MERCK KGaA v. MERCK SHARP & DOHME CORP AND OTHERS

HCIP 64/2019

[2025] HKCFI 6436

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

INTELLECTUAL PROPERTY PROCEEDINGS NO 64 OF 2019

(Transferred from HCA 1087 of 2018 pursuant to the order
of the Honourable Mr Justice Lok dated 5 November 2019)

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D E C I S I O N

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1.  There are two summonses before the court with each party seeking leave to amend its respective pleading. It is unnecessary to set out the background facts for the purpose of this Decision. They can also be found in the Decision given by Lok J on 8 November 2023: [2023] HKCFI 2885 (“the 2023 Decision”).

A.  PLAINTIFF’S SUMMONS TO AMEND

2.  I start with the Plaintiff’s summons to amend.  The Plaintiff has categorised its proposed amendments into three groups.  I will deal with them in turn.

A1.  The Miscellaneous Amendments

3.  The first group comprises the various miscellaneous proposed amendments at paragraphs 5(a), 6A, 46(e), 47 and 47(c)  of the draft Re-Re-Amended Statement of Claim (“draft RRASOC”).  The 1^st and 3^rd Defendants (“the Defendants”)  have no objection to these proposed amendments.  I give leave to the Plaintiff to plead these proposed amendments.

A2.  The First Set of Amendments

4.  The next group comprises the proposed amendments at paragraphs 35B, 35C (together with Annex K), 46(h), 47(f)  to (l), 47C and 49A(i)  to (dd)  of the draft RRASOC (“the First Set of Amendments”). 

5.  In considering whether leave should be given to raise a new claim in an existing action, I have borne in mind what the Court of Appeal described in Shenzhen Futaihong Precision Industry Co Ltd v BYD Co Ltd [2019] 2 HKC 175 at [74] as the well-established three-stage test, namely:

(1)  Stage 1: Is it reasonably arguable that the opposed amendments are outside the applicable limitation period?  If not, then the amendments fall to be considered under the general principles governing amendment applications.

(2)  Stage 2: If the answer to (1)  is yes, do the proposed amendments seek to add or substitute a new cause of action? If not, then again the amendments fall to be considered under the general principles governing amendment applications.

(3)  Stage 3: If the answer to (2)  is yes, does the new cause of action arise out of the same or substantially the same facts as are already in issue in the existing claim?  If not, the amendments cannot be allowed.  If so, then the court has a discretion to allow or refuse the amendments in accordance with the general principles governing amendment applications.

6.  For the purpose of this application, it is common ground that the applicable limitation period is the 6-year period immediately prior to the date of the present summons for leave to amend issued on 30 June 2025.  I understand that this common ground is reached as a result of the application of ss. 35(1)(b), 35(2)(a)  and 35(3)  of the Limitation Ordinance (Cap 347).

7.  Out of the First Set of Amendments, the Defendants submit that the matters pleaded in paragraphs 47C and 49A(i)-(n)  fall outside the 6-year limitation period. 

(1)  In paragraph 47C, the Plaintiff pleads that “From between 2005 to date, employees of the 3^rd Defendant have used ‘Merck’ in their LinkedIn profiles”, and relies on a few screenshots taken in 2024 and 2025 as examples.  The Plaintiff confirms in its skeleton that it is only relying on acts within the 6-year period prior to 30 June 2025, which is the date when the present application was taken out.

(2)  In the light of this confirmation, the Plaintiff should be taken to confine paragraph 47C to the use of “Merck” in the 3^rd Defendant’s employees’ LinkedIn profile from June 2019 to date.  In these circumstances, I do not think it is reasonably arguable for the Defendants to contend that this falls outside the applicable limitation period.  I also fail to see any evidential basis for the Defendants to suggest that the screenshots in the proposed amendments were taken prior to June 2019.  I will consider this proposed amendment together with the rest of the First Set of Amendments under the general principles later.

