The English High Court today handed down its decision in the proceedings brought by Merck KGaA, Darmstadt, Germany (the "Claimant") against Merck Sharp & Dohme Corp and others ("MSD") for breach of contract and trade mark infringement in respect of the use of "Merck". A copy of the decision can be found here.
The dispute centred on the claim that MSD's online and offline use of "Merck" in the UK breached a co-existence agreement between the parties and infringed the Claimant's trade mark rights.
In today's decision the High Court answered the following four questions remitted to it by the Court of Appeal:
- whether the uses by MSD of "MERCK" amounted to trade mark infringement in the UK;
- whether the uses were de minimis;
- what relief should be granted by way of final order in respect (a) the claim for breach of contract; and (b) the claim for infringement; and
- the extent to which the term "pharmaceutical substances preparations" in the Claimant's trade mark specification should be partially revoked for non-use.
Merck KGaA, Darmstadt, Germany, is an international pharmaceutical company whose origins date back to 1668. In 1890 it set up a US branch. After World War I the US branch became independent, eventually becoming MSD (another substantial pharmaceutical company).
The two organisations entered into a worldwide co-existence agreement in 1955 regarding the global use of the term "Merck". This global agreement was amended in 1970 (the "Agreement").
In 2016, the English High Court decided in favour of the Claimant and held that MSD's use of "Merck" alone in the UK was a breach of the Agreement, and that MSD should be restrained from describing itself in any printed or digital material addressed to the UK as "Merck" or using "MERCK" alone as a trade mark.
MSD appealed and in 2017 the Court of Appeal confirmed the Judge's finding that use by MSD of "Merck" alone in the UK whether as a trade mark or a company name amounted to breach of the Agreement. However it remitted certain questions back to the High Court including what breaches of the Agreement also amounted to trade mark infringement and what relief, if any, should be granted. In today's Judgment the High Court provided the answers to those questions.
On the question of infringement the Judge was tasked with deciding whether online and offline use of "MERCK" (a contraction of MSD's corporate name) amounted to trade mark infringement in the UK, even when MSD used a different house brand on products actually sold in the UK.
This involved analysing 32 samples of offline and online use to assess whether the use was mere use of a corporate name or use that had a material link with goods and services. The Judge held that in almost three quarters of the samples at least some of MSD's uses of "MERCK" amounted to trade mark infringement. The remaining uses were held to refer to the corporate entity and were not in relation to goods and services, as a consequence they did not infringe the Claimant's Trade Marks (although they were still breaches of the Agreement). The uses found to be trade mark infringement included uses of "MERCK" in the email addresses of MSD's UK employees (e.g. [email protected]).
The Court did not find the uses to be de minimis.
The Judge granted declarations that MSD had (i) infringed the Claimant's trade marks and (ii) breached the Agreement, through use of "MERCK" in the UK. MSD had argued that declarations were unnecessary but the Judge held they were important in order to set out in simple terms what the ultimate result of the analysis by the High Court and Court of Appeal had been (which consisted of over 200 pages of reasoned legal and factual analysis).
The Claimant had sought injunctions to restrain both breach of contract and trade mark infringement. MSD argued that injunctions were unnecessary because, amongst other reasons, once declarations had been granted that should be sufficient and it should be left to the parties to negotiate the practical application of the declaratory relief. The Judge dismissed this argument on the basis that any spirit of cooperation between the parties had evaporated. He went on to say:
The insistence of [MSD] that the issues in this action must be litigated in multiple jurisdictions (contrary to the very object of the 1970 Agreement) does not evidence a renewed spirit of co-operation.
He held that the grant of the injunctions was a public vindication of [the Claimant's] rights.
The Judge did however allow carve outs from the injunctions, such as the use by MSD of "MERCK" on social media so long as MSD used country restriction techniques, like geoblocking, to the fullest extent available on the relevant platform to prevent access by visitors from the UK. In addition, although the injunction covered use of "MERCK" in the @merck.com email addresses of MSD's UK employees, he excluded from the injunction email addresses of non-UK MSD employees.
The Judge did not grant an order requiring MSD to publicise a summary of the Judgment as he did not consider it would be possible to summarise the outcome in a helpful way nor did he feel that a simple reference to the Judgments themselves would add to awareness since the relevant public would be unlikely to wade through 275 pages of legal and factual analysis. He also considered that the form of declaration he intended to make would provide the Claimant with what it needed to raise public awareness.
On the question of partial revocation of the Claimant's trade mark registrations for pharmaceutical substances and preparations, the Judge considered that although the "MERCK" mark had been used as a house brand in relation to pharmaceutical products falling within 9 of the 15 categories relating to treatment of major body systems or to diseases, set out in the British National Formulary (BNF), this was not sufficient to preserve a registration as broad as "pharmaceutical substances and preparations". The Judge considered that the registration ought to be narrowed to cover categories that were exemplified by the products sold under the trade mark. He also took the view that the mark should not be limited to the 9 BNF categories as these were too broad. Instead he used them as a guide to identify the categories that the average consumer would consider were exemplified by the products sold.
He therefore narrowed the specification to:
Pharmaceutical substances for the treatment of the gastro-intestinal system (other than food allergies, liver disorders, obesity and haemorrhoids), the cardio-vascular system (other than bleeding disorders, blood clots and cardiac arrest), asthma and bronchitis, depression and alcohol dependence, worms (including tapeworm infections), the endocrine system, oncology and multiple sclerosis, vitamin deficiency and genetic metabolic disorders, and joint stiffness and aches.
This had little effect on the overall outcome of the case as the Judge agreed with the Court of Appeal that the partial revocation issues would have no effect on the outcome of the claim for trade mark infringement.
Bird & Bird acted for the Claimant, Merck KGaA, Darmstadt, Germany. The Bird & Bird LLP team was led by partner Peter Brownlow and included partner Nick Aries, associates Ning-Ning Li and Mark Day. The barrister team was Adrian Speck QC of 8 New Square, Lincolns Inn and Benet Brandreth QC of 11 South Square, Grays Inn.