch. It would be regrettable if he were remembered for piloting into law the IP equivalent of the Dangerous Dogs Act.

Anyway back to the talk, there have been two reports on trade secrets law in the EU:
There was also a conference on trade secrets in Brussels just over a year ago and a public consultation on the protection of business and research know-how which took place between the 11 Dec 212 and 8 March 2013. I am really grateful to Professor Aplin for bringing this research to our attention because I suspect that the first we would have heard of  it otherwise would have been a statutory instrument under s.2 of the European Communities Act 1972 when it would have been far too late to do anything about it.

A quick read of the executive summaries of the two reports shows why the whole notion of a harmonizing
Source Wikipedia
directive is barking. There is some sort of protection for trade secrets in each of the member states (and indeed there has to be because we are each obliged by our membership of the World Trade Organization to protect "undisclosed information" by art 39 of TRIPs as I pointed out in my question) but each member state provides that protection in a different way. Most states do so under a general unfair competition law whereas we and the Irish rely on the law of confidence. Sweden has a trade secrets statute.  In most countries using or disclosing trade secrets is a criminal offence. There is also protection in some countries under labour law.  If it has taken my whole professional life time to get to the point where we appear to be about to get a single European patent for most but by no means all of the territories of the member states of the EU when we are already party to the European Patent and Paris Conventions, getting agreement on harmonizing trade secrets law will be next to impossible.

Even if we do get agreement on such harmonization will it actually do us any good?   I have heard clients moan about inadequate design and trade mark protection in some countries of the world - mainly outside Europe - but I have never heard any complaints about Germans nicking the best British technology or of Italians trousering British designs. The reason for that is that you don't really need any law to protect trade
A shot of Chartreuse Wikipedia
secrets (or if you do it is too late because the secret is out). What you need are good levels of security.  After all the Carthusian monks have managed to keep the recipe of chartreuse a secret since 1764 through good security measures though doubtless they have the sanction of eternal damnation should their secret ever be leaked. As I said in my talk to the Leeds Inventors Club in "All you need to know about confidentiality" some seven years ago you need to monitor and police individual disclosures rather than rely on confidentiality agreements and courts when things go wrong.

Finally the harmonization that we have had in such areas as database protection and trade mark law has not exactly been a howling success.   Professor Aplin described the arguments in favour of harmonizing trade secrets law as "myths" and I think she is right.  But if any of you take a contrary view or want to discuss this article or topic give me a ring on 020 7404 5252, fill out my contact form, send me a tweet, write on my wall or say something rude (or nice) about me on G+, Linkedin or Xing..

20 July 2013

Injunctions against ISPs Part VI: The Football Association Premier League Ltd v British Sky Broadcasting Ltd and Others

Early international between England and Scotland   Source Wikipedia

In The Football Association Premier League Ltd v British Sky Broadcasting Ltd and Others [2013] EWHC 2058 (Ch) (16 July 2013) Mr. Justice Arnold granted an injunction under s.97A of the Copyright, Designs and Patents Act 1988 against the top 6 internet service providers in the UK to block access to the First Row Sports website. As the judge had already made similar orders against the same defendants in Newzbin2 (see "Injunctions against ISPs" 6 Nov 26), Dramatico ("Injunctions against ISPs Part III: Dramatico Entertainment Ltd and Others v British Sky Broadcasting Ltd. and Others") and EMI ("Injunctions against ISPs Part V: EMI Records Ltd and Others v British Sky Broadcasting Ltd and Others" 5 March 2013) they did not defend the application but instead agreed the terms of the order with the Premier League. However, as the judge acknowledged at paragraph [7] of his judgment, that did not absolve the Court of the responsibility of determining whether the orders sought were justified.

The Copyright Works
The Football Association Premier League is the governing body of the competition between the top English and Welsh football clubs.It owns the copyright in recordings of the football matches played in the competition together with the copyright in various other artistic works such as the Premier League and Barclays logos. These recordings form part of live transmission of the matches to viewers outside the UK, Viewers in this country cannot watch them live because TV broadcasting is banned between 14:45 and 17:15 on Saturdays in order to encourage British fans to go to the grounds and actually watch some football.

First Row Sports
First Row indexes transmissions of the matches that somehow find their way in digital form onto the internet and makes them available to the public even at the times when the fans should be in the stadiums, The website  makes its money from advertising. Some of the recipients are private householders but others are pubs which show Premier League matches while the teams are actually on the field. According to the League's expert First Row makes between £5,360,680 and £9,505,564 from this activity. Shocking!

The Statutory Requirements
In order to grant an injunction, the judge had to tick the following boxes:
  • Were the defendants Information Society Service Providers?. Tick
  • Do the operators and users of First Row infringe copyright?  The judge held that they did either by communicating the works to the public or acting as joint tortfeasors with their customers.
  • Did the operators and users use the defendants' services? Well of course. How else could anyone access the site?
  • Did the defendants have actual knowledge? Well they did after they got the claimants' letter before claim.
  • Are the orders proportionate? Tick.
Having satisfied all the requirements his lordship made the order.

