Microsoft is set to rename its SkyDrive cloud storage service, following a court ruling in June that the name infringes on trademarks of satellite broadcaster British Sky Broadcasting (BskyB).

In June this year, High Court judge Mrs Justice Asplin issued her judgment that the SkyDrive name infringed on BSkyB’s rights to the ‘Sky’ trademark. Microsoft had indicated that it intended to appeal, but has now reversed this decision and has agreed to change the name following a transition period.

In a statement issued today, BskyB and Microsoft announced the settlement of their trademark infringement proceedings in the European Union. Financial details of the deal are being kept confidential.

The agreement states that Microsoft will not pursue its planned appeal, and in return BSkyB will allow Microsoft to continue using the SkyDrive name for a reasonable period of time to allow for an orderly transition to a new brand.

BSkYB noted, “We are pleased to have reached a settlement after Microsoft agreed not to appeal the trademark infringement judgment in relation to its SkyDrive service.”

For its part, Microsoft said it was glad to have a resolution to the dispute, and would continue to deliver “the great service our hundreds of millions of customers expect”.

The announcement comes at a tough time for Microsoft as it disclosed this week that it has made a heavy loss on sales of its Surface tablets.

The move could also prove to be a period of upheaval for Microsoft customers as the firm rolls out a new name for SkyDrive, which is not only available in a browser but embedded in the Windows 8, Windows RT and Windows Phone platforms as an app.

Microsoft also had to rethink its branding of the user interface it introduced in Windows 8 because of a similar wrangle. Originally referred to as Metro, this label was hastily dropped after the firm was reportedly threatened with a trademark action over it.