Merck KGaA v Merck Sharp & Dohme LLC & Anor

Factual and Procedural Background

This appeal concerns an order made by Judge Johnson on 24 April 2024, declaring that certain uses of the term "Merck" by the Appellants breached paragraphs 2 and/or 3 of a prior order dated 28 July 2020 ("the Final Order"). The dispute arises from a long-running conflict between the Claimant ("Merck Global"), a German pharmaceutical company, and the Defendants collectively known as "Merck US," comprising several companies based in New Jersey, England, and the Netherlands.

The origins of the dispute trace back to separate businesses using the "Merck" name in different territories, governed by a series of agreements beginning in 1932, with a key 1970 Agreement and a 1975 Protocol regulating the use of the "Merck" name and trademarks between Merck Global and Merck US. Over time, Merck Global alleged that Merck US had breached these agreements, particularly following a 2009 merger that expanded Merck US's global presence.

Litigation began in 2013 with claims of breach of the 1970 Agreement and trademark infringement. Several judgments followed, including findings of breach and infringement by the Defendants, and injunctions to restrain further breaches. The Final Order of 28 July 2020 set out specific prohibitions and exceptions regarding the use of the "Merck" name and trademarks in the UK.

Merck Global applied in March 2022 for a declaration that certain uses of "Merck" by the Defendants breached the Final Order. The application identified 55 alleged breaches across 33 categories. After extensive written and witness evidence and a hearing in December 2023, the judge issued a detailed judgment on 12 April 2024, finding breaches in 17 categories and dismissing others. The consequential order was made on 24 April 2024. The Appellants now appeal against this order on four grounds.

Legal Issues Presented

1. Whether declaratory relief was a proper remedy for alleged breaches of the Final Order, or whether contempt proceedings under CPR Part 81 were the exclusive remedy.
2. Whether the judge erred in finding that the Appellants "targeted" the UK in their use of "Merck" contrary to paragraphs 2 and 3 of the Final Order.
3. Whether the judge erred in holding that the Appellants used "Merck" as a trade mark in relation to goods or services in the UK in breach of paragraph 3.
4. Whether the judge misinterpreted paragraphs 4(b), (d), and (h) of the Final Order, which provide exceptions to breaches.
5. Whether the judge should have made declarations concerning breaches not established as well as those established.

Arguments of the Parties

Appellants' Arguments

• The judge was wrong to grant declaratory relief for specific breaches, arguing that the proper procedure was to bring contempt proceedings under CPR Part 81, which provides procedural safeguards including the criminal standard of proof.
• The judge incorrectly found that the Appellants targeted the UK in several instances, contending that mere accessibility of websites or materials in the UK is insufficient without targeting or direction at UK users.
• The judge erred in concluding that the Appellants used "Merck" as a trade mark in relation to goods or services in the UK, since Merck US had not sold or supplied goods or services in the UK under the sign "Merck".
• The judge misinterpreted paragraphs 4(b), (d), and (h) of the Final Order, particularly the meaning of "UK-specific" websites, the scope of email address exemptions, and the definition of "inadvertent error".
• The judge should have made declarations regarding breaches not established to ensure even-handedness.