As I said yesterday in "We can now field a cricket team" 4 to 5 IP 19 July 2013, we are very hot on sport in these chambers. We actually have a footballer in our IP, tech and  media law group.  None other than Mr Samuel Okoronkwo who seems to have lots of accomplishments and experience. If you want to talk to Samuel, Robert Griffiths QC or indeed any of my colleagues about this case, copyright in general or even sport, call Steve on 020 7404 5252 or fill in our contact form. Happy days!

19 July 2013

Patents: Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd

"In this case", began Lord Sumption in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46 (3 July 2013).  "Virgin Atlantic Airways Ltd wishes to recover damages exceeding £49,000,000 for the infringement of a European Patent which does not exist in the form said to have been infringed. The Technical Board of Appeal ("TBA") of the European Patent Office ("EPO") has retrospectively amended it so as to remove with effect from the date of grant all the claims said to have been infringed."

The reason why Virgin contended that it was nevertheless entitled to those damages is that the Court of Appeal had held that those same claims were valid and had been infringed, that the questions of validity and infringement were now res judicata and thus not capable of review and that there was authority to that effect from thee Court of Appeal in Coflexip S.A. and another v Stolt Offshore Ms Ltd. and others [2004] EWCA Civ 213 (27 Feb 2004) [2004] FSR 34 and Unilin Beheer BV v Berry Floor NV and others [2008] 1 All ER 156, [2007] Bus LR 1140, [2007] BusLR 1140, [2007] FSR 25, [2007] EWCA Civ 364.

The case before the Supreme Court was not an appeal against the decision of the Court of Appeal that the European patent was valid and had been infringed because permission to appeal to the Supreme Court had already been refused.   It arose in the inquiry as to damages because Zodiac Seats contended that there could be no damages as the claims that were held to have been infringed no longer subsisted.  The outcome depended on "whether the Court of Appeal was right to say that its order declaring the patent to be valid continued to bind the parties per rem judicatam notwithstanding that the patent was later amended on the footing that it was not valid in the relevant respects."

Lord Sumption together with Lady Hale, Lord Clarke and Lord Carnwath sidestepped that question masterfully.   Allowing the appeal Lord Sumption said at paragraph [27]:
"The Court of Appeal decided, before the result of the opposition proceedings in the EPO, that in its unamended form the patent was valid and infringed. It follows that Zodiac are estopped from asserting on the enquiry as to damages that in its unamended form the patent was invalid or was not infringed. This estoppel is a true cause of action estoppel. The Court of Appeal has determined in favour of Virgin issues essential to the existence of the cause of action for infringement of the unamended patent, which are the basis of the claim for damages. However, the point which Zodiac seek to make on the enquiry is that the unamended patent has been retrospectively amended. It no longer exists, and is deemed never to have existed, in the form on which these issues were adjudicated by the Court of Appeal. Zodiac's reliance on the retrospective amendment is a new point which was not raised before. It could not have been raised before, because the decision of the TBA retrospectively amending the patent was made after the order giving effect to the judgment of the Court of Appeal. There are two related reasons why Zodiac cannot be precluded from relying on the decision of the TBA on the enquiry as to damages. One is that they are relying on the more limited terms of a different patent which, by virtue of the decision of the TBA, must at the time of the enquiry be treated as the only one that has ever existed. The other is that Zodiac are not seeking to reopen the question of validity determined by the Court of Appeal. The invalidity of the patent may be the reason why the TBA amended the patent, but the defendant is relying on the mere fact of amendment, not on the reasons why it happened."
That meant that  Coflexip and Unilin had been wrongly decided.

Lord Neuberger also allowed the appeal but for slightly different reasons.   He observed at paragraph [59] that:
"The policy of the Patents Act is that valid patents are enforceable against the world, even if an infringer is honestly and reasonably unaware of the existence of the patent. Equally, if a patent is revoked (or amended), the policy is that the revocation (or amendment) takes effect retrospectively, and that this can be relied on by the world. I find it hard to see why someone who has failed in an attack on the patent should not be entitled, like anyone else, to rely on the points that the patent has been revoked (or amended), and that the revocation (or amendment) is retrospective in its effect, whether in legal proceedings or in another context."
The illogicality of any other conclusion was underscored by the fact that it was common ground that the Court of Appeal's injunction would have to be discharged as an invalid patent could not be infringed in future even if the damages award wase to remain undisturbed.   I have to say that I prefer Lord Neuberger's reasoning on that point to Lord Sumption's,

Should anyone want to discuss this fascinating case or any other issue of patent or IP Law call me on 020 7404 5252 or fill out my contact form to discuss the case or patent law generally. You can also follow me on .Facebook, Linkedin, twitter or Xing.