(3)  For paragraphs 49A(i)-(n), the events pleaded are matters from November 2012 to April 2018.  In their context, it appears the proposed amendments are particulars to support “actual confusion, a likelihood of confusion or that are likely to contribute to confusion in Hong Kong”, as pleaded in the first sentence of the existing paragraph 49A.  I do not consider these proposed amendments seek to add a new cause of action.  Further, I accept the Plaintiff’s submission that these are matters which are necessary to be pleaded to support the element of likelihood of confusion.  I will consider these together with the rest of the First Set of Amendments under the general principles later.

8.  For all the proposed amendments under the First Set of Amendments, the Defendants oppose them on grounds of unexplained delay and the prejudice that would ensue in allowing a significant expansion of the Plaintiff’s case at this stage.

(1)  Under RHC O.20 rr.5(1)  and 8(1), the court may “at any stage of the proceedings” order a pleading to be amended.

(2)  The court’s guiding principles on the exercise of discretion to allow or refuse an amendment of pleadings post-CJR remain the same as those laid down by the House of Lords in Ketteman v Hansel Properties Ltd [1987] AC 189 at 212, namely:

(a)  All such amendments should be made as are necessary to enable the real questions in controversy between the parties to be decided.

(b)  Amendments should not be refused solely because they have been made necessary by the honest fault or mistake of the party applying for leave to make them: it is not the function of the court to punish parties for mistakes which they have made in the conduct of their cases by deciding otherwise than in accordance with their rights.

(c)  However blameworthy (short of bad faith)  may have been a party’s failure to plead the subject matter of a proposed amendment earlier, and however late the application for leave to make such amendment may have been, the application should, in general, be allowed, providing that allowing it will not prejudice the other party.

(d)  There is no injustice to the other party if he can be compensated by appropriate orders as to costs.

(3)  Nonetheless, the Court must now also take into account the underlying objectives in RHC O.1A to decide how its discretion should be exercised.  A pertinent consideration in giving effect to the underlying objectives is that the court “shall always recognise that the primary aim in exercising the powers of the Court is to secure the just resolution of disputes in accordance with the substantive rights of the parties”: RHC O.1A r.2(2). See Topwell Corp Ltd v Kwan Kam Kee [2014] 5 HKLRD 1 at [39] (Kwan JA).

(4)  In this case, witness statements have been exchanged.  This matter has now progressed to the stage where the parties are engaged in discussions on expert evidence.  The Plaintiff contends that some of the proposed amendments in question are to reflect the findings made in the decisions in the English proceedings, including the English Court of Appeal’s judgment involving the parties in [2025] EWCA Civ 343 handed down in March 2025.  The Plaintiff has also said in correspondence that some of the proposed amendments arose from the documents disclosed during discovery by both parties in March 2024.  In these circumstances, I do not believe the Plaintiff has been guilty of significant delay.  Further, I am unable to agree with the Defendants’ submission that the proposed amendments will put the parties “back to square one, causing further delay to the resolution of this dispute”.  In any event, in the context of the present case, I am not satisfied that it is appropriate to disallow the proposed amendments on the basis of delay. 

(5)  As far as the Defendants’ submission that they will suffer prejudice by being required to prepare further evidence with specific responses to the proposed amendments after so many years, it seems to me that such prejudice may be compensated by appropriate orders as to costs.

(6)  As to the Defendants’ submissions that various proposed amendments involve trivial allegations, the court is not at this stage in a position to determine the extent of confusion brought about by the Plaintiff’s allegations.  I am not prepared to shut out the proposed amendments on the basis of the alleged triviality. 

(7)  In my view, in order to secure the just resolution of the disputes, and to enable the real questions in controversy between the parties to be decided, I would allow these proposed amendments.

9.  For the above these reasons, I allow all the proposed amendments under the First Set of Amendments.

A3.  The Second Set of Amendments

10.  The last group in the Plaintiff’s application comprises the proposed amendments at paragraphs 31A (together with Annex I), 31B (together with Annex J), 35A, 46(f)-(g), 47(d)-(e), and 47B(a)-(e)  of the draft RRASOC (“the Second Set of Amendments”).

