BSkyB brought an action in the England and Wales High Court to force the IT giant to drop the name, claiming the similarity could be "confusing" for British residents; BSkyB is universally known as "Sky" in the country. The basis of the case was that the name breached Sky's copyright.
Microsoft has agreed to drop the name and says it will not challenge the ruling by Justice Sarah Asplin, originally made in late June, that some buyers could end up confused and that the Microsoft service name did infringe on two registered Sky trademarks.
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BSkyB had offered a service in the U.K. called "Sky Store & Share," which was an online storage service available for customers to upload and share digital files and photos, and information about events and appointments. Though discontinued in December 2011, the judge found this very significant. She also noted that users having problems with SkyDrive had ended up calling BSkyB's helpline, mistakenly thinking it was behind the technology.
BSkyB has struck a deal with Microsoft, which means it can continue to use the SkyDrive moniker "for a reasonable period of time" so as to allow for an orderly transition to any new brand identity.
Apparently that's part of a wider, though confidential, set of agreements between the two firms, which press reports in London suggest include some kind of financial aspect. In a joint statement, the two firms said, "The settlement of this case reflects the desire of both companies to focus on joint projects to benefit their customers," suggesting they have put the spat firmly behind them.
"We're glad to have resolution of this naming dispute, and will continue to deliver the great service our hundreds of millions of customers expect, providing the best way to always have your files with you," added Microsoft.
The tech company said it will change the name of the service, although it didn't reveal a new name. Technically, the problem only exists within the European Union, according to the judgment. So Microsoft could still use the name outside that territory. But it seems more likely a fresh identity will be created.
Microsoft managers may be getting used to changing names after copyright claims, though, so that may not be such a problem for them: last year it was forced by European lawyers to drop the name "Metro" for its Windows 8 UI, after German firm Metro AG complained. It's now called the Modern UI.