07 July 2013

Trade Mark Infringement and Passing off: British Sky Broadcasting Group Plc v Microsoft Corporation

In British Sky Broadcasting Group Plc and Others v Microsoft Corporation Microsoft and another [2013] EWHC 1826 (Ch), Sky (that is to say British Sky Broadcasting Group plc, Sky IP International Limited, British Sky Broadcasting Limited and Sky International AG) sued Microsoft (Microsoft Corporation and Microsoft Luxembourg Sarl) for infringement of its British and Community trade marks and passing off while Microsoft counterclaimed for declarations of invalidity of Sky's trade marks on grounds of descriptiveness and  impermissible amendment.

Sky's registrations were:

  • 2 415 829 for the word 'SKY', for "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".in class 9 and "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" in class 38;
  • 2 302 176E for the word 'SKY' for 'receipt, storage and provision of computerized business information data" in class 35;
  • CTM 3,203,411 for the word 'SKY' in relation to various goods "including data storage apparatus and instruments, software and data storage software, and software for video-conferencing, but excluding car batteries." in class 9 and services  "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" in class 35,  "video-conferencing services and sharing of files, images, music, video, photos, drawings, audio-visual, text, documents and data; but excluding telegraph communications service." in class 35 and "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" in class 42; and
  • CTM 3 166 337 for the word SKY in upper case letters for the same goods and services as in the previous mark.
Sky complained of Microsoft's use of the sign

for an online storage facility for its Windows, tablet and smartphone users. The sign that Microsoft now uses is: 

In an appendix to her judgment, the trial judge Mrs Justice Asplin assembled the following examples:

She also added some examples of how the SkyDrive icon appears on the face of a Windows tablet

and Xbox

As for the claim for passing off Sky is now an important internet service provider ("ISP") which also offers online storage to its subscribers by reference to its corporate name and trade mark.

Microsoft claimed for infringement of its UK marks under s.10 (2) and (3) of the Trade Marks Act 1994 and art 9 (1) (b) and (c) of the CTM Regulation (Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark OJ 24.3.2009 L78/1).

Her ladyship gave judgment to Sky on all three grounds - that is to say, infringement of its British and Community trade marks on both s.10 (2) and (3) grounds and the corresponding provisions of the Regulations and passing off. She also dismissed Microsoft's counterclaim for invalidation of those trade marks.

A comprehensive drubbing then.. Not something that Microsoft is used to.

Microsoft does not take reverses of this order lying down but this is going to be a hard judgment to appeal.  Mrs. Justice Asplin was careful - ultra careful - in her analysis of the law citing every relevant English and CJEU authority that I had heard of and even one or two that I hadn't.  That part of her judgment is 77 paragraphs long (paragraph [70] to [147].

Her analysis of the facts is also hard to fault.as it was equally thorough.

As to the claim under s.10 (2) (a) and the corresponding provision under the Regulation she concluded at [148]
"having taken into account all the learning in relation to the nature of the "average consumer" who is a reasonably well informed and reasonably observant user of broadband internet services, if one undertakes a global assessment there is every reason to conclude that there is a likelihood of confusion in the average consumer in the sense that there is a risk that the public might believe that the services come from the same undertaking or one which is economically linked."

She added at [158]
"The global assessment which I have undertaken having taken account of the context in which the sign appears, has taken into account the visual, aural and contextual effect of the fact that the dominant component in the sign is the same as the mark."
Her ladyship came to a similar conclusion in respect of the claim under s.10 (2) (b):and art 9 (1) (b) at paragraph [177]:
!it seems to me that if one undertakes a global assessment, given all the matters to which I referred under the "identity" head which are also relevant here, together with the similarity in goods and services to which the UKTM and the CTMs and the sign relates, the descriptive nature of "drive" and the dominant remaining part of the sign being "Sky", there is a likelihood of confusion in the average consumer who is a reasonably well informed and reasonably observant user of the relevant internet services."
As to the claim under s.10 (3) and art 9 (1) (c) the judge directed herself at paragraph [226] that it is not necessary to show a likelihood of confusion but there must be a "link" between the sign and the mark in the mind of the average consumer. Furthermore, it is also necessary to show that the mark has a reputation in the relevant territory.  In the subsequent 8 paragraphs she found that those elements were established and that Microsoft's use of the sign was without due course.

As to passing off, she referred to Lord Oliver's famous speech in ord Oliver in Reckitt & Coleman v Borden [1990] RPC 341 at 406. She found no dispute as to Sky's reputation and in view of her earlier findings on the trade mark matters she concluded that there had been misrepresentation from which damage flowed as a natural result.  Accordingly, that head too was made out.

The counterclaim for invalidity was largely based on the absence of distinctiveness under s.3 (1) (b) and (c) and art 7 of the CTM Regulation. The learned judge did not accept any of that. Upon the evidence before her the word SKY was distinctive in relation to online storage. There was a secondary argument that an amendment of the registration was made in bad faith in that it had somehow widened the specification. The power to disallow registrations made in bad faith was under art 52 of the CTM Regulation which the judge did not considered applicable in this case.