11.  The Defendants contend that all of these proposed amendments are objectionable because they are claims falling outside the 6-year period from the date of the application for leave to amend (i.e. 30 June 2019).

12.  As to the proposed amendments in paragraphs 31A, 31B and 35A, they relate to the 1^st Defendant’s alleged use of the name and/or mark “MERCK” as at 2018 on three specific websites operated by the 1^st Defendant. 

(1)  It seems to me that the Defendants have an arguable limitation defence under Stage 1.

(2)  Stage 2 involves asking whether the proposed amendments seek to add a new cause of action.  To determine the answer, I compare the essential factual elements in the cause of action already pleaded with the essential factual elements in the cause of action as proposed: Shenzhen Futaihong at [83]-[84].

(3)  The Plaintiff’s already pleaded causes of action against the 1^st Defendant are for breach of the 1970 Agreement and trade mark infringement.  The alleged breach/infringement was the use of the name and/or mark “MERCK” on an integrated group of websites accessible by and directed at users in Hong Kong.  In my view, I do not think the proposed amendments go beyond the original pleaded causes of action.  I am unable to agree with the Defendants’ submission that each alleged use of “MERCK” would be a distinct wrong and constitute a new cause of action.  I agree with the Plaintiff that the proposed amendments are further particulars of the already pleaded causes of action.  As Millett LJ said in Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400 at 405, “[the] pleading of … the addition of further instances or better particulars do not amount to a distinct cause of action.  The selection of the material facts to define the cause of action must be made at the highest level of abstraction.”

(4)  If it were necessary to proceed to Stage 3 because the proposed amendments constitute a new cause of action, I would have come to the view that they arise out of substantially the same facts as are already in issue in the Plaintiff’s existing claim for breach of the 1970 Agreement and trade mark infringement.

(5)  The Defendants rely heavily on an acceptance made by the Plaintiff at a hearing before Lok J in March 2023.  On that occasion, the Plaintiff sought to add paragraph 47A to the Amended Statement of Claim but Lok J disallowed 4 out of the 6 sub-paragraphs in paragraph 47A in the light of the Defendants’ time-bar objection.  In [16] of the 2023 Decision, Lok J recorded the Plaintiff’s confirmation that it would not rely on facts and events which occurred before 10 August 2016, which was 6 years prior to the amendment application.  Nonetheless, the Plaintiff argued that such facts and events should still be allowed to be pleaded because (a) they would enable the Plaintiff to obtain injunctive relief against the Defendants and (b)  they would constitute evidence to assist the Plaintiff.  In [17] to [19] of the 2023 Decision, Lok J rejected the arguments and gave two reasons for his rejection. 

(6)  It seems to me that the Plaintiff’s acceptance in 2023 was only in relation to the then proposed amendments to paragraph 47A.  I do not believe it is right for the Defendants to describe it as a concession on the part of the Plaintiff to the effect that “the limitation period had expired in relation to any alleged uses of the “MERCK” name or mark by Ds more than 6 years prior to the amendment application”.  Further, I do not read [16] to [19] of the 2023 Decision as rejecting the same arguments which are being made by the Plaintiff in the present application in relation to Stages 2 and 3, which do not appear to have been argued in 2023.  As mentioned above, Lok J was dealing specifically with the then proposed paragraph 47A which referred to matters that occurred before the 6-year period prior to the amendment application.  In these circumstances, I am unable to agree with the Defendants’ submission that [16] to [19] of the 2023 Decision are directly applicable to disallow the proposed amendments in this application.

(7)  I repeat what I said earlier about the Defendants’ submissions on delay and prejudice.  In order to secure the just resolution of the disputes, I allow these proposed amendments.

13.  As to the proposed amendments in paragraphs 46(f)-(g)  and 47(d)-(e), they relate to the alleged use of the domain “@merck.com” as email addresses by the 3^rd Defendant in July and October 2017, and May 2018. 

