Merck v Merck: a lesson in co-existence

On 19 September 2025, the High Court handed down its judgment following the inquiry into damages in this case, awarding Merck Global nearly £6m in damages.  It had initially claimed around £50m, which by the time of the hearing had been reduced to around £46m.  Damages were awarded on the basis of a reasonable royalty under a notional licence between the parties.  The reasonable royalty was calculated on the basis of the "economic benefits" approach rather than the "comparables" approach which Merck Global had argued for. 

The court confirmed that licence fee damages (or user damages) were, as a matter of principle, available in trade mark cases.  That had been disputed by Merck US, but it was "clear that the licence fee approach to quantification of damages will in principle be an appropriate approach where the loss can be defined as the economic value of the right which has been breached, considered as an asset". 

Merck Global's argument that the reasonable royalty should be calculated by reference to comparable licences was rejected.  This was largely because its expert admitted in cross-examination that the analysis on which he had based his expert report was flawed, leading to the wholesale rejection of the comparables analysis.  That left the "economic benefits" approach:  a consideration of the "economic benefits and costs to the parties, comparing the position as it was with the position had the breaches of contract and trade mark infringements not occurred".  After a careful analysis of each type of avoided cost and economic gain, it was decided that Merck US should pay for avoided website, social media and marketing costs, but not for avoided email migration, diversion of web traffic or staff training costs.  The resultant figure of around £5.7m would then be adjusted for inflation and discounted to reflect the fact that the money would have been worth less than today if paid as a lump sum at the outset.

Case Analysis (as published in May 2025)

In the latest instalment of a long-running dispute, the Court of Appeal has recently upheld the High Court judge's view on whether the Defendants had breached the terms of an order made in July 2020, following a finding of trade mark infringement and breach of contract (Merck KGaA v Merck Sharp & Dohme LLC & Anor, [2025] EWCA Civ 343).

The decision gives useful insights on the appropriate remedy for a breach of an order as well as giving guidance on what is permissible and what is overstepping in a co-existence situation.

Background

The Claimant, referred to as Merck Global, and the Defendants, together referred to as Merck US, had begun life from the same family business originally founded in 1668. In 1889 a family member established a separate but economically-supported business in the US; by 1918 these businesses were run separately but co-operated over use of the name Merck. 

Various co-existence agreements were entered into over the years culminating in a 1970 agreement supplemented by a 1975 protocol (the "Agreement"). In brief, under the Agreement, Merck Global could use Merck outside the US and Canada, whilst Merck US could use Merck in the US and Canada. Neither could use Merck alone in the other's territory but each was able to use Merck in specified ways as part of fuller references to their company in the other's territory, on terms regulated by the Agreement.

After Merck US's merger with another company in 2009, Merck Global noted increasing uses of Merck by Merck US outside of the US and Canada. The parties were unable to resolve the dispute and in 2013 Merck Global issued proceedings for breach of the Agreement and for trade mark infringement. These proceedings reached the Court of Appeal in 2017 and were remitted to the High Court which gave judgment in 2020: the Defendants had breached the Agreement and infringed the trade marks.  A final order giving effect to the findings was made in July 2020 (the "Order"). See here our blog on this at that time:  A trade Merck battle of historic proportions… | Fieldfisher.

Merck Global considered Merck US had breached the Order in various ways and informed it of this in October 2021. With no satisfactory resolution, in March 2022 Merck Global applied for a declaration that various uses of Merck breached the Order, which was granted in April 2024; 17 of the 33 uses breached the Order. Merck US appealed against the declaration, and the Court of Appeal dismissed the appeal by this judgment.

Grounds of Appeal

1 & 4: the declaration had been improperly granted

The court confirmed that there is no need to issue proceedings for contempt of court to enforce an order; it was perfectly legitimate to apply under either or both of the Court's general jurisdiction to grant a declaration under CPR Rule 40.20 (which states simply that "[t]he court may make binding declarations whether or not any other remedy is claimed") and paragraph 22 of the Order (which granted the parties "permission to apply for further directions and generally with regard to the implementation … of this Order"). 

Merck US had argued that these grounds were not the "legal standard" (see below) applicable to an allegation of breach of a court order; the correct legal standard was contempt of court, regulated by CPR Part 81 and the common law.  Furthermore, Merck US had argued that although the judge was entitled to resolve issues of interpretation of the Order by declaration, he had overstepped in making a declaration that specific acts constituted breaches of the Order. Consequently, the declaration had not been properly made.

The Court of Appeal disagreed. Lord Justice Arnold, giving the lead judgment, looked very carefully at the issue of the propriety of the declaration. 

On the issue of contempt of court, it was noted that Merck Global had stated in writing and in oral submissions to the first instance judge that it would not bring contempt proceedings in relation to the alleged breaches; this did not amount to an undertaking to the court but Merck Global said they were willing to give such an undertaking if required.

The law and procedure around contempt of court provide safeguards for those accused, for example by applying the criminal standard of proof rather than the civil standard. Those safeguards are needed because of the serious nature of the punishments if contempt is found:  imprisonment and fines for individuals, and fines and sequestration of assets for companies. But those safeguards are not needed where 1) no application for contempt has been made, 2) the applicant has formally stated one will not be made, and/or 3) where the applicant has undertaken not to make one.

There is nothing requiring the applicant in these circumstances to proceed by way of an application for contempt, and in the absence of such an application, the procedure and safeguards set out in Part 81 and the common law are not applicable. 

