The case of Merck KGaA v Merck Sharp & Dohme Corp & Ors  EWHC 1273 (Ch) concerns two companies (Merck Global and Merck US) and their epic battle regarding the MERCK trade mark, following a 50 year old co-existence agreement and the advent of the Internet.
The Merck pharmaceutical companies have shared a long and complicated history of co-existence concerning the MERCK brand. The general understanding is that Merck Sharp & Dohme (“Merck US”) has exclusive rights to use MERCK as a standalone trade mark in the US and Canada whereas Merck KGaA (“Merck Global”) has the exclusive right to use MERCK as a standalone mark in the rest of the world. There have been a number of co-existence agreements over the years but the latest was a 1970 agreement and a slightly later protocol, both governed by German law.
The dispute arose because Merck US was operating a number of websites using the MERCK brand on its own. As the websites were accessible globally, Merck Global claimed this was in breach of the 1970 Agreement. The judge therefore had to decide how to give effect to the 1970 agreement, as interpreted under German law, in the Internet age, and in what circumstances online use could amount to trade mark infringement.
First instance - Contractual issues
Mr Justice Norris (as he then was) concluded that the 1970 Agreement governed the use of MERCK as a trade mark or trade name on the Internet. The agreement was intended to be an all-encompassing co-existence agreement, negotiated by parties who were aware that technology evolved. He rejected Merck US' argument that the websites were really targeted at the US/Canada and disagreed that accessibility from the UK was unfortunate and unpreventable “overspill”. Consequently, Merck US was held to be in breach of the 1970 agreement.
First instance - Infringement of UK trade marks
The judge also considered the position under general UK trade mark law. He confirmed that the fact that a US website is accessible in the UK is not a sufficient basis for concluding that the website is targeted at UK consumers. He stated that the fundamental question is whether or not the average consumer within the UK would regard the advertisement and website as being aimed and directed at him. In this case, the judge was satisfied that the US websites were directed at commercial activity in the UK as they contained UK specific content directed at UK based job-applicants, suppliers etc.
The parties appealed and cross-appealed against the 2016 decision. Although Merck Global was generally successful on appeal, certain issues were then remitted by the Court of Appeal to the High Court for further consideration. The hearing took place in July 2018. The significant delay in issuing the judgement (which was handed down on 20 May 2020) has been noted by Sir Alastair Norris and is attributed to his involvement in another very heavy case and health issues.
The matters remitted to the High Court for further consideration included:
Further consideration of partial revocation of Merck Global's registered marks
In the 2016 judgment, it was held that there should be partial revocation of each of Merck Global's trade marks. Although the Court of Appeal agreed with partial revocation, whether there should be any further revocation was remitted.
Both sides maintained the positions which they adopted at trial - Merck Global argued that it had a sufficient range of proven uses to justify protection across the spectrum of "pharmaceutical substances and preparations" and Merck US contended that the specification must be limited to the specific therapeutic indications for which the marks were used.
To identify the relevant sub-category to which a pharmaceutical product belongs, regard must be had to its therapeutic indication and the perception of the average consumer. The purpose and intended use of a pharmaceutical product are of particular importance. Both parties and the court referred to the British National Formulary ("BNF") publication to pinpoint broad categories of use of pharmaceutical products. Sir Alastair Norris then identified nine categories in which he considered the trade marks had been used. He went on to partially revoke the trade marks for the goods which fell outside of these categories.
Whether the activities of Merck US constituted use in the UK in the course of trade in relation to the relevant goods or services
The findings made at trial that withstood challenge on appeal are that Merck US operated a number of global websites (some with UK specific content) to support and promote its business. It also undertook social media activities (some with UK specific content) accessible from those websites, which deliberately did not take advantage of available country specific limitations that would have restricted access from the UK. The websites and social media were "targeted" at UK consumers.
The question remitted for reconsideration is whether that use on the websites constitutes "use in the course of trade".
Sir Alastair Norris reviewed 32 samples of different website, social media and email address uses by Merck US of the MERCK mark and found that the use was in the course of trade and therefore constituted infringement. He noted that "use in the course of trade" does not require that the goods are made available, or actually sold, in the UK but also covers circumstances in which Merck US was participating in some other material and relevant commercial activity with a view to gain.
Even if the MERCK sign is not affixed to goods or services that are marketed there is use "in relation to" goods or services if that sign is used in such a way as to establish in the mind of the average consumer a link between the sign and the products or services provided by Merck US. In those circumstances, there is "use in the course of trade in relation to goods or services" because the MERCK sign is not just the name of the company, but is also an indicator of origin of the goods or services supplied.
Whether any uses of the kind identified (2) above could be regarded as de minimis
Sir Alastair Norris stated that this question of whether the infringements that have taken place are negligible or insignificant is not answered by calculating what proportion of the total output is infringing. The answer to the question involves looking not only at what numerical proportion of the output targeted at the UK is infringing, but also at the content and significance of that material and its likely individual and cumulative impact. Based on the 32 selected samples, he did not consider that they can be dismissed as negligible or de minimis. In fact, his conclusion was that the examples served to illustrate Merck US' policy to bring the sign "MERCK" before the UK market at every opportunity.
The judgment provides some useful examples of the types of online use that may amount to trade mark infringement, even if there has been no trading activity.
It is also a warning to those involved in online activities that, should they wish to avoid (a) trade mark infringement claims, and (b) the jurisdiction of overseas courts, they should employ available technological techniques to prevent access to the site from the locations where they do not have the right to use a particular trade mark. In this case, Merck US' conduct (even if not deliberate) meant that the UK was targeted in a way that constituted trade mark infringement and breach of contract.
This case also serves as a warning to those agreeing trade mark co-existence arrangements to try to take into account future advances in technology and consider how goods and services may overlap in the future. In this case the agreement between the parties was entered into 50 years ago, prior to the Internet being invented and long before websites, domain names, email addresses, social media and metatags came into general use. It would have been difficult for the parties in 1970 to imagine how technology would change the world, but future-proofing is something which should be considered when negotiating co-existence, together with regular reviews of arrangements.
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