(1)  I consider that the Defendants have an arguable limitation defence under Stage 1.

(2)  The Plaintiff’s already pleaded causes of action against the Defendants are for breach of the 1970 Agreement and trade mark infringement by the use of various email addresses with the domain “@merck.com” in Hong Kong.  Accordingly, I do not think the proposed amendments seek to add a new cause of action.  In my view, the proposed amendments are further particulars of the already pleaded causes of action.

(3)  If it were necessary to proceed to Stage 3 because the proposed amendments constitute a new cause of action, I would have come to the view that they arise out of substantially the same facts as are already in issue in the Plaintiff’s existing claim for breach of the 1970 Agreement and trade mark infringement.

(4)  I repeat what I said earlier about the Defendants’ submissions regarding new cause of action, relevance of the 2023 Decision, delay and prejudice.  In order to secure the just resolution of the disputes, I allow these proposed amendments.

14.  As to the proposed amendments in paragraph 47B(a)-(e), they relate to the alleged use of the word/mark “MERCK” in events in Hong Kong in 2017.

(1)  I think the Defendants have an arguable limitation defence under Stage 1.

(2)  The Plaintiff’s already pleaded causes of action against the Defendants are for breach of the 1970 Agreement and trade mark infringement by the use of the name/mark “MERCK” in publications, events and promotional materials in Hong Kong.  In particular, the Plaintiff has already pleaded that from between 10 August 2016 to date, the Defendants have used/approved the use of the word/mark “MERCK” in events in Hong Kong and/or promotional materials for events used in Hong Kong and/or sent or directed to recipients in Hong Kong.  In my view, the proposed amendments do not go beyond the original pleaded causes of action and are further particulars of the same.

(3)  If it were necessary to proceed to Stage 3 because the proposed amendments constitute a new cause of action, I would have come to the view that they arise out of substantially the same facts as are already in issue in the Plaintiff’s existing claim for breach of the 1970 Agreement and trade mark infringement.

(4)  I repeat what I said earlier about the Defendants’ submissions regarding new cause of action, relevance of the 2023 Decision, delay and prejudice.  In order to secure the just resolution of the disputes, I allow these proposed amendments.

A4.  Conclusion on the Plaintiff’s Summons

15.  For all of the above reasons, I give leave to the Plaintiff in relation to all of the proposed amendments as set out in purple in the draft RRASOC.

B.  1^ST AND 3^RD DEFENDANTS’ SUMMONS TO AMEND

16.  By their summons dated 30 June 2025, the Defendants seek leave to amend their pleading to introduce two sets of proposed amendments.  I start with those in paragraph 56B of the draft Re-Re-Amended Defence and Counterclaim (“draft RRADCC”).

B1.  Proposed Amendments in Paragraph 56B

17.  The contentious parts are the proposed amendments in paragraphs 56B(a)  and 56B(b). The Plaintiff does not object to those in paragraph 56B(c).

18.  As to paragraphs 56B(a)  and 56B(b)  of the draft RRADCC, the proposed amendments relate to the issue of whether the impugned publications target Hong Kong for the purpose of the Plaintiff’s breach of contract and trade mark infringement claims.  The Defendants contend that under German contract law, the Plaintiff has to establish that the impugned uses of the “MERCK” mark either has its main focus in Hong Kong or, if not, there is a sufficient commercially relevant domestic connection or a “commercial effect” within Hong Kong. 

19.  The Plaintiff objects to the proposed amendments on the ground that the issue of whether the impugned uses of the “MERCK” mark targeted at Hong Kong should be determined by applying the lexi fori, i.e. Hong Kong law.  Detailed submissions have been put forward to support its position, including references to the English Court of Appeal’s decision involving the same parties in [2017] EWCA Civ 1834.