Furthermore, it was entirely appropriate for Merck Global to adopt this "low-key method of resolving the disputes … [Merck US's] contention, if accepted, would force litigants in the position of Merck Global instead to bring high-stakes applications for contempt of court. That would unnecessarily inflame such disputes when the courts should be enabling parties to have their disputes resolved in the most dispassionate, as well as efficient and proportionate, manner possible".

Arnold LJ referred to his judgment in Tesla v InterDigital ([2025] EWCA Civ 193) and stated that declarations, negative and positive, were governed by the following principles among others:

• Declarations are discretionary;
• They should serve a useful purpose;
• The underlying issue must be sufficiently clearly defined to render it properly justiciable; and
• To be properly justiciable there had to be an applicable rule or standard.

The legal standard applicable here was "provided by well-established principles concerning (i) the interpretation of court orders and (ii) fact-finding and evaluation … the exercise is conceptually no different to determining whether a party has acted in breach of contract".  Further, the declaration certainly served a useful purpose, giving concrete examples of infringing acts so as to assist with differentiating the brands and thereby complying with the Order going forward. 

The fourth ground of appeal was related; Merck US felt that the judge had not acted even-handedly by declaring which acts had breached the Order but not declaring which had not. This was dismissed quickly; Merck US had not applied for such a declaration and the judge had been entitled to frame the declaration as he had.

2. Targeting and trade mark use

The Order prohibited use in the United Kingdom. Merck US argued that the judge had erred here, as it had neither targeted the UK nor used Merck in a trade mark sense in the UK. The Court of Appeal disagreed.

Targeting

Mere accessibility of internet uses of a mark does not by itself constitute use in the UK; the uses must be targeted or directed at the UK. Reference was made to the Supreme Court's judgment in Lifestyle Equities v Amazon (UKSC/2022/0108) (see our analysis of that case here:  Ready, set, buy – Supreme Court holds that Amazon did target UK consumers | Fieldfisher), which states that targeting is a matter for the first instance judge to assess following a multi-factorial evaluation, in which appellate courts could only intervene if the judge had made an error of principle. 

The judge had not made an error of principle in this case. He had meticulously analysed the individual webpages and links in the context of the user's overall experience of the website and his conclusions that these uses had been targeted at the UK were upheld:

• Advertising a job which could be located in the UK, despite a disclaimer that the site was intended for residents of the United States and Canada;
• A chatbot headed with a Merck US logo used as an automatic pop-up on that same jobs website, which in response to a user enquiry about jobs in the EMEA region presented information about jobs in the UK;
• The availability only on the Merck US website (merck.com) of safety data sheets for Merck US products relating to the UK (and other territories), despite a pop-up informing users that the site was intended for residents of the US and Canada; and
• Links from one company website to Merck-branded news and company statements hosted on merck.com, despite two pop-ups informing the user that they were leaving one website and that the website they were entering was intended for residents of the US and Canada.

The overall assessment of the user's journey led to the conclusion that that not only could UK users easily access those links/pages, but that the UK had been targeted; the pop-ups and disclaimers were not enough to overcome that view.

Trade mark use

Merck US claimed that they had not used Merck in a trade mark sense in the UK because they had not sold or supplied goods or services in the UK under that mark, and therefore had not breached their obligations in the Order. The Court of Appeal upheld the judge's quote in the 2024 judgment:  "what has to be established here is a link between (a) the sign constituting the company or business name of the defendant and (b) the goods or services marketed by the defendant:  and if that link is established then there is not simply 'use' of the mark but 'use in the course of trade in relation to goods or services'". 

There was no need for the judge to have made findings of trade mark use in the UK in relation to specific goods and services; there was never any dispute that if Merck US were using the mark in the course of trade in the UK, they were doing so in relation to goods and services which were at least similar to those of Merck Global, and there was no need to go any deeper.

3.  Interpretation of the Order's exceptions

The Order set out specific acts which would not amount to breaches; the Court of Appeal upheld the first instance judge that none of the acts carried out could benefit from those exceptions.

After some discussion about where the burden of proof lay, the Court went on to consider the precise wording of each exception:

• Establishing and maintaining "any 'MSD-branded' UK-specific websites with links to a website at the domain merck.com" provided a particular pop-up was generated.

The msd.com website was targeted at all parts of the world outside the US and Canada, including the UK. It was held not to be "UK-specific", which "means what it says: specific to the UK. A website that is also targeted at other countries is not "UK-specific"".

• Using, "in the ordinary course of business, email addresses ending '@merck.com' for employees based outside the United Kingdom".

This did not include generic email addresses (whether or not they may have been monitored by UK employees). Generic email addresses had been specifically provided for in another paragraph of the Order and therefore if they were also included in the current exception, that specific provision would have been redundant which cannot have been what the parties intended.

• "inadvertently to act in breach" provided the error was rectified within 7 days.

This did not extend to "acts deliberately done … in the erroneous belief that such acts did not constitute breaches". To hold otherwise would mean that potentially all acts falling short of criminal contempt could be excluded. Inadvertent errors were genuine accidents, which were unintended as opposed to deliberate acts.  Merck US's breaches "arose against a background of conscious and deliberate (though honest) policy choices" and did not fall into this exception.

Comments

This relatively short judgment delivers some clear and practical guidance on how to enforce an injunction and how (not) to peaceably co-exist. 

Those seeking to co-exist would be wise to note that most if not all of the acts which had breached the Order had been done intentionally (not necessarily maliciously) and could potentially have been avoided fairly easily by structuring the websites/pages differently, running a parallel website, using effective geo-blocking and other similarly practical measures. Disclaimers will not be enough on their own to avoid infringement.