English appeals court weighs in on ‘Merck’ TM battle

The English Court of Appeal today handed down its decision in a dispute between pharmaceutical company Merck Sharp & Dohme (MSD) Corp and its German rival Merck KGaA, offering a mixed ruling.

The case also involves Merck & Co (MSD’s equivalent in the US and Canada) and Merck Sharp & Dohme Ltd (a subsidiary) on the side of MSD, with the three referred to as Merck US in the decision.

In January 2016, the English High Court found that MSD’s use of the ‘Merck’ trademark violated a previous agreement with its German rival.

Merck was founded in Germany in 1668, but has since split into several companies.

In 1955, an agreement restricted the US company’s use of the ‘Merck’ name. Under the agreement, the US company could use the name as long as an indicator of its geographic origin appeared prominently next to it. The deal was updated in 1970.

Then, in November 2009, Merck US merged with a competitor, Schering-Plough, to form one of the largest healthcare organisations in the world, according to the Court of Appeal.

From this time, the German company became concerned at what it “perceived to be a substantial growth” in the use by Merck US of the word “Merck” outside the US and Canada.

The use included a number of websites: merck.com; merckformothers.com; mercknewsroom.com; merckresponsibility.com; and merckmanuals.com.

Merck KGaA complained that the domains were an infringement of the agreement, but the US company argued that the websites were only directed to a US audience.

In rejecting the US company’s argument, Mr Justice Norris found in 2016 that the websites were accessible by UK users and a violation of the German company’s trademarks.

Norris also held that Merck KGaA was entitled to an order restraining MSD from describing itself in any printed or digital material addressed to the UK as “Merck” and restraining MSD’s use in the UK of the trademark ‘Merck’ alone.

On appeal, MSD argued that the judge had failed to have any “adequate regard” to the principle of honest concurrent use and should have found that MSD had an own name defence.

The US company also argued that the judge “erroneously allowed” Merck KGaA to “retain impermissibly broad specifications of goods for its trademark registrations”, and that even if there were infringing uses, these were de minimis.

Lord Justice Kitchin, on behalf of the Court of Appeal, dismissed most of the appeal on infringement, but did remit for hearing whether the MSD’s activities constituted use in the UK in relation to any relevant goods and services, and whether any of the uses were de minimis.

The High Court had also found that the relevant trademark registrations should be revoked in respect of some of the goods and services on the ground of non-use.

MSD said the judge should have gone further, saying he ought to have revoked the marks in relation to “pharmaceutical substances and preparations”.

The appeals court remitted this issue to the High Court.

The court also confirmed Norris’s finding that MSD’s use of ‘Merck’ alone in the UK amounted to breach of contract, and remitted the issue of the appropriate form of any relief to be decided.

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