20.  It is common ground that the 1970 Agreement is governed by German law for the purposes of these proceedings.  However, a dispute has arisen between the parties on the question of what law should govern the manner of performance of the 1970 Agreement.  I am not in a position to say that the proposed amendments are bound to fail.  In these circumstances, it is undesirable for this question to be resolved in an amendment application at an interlocutory stage.  Although the Plaintiff has cited a few authorities, including an English Court of Appeal’s decision in 2017 involving the same parties, to support its position, it seems to me that the matter should be determined at the trial.  After properly construed the 2017 Agreement, and after hearing all the relevant evidence from the parties, the trial judge will be in the best position to decide whether the German law concept of “commercial effect” has any relevance in the Plaintiff’s breach of contract claim.

21.  For the avoidance of doubt, I express no view on the necessity or relevance of expert evidence on Hong Kong pharmaceutical trade.  This application is not concerned with expert evidence and the court will have to determine that issue on a different occasion if necessary.

22.  In order to secure the just resolution of disputes in accordance with the parties’ substantive rights, I allow the proposed amendments in paragraph 56B of the draft RRADCC.

B2.  Proposed Amendments in Paragraph 66

23.  The proposed amendments in paragraph 66 of the draft RRADCC seek to add the defences of “equilibrium” and “honest concurrent use” which exist under German law.  The Plaintiff opposes them on the basis that German law is irrelevant because the Defendants’ existing defence in paragraph 66 relates to the trade mark infringement claim, which must be determined by applying Hong Kong trade mark law.

24.  In the affidavit evidence filed to support the application to amend, Mr Cobden has said that the Defendants intend to use the equilibrium concept to answer both of the Plaintiff’s claims in this case, which includes the breach of contract claim. 

25.  In any event, whether or not the Hong Kong trade mark law must apply to determine the Defendants’ defences is not a matter that I can resolve at this stage.

26.  In these circumstances, for the purpose of securing the just resolution of the disputes, I allow the proposed amendments in paragraph 66 of the draft RRADCC.

C.  ORDERS

27.  I will make an order in terms of paragraph 1 of the Plaintiff’s Summons dated 30 June 2025.  I will also make an order in terms of paragraph 1 of the 1^st and 3^rd Defendants’ summons dated 30 June 2025 (save that the time for amending the Defendants’ pleading will need to be postponed until after the Plaintiff has filed its Re-Re-Amended Statement of Claim).

28.  I will now hear the parties on costs and further directions on the filing of subsequent pleadings and supplemental witness statements.

[Submissions on costs and further directions]

29.  On costs, since both the Plaintiff and the Defendants have not been successful in opposing the other party’s amendment application, it seems to me fair that each party should bear its own costs occasioned by its opposition of the other party’s application. 

30.  I make no order as to costs which are occasioned by this hearing.  Save as aforesaid, I order that (1)  the costs of and occasioned by the Plaintiff’s amendments be to the 1^st and 3^rd Defendants, and (2)  the costs of and occasioned by the 1^st and 3^rd Defendants’ amendments be to the Plaintiff, to be taxed if not agreed, with a certificate for two counsel.

31.  I also make the following orders.

(1)  The Plaintiff do have leave to amend the Re-Amended Statement of Claim dated 22 March 2023 as set forth in purple ink in the Re-Re-Amended Statement of Claim annexed to the Summons dated 30 June 2025, and to file and serve the same within 7 days from the date of the Order herein.

(2)  The Defendants do have leave to file and serve their Re-Amended Defence and Counterclaim of the 1^st Defendant and Re-Re-Amended Defence and Counterclaim of the 3^rd Defendant with consequential amendments and the amendments granted under their amendment application within 49 days thereafter.

(3)  The Plaintiff do have leave to file and serve its Re-Amended Reply and Defence to Counterclaim to the 1^st Defendant and Re-Re-Amended Reply and Defence to Counterclaim to the 3^rd Defendant with consequential amendments within 49 days thereafter.

(4)  The parties do have leave to file and serve supplemental witness statement(s)  to deal with the amendments within 56 days thereafter.

