KGaA v Merck Sharp & Dohme Corp & Ors

An injunction enforcing contractual obligations must identify conduct sufficiently clearly to guide future compliance, while remaining tied to breaches established by the evidence. Where liability depends on a party’s instrumental or causative conduct, an order referring to the occurrence of a prohibited use does not impose liability for events wholly outside that party’s control.

Prospective carve-outs should reflect the rationale of the relief and established arrangements, rather than speculative future possibilities. Costs remain a matter for the court’s discretion. The general rule is only presumptive, and conduct, partial success and the significance of issues may justify a substantial reduction. An appeal should not be permitted merely to obtain a different evaluation of facts where no identifiable legal error is shown.

The judgment concerned the form of relief following earlier proceedings between Merck KGaA and Merck Sharp & Dohme Corp and related companies concerning contractual restrictions on the use of the name “Merck”, together with trade mark infringement and a counterclaim for revocation.

After the determination of remitted issues, the court addressed the wording of the declaration, injunction and carve-outs, the costs of the counterclaim, the amount of an interim costs payment, and the defendants’ application for permission to appeal. The central questions were how the established breaches should be characterised, how far prospective relief should extend, how costs should reflect mixed success and conduct, and whether any arguable error of law justified permission to appeal.

1. Form of declaration and injunction. The established breaches were properly characterised as use of “Merck” as a contraction of a corporate name or as a trade or business name, alone or with other words in formulations not permitted by the Agreement or lacking required distinguishing identifiers, when furthering or promoting business to third parties [4]. The injunction could refer to “use” rather than “using”. That wording did not impose liability for an event unless the defendant’s conduct was instrumental or causative in bringing it about [6].
2. Prospective relief. An injunction must provide clear guidance for future conduct. Its scope was confined to the context established by the evidence, namely furthering or promoting business to third parties. The court declined to extend it to speculative activities unsupported by evidence of an actual intention to undertake them [7].
3. Carve-outs. The carve-outs were framed to reflect their rationale and the existing arrangements. The court declined to create broader flexibility for future departures from the literal contractual terms or to accommodate speculative changes to website architecture [8]-[9].
4. Costs. Merck Sharp & Dohme was treated as the successful party on the counterclaim, so the general rule applied presumptively. The court nevertheless considered all the circumstances, including its conduct and the parties’ relative success on individual issues. The appropriate order was that it recover 50% of its counterclaim costs [13]-[16]. The interim costs payment was fixed at £2,370,500. Apportionment was to be assessed by reference to the practical work required, not by counting paragraphs in skeleton arguments or judgments [17]-[21].
5. Permission to appeal. Permission was refused. The defendants had not identified a sufficiently arguable error of law. Disagreement with the evaluation of the facts did not establish that the decision was unprincipled or obviously wrong [22].

The judgment followed earlier first-instance proceedings, an appeal and the determination of remitted issues. The citation of the appeal judgment is not stated in this judgment. This decision addressed the consequential form of order, costs and permission to appeal.