Introduction

The case of Merck KGaA v Merck Sharp & Dohme LLC & Anor ([2025] EWCA Civ 343) represents a pivotal moment in the enforcement of court orders relating to trademark usage, particularly in an era marked by an increasing digital presence. The dispute has its roots in a long-standing conflict between two corporate entities with deep historical ties – Merck Global, a German pharmaceutical giant with origins dating back to 1668, and Merck US (comprising subsidiaries such as MSD and Merck & Co.), a New Jerseybased company. Central to the litigation is the alleged breach of the Final Order issued on 28 July 2020, which itself revised agreements dating back to 1955, 1970 (the 1970 Agreement), and the subsequent 1975 Protocol regulating the use of the “Merck” name internationally.

Merck Global, seeking to restrain the use of the “Merck” brand outside its permitted territories (i.e. the United States, Canada, Cuba, and the Philippines), initiated proceedings alleging breaches in how the MSD Defendants were using “Merck” in the United Kingdom – particularly in digital contexts where “targeting” UK internet users was a contentious issue. The underlying legal challenge involved how the digital environment interacts with traditional trademark obligations stipulated by historical cross-border agreements.

Summary of the Judgment

In a meticulously reasoned judgment spanning 514 paragraphs, the trial judge (and subsequently, this Court) considered a vast array of evidentiary material and legal arguments. The final order, as confirmed on 24 April 2024 and upheld on appeal, declared that certain uses of “Merck” – as manifested in various online materials and other communications – breached paragraphs 2 and 3 of the Final Order.

Specifically, the judgment found that:

• Merck US (and its subsidiary MSD) breached contractual obligations by using the “Merck” trademark in the United Kingdom in ways deemed to be “targeted” at UK users, thereby contravening the clear territorial limitations imposed by the 1970 Agreement and associated protocols.
• The judge’s decision encompassed a detailed evaluation of numerous “rows” of alleged breaches (annotated A to HH in Annex 2) and ultimately held that breaches were established in respect of 17 rows, while 18 rows were not found to be in breach.
• Declaratory relief was awarded, confirming that the act of using “Merck” in specific digital and advertising contexts constituted breaches, while also providing a mechanism to guide the parties’ future conduct. Importantly, the judge emphasized that this relief was not tantamount to launching contempt proceedings but was instead a means to clarify the parties’ legal obligations and enforce the Final Order in a proportionate manner.

Analysis

Precedents Cited

The judgment makes extensive reference to several landmark cases, which served as key precedents in shaping its reasoning:

• Hotel Cipriani v Fred 250 Ltd – This case provided guidance on using declaratory relief as a “low‐key” mechanism to enforce injunctions without immediately resorting to criminal contempt proceedings.
• Lifestyle Equities CV v Amazon UK Services Ltd – The principles regarding “targeting” online users were reaffirmed here, underscoring the necessity of a holistic analysis of the user experience in determining whether online content is intended for UK audiences.
• Argos Ltd v Argos Systems Inc – Reinforced the idea that digital content and online routes must be evaluated for their geographic targeting features.
• Tesla, Inc v InterDigital Patent Holdings, Inc – Although primarily cited by the Appellants, the case was considered in relation to the appropriate legal standards for declaratory relief and the procedural confines between civil and quasi‐criminal proceedings.
• Nokia Corp v Interdigital Technology Corp – Its clear statement on the need for an applicable legal standard was influential in shaping the analysis of declaratory versus contempt proceedings.

Legal Reasoning

Two central threads run throughout the judgment. The first is the application of the established contractual framework derived from the 1970 Agreement and the 1975 Protocol. Within this framework, the court had to resolve competing interpretations about whether the use of “Merck” in digital spaces – by virtue of “targeting” techniques – constituted a breach of the Final Order. The judge’s approach was to conduct a fact‐sensitive and granular analysis of the digital presence (for example, examining job advertisements, chatbots, safety data sheets, and linked news releases) to determine if they were intended for or accessible to UK consumers.

The second thrust of the reasoning concerned the proper use of declaratory relief. The judgment emphasized that declarations could serve as an effective mechanism to delineate the rights and obligations of the parties without the harsher consequences that might accrue if the relief were secured via contempt proceedings. The Court held that where no sanction is sought, and where both parties are likely to adjust their conduct upon clarification of the law, a declaratory remedy is both just and efficient.

Lastly, in addressing the Appellants’ contention that such matters should be subject solely to the safeguards of CPR Part 81 (contempt proceedings), the judgment made clear that the issues here were contractual breaches rather than criminal infractions. The court distinguished between the procedural rigor required for contempt and the simpler, doctrinally-driven process appropriate for declaratory relief.

Impact

The implications of this judgment are wide-ranging:

• Clarification of Enforcement Mechanisms: The decision cements the principle that declaratory relief can be used effectively to enforce court orders relating to trademark use, especially in digital contexts. Litigants now have a clear pathway to indirectly prevent further breaches without immediately triggering punitive contempt proceedings.
• Digital “Targeting” Standard: By rigorously analyzing what constitutes “targeting” in a digital space, this judgment provides a model that future courts may adopt when evaluating online trademark use. It underscores that mere accessibility is insufficient; rather, evidence must demonstrate that such content is specifically directed at UK audiences.
• Burden Shifting in Error Analysis: The treatment of inadvertent errors (particularly under paragraph 4(h) of the Final Order) clarifies the extent to which a party must prove a mistake was genuine and unintentional. This may well influence future disputes where intent and awareness are central issues.

Complex Concepts Simplified

Several legal concepts featured prominently in the judgment. Here is a breakdown:

• Declaratory Relief: This is a court-issued declaration that clarifies the legal rights and obligations of the parties, without directly imposing sanctions. It functions as a “low-key” enforcement mechanism particularly useful in complex contractual disputes.
• Targeting: In the online context, “targeting” refers to the deliberate direction or offering of content to a specific geographic audience. The judgment makes it clear that for a breach to be established, merely being available on the internet is insufficient; the content must be purposefully aimed at UK users.
• Burden of Proof in Inadvertent Errors (Paragraph 4(h)): The judgment explains that if a breach is asserted, the burden shifts to the defending party (MSD Defendants) to prove that any error was accidental and corrected promptly, rather than being a deliberate or conscious violation.
• Use in the Course of Trade: When determining “use” of a trademark, particularly under paragraph 3 of the Final Order, it is not enough that the mark appears; there must be a demonstrable link between the mark's display and its role in marketing or promoting goods and services in the UK.

Conclusion

The Court of Appeal’s ruling in Merck KGaA v Merck Sharp & Dohme LLC & Anor not only reaffirms the importance of respecting international trademark agreements but also recognizes declaratory relief as a pragmatic and proportionate remedy. By dissecting the factual matrix of each alleged breach and by emphasizing the nuanced standards required for establishing “targeting” online, the judgment provides critical guidance for future cases in the evolving digital landscape.

Overall, this decision is significant not only for its immediate impact on Merck Global and Merck US but also for its broader implications regarding judicial enforcement mechanisms. Legal practitioners can now point to this judgment as a persuasive authority when advising clients on how to structure court orders to address potential breaches in the online environment, thereby balancing effective enforcement with fairness and proportionality.