Merck KGaA v Merck Sharp & Dohme LLC & Ors

Declaratory relief may determine whether conduct breaches an existing intellectual-property injunction where there is a real commercial reason and the declaration will usefully clarify future compliance. The court must assess the circumstances sensitively, including fairness, utility and any overlap with contempt jurisdiction.

An injunction is construed objectively, in context and restrictively where breach may have penal consequences. An inadvertent error exception ordinarily protects a genuine accident, not an intended act carried out under a mistaken view of the order. Internet use is targeted at the United Kingdom only where the overall circumstances show that the relevant activity is directed there. Mere accessibility is insufficient.

The claimant sought declarations that the defendants had breached an order made in the action restricting use of the name and trade mark Merck in the United Kingdom. The application concerned numerous online and offline materials, including websites, links, publications, email addresses, social-media content, recruitment material and safety-data sheets.

The defendants argued that the application should be confined to construction of the order and should not determine alleged breaches. They relied on exceptions in paragraph 4, including provisions concerning UK-specific websites, overseas employees’ email addresses and inadvertent error. The central issues were the scope of declaratory relief, construction of the order, targeting, trade-mark use, burden of proof and the application of those exceptions.

1. Declaratory relief. The court exercised its discretion to determine the alleged breaches in Annex 2 and to grant declarations where breaches were established. The application was not confined to an abstract construction exercise. Full declarations had real utility in a long-running commercial dispute and would help reduce future disagreement. The safeguards applicable to contempt proceedings did not prevent the court deciding the civil application, particularly as no contempt sanction would be sought for pre-judgment conduct.
2. Construction and evidence. Orders are construed objectively, by their natural and ordinary meaning, in their historical and legal context and having regard to their purpose. Injunctions are strictly or restrictively construed. The burden lay on the claimant to establish breaches of paragraphs 2 and 3. Where paragraph 4(h) was relied upon, the defendants had to establish both an inadvertent error and correction within seven days. The standard was the balance of probabilities. Untested witness evidence could not ordinarily be rejected where conflicts could only be resolved by cross-examination.
3. Paragraph 4(h). An inadvertent error meant a genuine accident: something unintended or undesired which occurred when another result was intended. It did not generally include an intended use made under a mistaken belief that the use was permitted. The exception was therefore unavailable for deliberate branding choices, generic email addresses knowingly used, or failures to appreciate the legal restriction.
4. Targeting and trade-mark infringement. Targeting was required for both contractual use within the United Kingdom and trade-mark infringement. The inquiry was an objective, multifactorial assessment of all relevant circumstances from the perspective of the reasonably informed, reasonably observant and circumspect consumer. Mere accessibility was insufficient. Trade-mark infringement additionally required use of the sign as a trade mark, in the course of trade, in relation to relevant goods or services, with the required effect on the mark’s essential function.
5. Application and outcome. Breaches were established in relation to Rows J, K, L, P, Q, R, S, T, U, parts of V and W, AA, BB, DD, EE, FF and HH. Other alleged breaches were not established, principally because the activity was not targeted at the United Kingdom, fell within an exception, was not trade-mark use, or was an inadvertent error. The application succeeded in part. Declarations were to be made in accordance with the table of conclusions, with consequential matters and the form of relief adjourned.

1. Court of Appeal: The appeals from the original trial judgment were allowed in part and certain issues were remitted: [2017] EWCA Civ 1834.
2. High Court: The remitted issues were determined and injunctive relief was granted: [2020] EWHC 1273 (Ch). The form of order was subsequently addressed in [2020] EWHC 2120 (Ch).
3. High Court (present decision): The application for declarations of breach succeeded in part.