The US firm released a cloud storage service named SkyDrive in 2007, for which user numbers have since grown to more than 250 million. However, BSkyB claimed the name was infringing on its copyright and wanted Microsoft to be forced to change it.
The broadcasting company took its complaint to the European Union and, after the case was heard in a UK court, a ruling was made that Microsoft would have to change the name.
It had threatened to appeal the decision, but on 31 July the two companies announced they had come to a settlement, which would give Microsoft “a reasonable period of time to allow for an orderly transition to a new brand”.
There were “financial terms” as part of the settlement, but the firms have not disclosed any figures.
"We are pleased to have reached a settlement after Microsoft agreed not to appeal the trademark infringement judgement in relation to its SkyDrive service," read a statement from BSkyB. "We will remain vigilant in protecting the Sky brand and will continue to take appropriate action against those companies who seek to use our trademark without consent."
A statement from Microsoft added: "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."