Appellee's Arguments

• Declaratory relief was appropriate and useful to clarify the parties' positions without resorting to contempt proceedings, which involve harsher sanctions and procedural safeguards unnecessary here since no such sanctions are sought.
• The judge correctly applied the law on targeting, making fact-sensitive assessments of whether the Appellants' online materials were directed at UK users, including consideration of disclaimers and pop-ups, and found targeting established in specific instances.
• The judge properly found trade mark use in the UK given the link between the sign "Merck" and goods or services marketed by the Appellants, supported by the parties' own acknowledgments.
• The judge correctly interpreted the Final Order's exceptions, concluding that "UK-specific" means exclusive to the UK, generic email addresses are not covered by paragraph 4(d), and "inadvertent error" means genuine accidents rather than deliberate acts done under mistaken belief.
• The judge was entitled to exercise discretion in framing the declaration and was not required to declare on breaches not established.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
JSC BTA Bank v Ablyazov (No 10) [2015] UKSC 64	Use of declaratory relief to resolve issues of interpretation of court orders.	The court accepted declaratory relief as a proper mechanism for clarifying parties' rights under the Final Order.
Amstrad Consumer Electronics plc v British Phonographic Industry Ltd [1986] FSR 159	Caution in granting declarations that may prejudice criminal proceedings.	The court distinguished the present case as no criminal offence was alleged, so the caution did not apply.
Hotel Cipriani v Fred 250 Ltd [2013] EWHC 70 (Ch)	Utility and appropriateness of declaratory relief to enforce injunctions without seeking penal sanctions.	Supported the utility of low-key declaratory relief in disputes over compliance with injunctions.
Lifestyle Equities CV v Amazon UK Services Ltd [2024] UKSC 8	Principles on "targeting" in internet use for trade mark infringement and breach of court orders.	The court applied the targeting principles to assess whether online use was directed at UK users, affirming the first instance judge's fact-sensitive approach.
Bank St Petersburg v Arkhangelsky [2014] EWHC 574 (Ch)	Discretion in granting declarations of breach and the utility of such declarations.	The court found no real utility in declarations in that case; distinguished from the present case where utility was found.
Invest Bank PSC v El-Husseini [2023] EWHC 3350 (Comm)	Consideration of utility and procedural fairness in granting declarations of breach.	The court declined declaration due to lack of practical utility; did not deny jurisdiction, contrasting with the present case.
Tesla, Inc v InterDigital Patent Holdings, Inc [2025] EWCA 193	Principles governing the granting of declaratory relief and the requirement for justiciability.	The court reaffirmed that declarations are discretionary and require a clearly defined legal issue; applied these principles to uphold the judge's approach here.
Nokia Corp v InterDigital Technology Corp [2006] EWHC 802 (Pat)	Statement of principles on granting negative declarations and justiciability.	The court applied these principles to support the use of declaratory relief in the present dispute.
Argos Ltd v Argos Systems Inc [2018] EWCA Civ 2211	Principles on "targeting" in internet trade mark use cases.	The court cited this precedent in summarizing the law on targeting, which was followed in the present case.

Court's Reasoning and Analysis

The court undertook a detailed and methodical review of the issues raised on appeal. On the propriety of declaratory relief, the court emphasized that such relief is discretionary and useful to clarify parties' rights without the procedural burdens and sanctions associated with contempt proceedings. The court noted that since the Claimant had undertaken not to pursue contempt for past breaches, the procedural safeguards of CPR Part 81 were unnecessary. The court found no principle precluding declarations of breach and distinguished cases where declarations lack utility.

Regarding the question of targeting, the court applied established legal principles requiring that use of a mark on the internet be directed or targeted at UK users to constitute use in the UK under the Final Order. The court accepted the judge's fact-sensitive approach, which involved evaluating individual instances of online use in context, including considering disclaimers and pop-ups. The court rejected the Appellants' criticisms of the judge's assessment, finding no error of principle in his conclusions on targeting.

On trade mark use under paragraph 3, the court found that the judge correctly applied the law requiring a link between the sign used and the goods or services marketed. The judge reasonably found such use in the UK, supported by the parties' own admissions and the nature of the goods and services involved. The court rejected arguments that findings should specify particular goods or services, reasoning that the extensive lists provided were sufficient.

In interpreting paragraphs 4(b), (d), and (h) of the Final Order, the court agreed with the judge that "UK-specific" means targeted exclusively at the UK, that paragraph 4(d) does not extend to generic email addresses, and that "inadvertent error" in paragraph 4(h) means genuine accidents rather than deliberate acts done under mistaken belief. The court endorsed the judge's reasoning that the burden of proof shifts in respect of paragraph 4(h), and that the exceptions are not so broad as to swallow the prohibitions.

Finally, the court upheld the judge's discretion in framing the declaration to cover only breaches found established, noting that no cross-application was made for declarations on breaches not found.

Holding and Implications

The court DISMISSED THE APPEAL.

The effect of this decision is to affirm the order declaring that certain uses of "Merck" by the Appellants breached the Final Order. This provides clarity and certainty for the parties regarding the application of the Final Order and the scope of permissible use of the "Merck" name and trademarks in the UK. The court emphasized the utility of declaratory relief as a proportionate and efficient means of resolving such disputes without resort to contempt proceedings. No new precedent was established beyond the application of existing principles to the facts of this case.