Mr John M Y Yan SC and Mr Philips B F Wong, instructed by Bird & Bird, for the Plaintiff

Mr Timothy Parker SC and Ms Natalie So, instructed by Hogan Lovells, for the 1^st and 3^rd Defendants

HCIP 64/2019

[2023] HKCFI 2885

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

INTELLECTUAL PROPERTY PROCEEDINGS NO. 64 OF 2019

(Transferred from HCA 1087 of 2018 pursuant to the order

of the Honourable Mr Justice Lok dated 5 November 2019)

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DECISION AND REASONS FOR DECISION

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1.  I have to deal with the following remaining issues under the Amended Case Management Summons (“ACMS”):

(i)  the Plaintiff’s application (“the Amendment Application”) to amend the Amended Statement of Claim (“ASOC”) by adding the proposed §§47A and 49A under §1 of the ACMS; and

(ii)  the proper scope of discovery under §3A and Schedule 1 of the ACMS, with the remaining dispute relating to Categories 1, 2, 3 and 5 in Schedule 1 (“the Disputed Categories”).

2.  I dealt with these matters in the oral hearing on 8 March 2023. For the Amendment Application, I allowed the amendments contained in §§47(e)-(f) and 49A in the proposed draft but disallowed the amendments contained in §§47(a)-(d) therein. For the discovery relating to the Disputed Categories, I allowed the discovery under Categories 1 and 2 in the terms as amended and reserved the decision for Categories 3 and 5. I now give my reasons for the decision I made on 8 March 2023 and my reserved decision on Categories 3 and 5.

BACKGROUND AND THE DISPUTE BETWEEN THE PARTIES

3.  The background of this case has been succinctly summarised by Mr Lam, counsel for the Plaintiff, in §§8-14 of his written submissions. In fact, there were similar proceedings between the parties in other jurisdictions. The first of such litigations took place in England (“the English Proceedings”). Fuller accounts of the dispute between the parties can be found in the judgment on preliminary issues of Nugee J[1], the judgment of the first trial on liability before Norris J[2], the judgment of the English Court of Appeal[3] and the judgment of the second trial on the matters remitted back by the Court of Appeal[4].

4.  In essence, the Plaintiff is the senior company which started life in Germany in 1668 under the name “Merck”, and the 1^st Defendant was its associate company (also using the name “Merck”) operating as its selling agent in the United States of America (“USA”) in the late 1880s.

5.  During World War I, the ownership and businesses of the Plaintiff and 1^st Defendant became completely separate (as the USA was at war with Germany). At that time the 1^st Defendant operated only in the USA, Canada and related territories. After the two World Wars and with normalization of international trade, conflict arose between the Plaintiff and the 1^st Defendant as they both tried to market around the globe as “Merck”. As the Plaintiff was the senior company, it held prior registered marks all over the world except North America. In 1932, the Plaintiff and 1^st Defendant entered into an agreement which effectively divided up the world between them, with the 1^st Defendant trading in the USA and its territories and dependencies, and the Plaintiff trading in the rest of the world. However, the agreement was cancelled in 1945 for being an unlawful restraint of trade pursuant to the USA legislation. For some time, the 1^st Defendant was prohibited by the USA Sherman Anti-Trust Act from entering into any cooperation with the Plaintiff. This led to litigation worldwide between the Plaintiff and the 1^st Defendant over the use of their trade marks and trade names.

6.  Those disputes were eventually settled through agreement in 1955, which ultimately became an agreement in 1970 (“the 1970 Agreement”). The arrangement under the 1970 Agreement is broadly as follows:[5]

(i)  In USA and Canada, the 1^st Defendant and its subsidiaries (“MSD Group”) have exclusive right to use “Merck” as or as part of a mark. There is a carve-out for the Plaintiff that it can use “Merck” as its name provided it is accompanied by geographical identifiers (clause 2).

(ii)  In Germany, the Plaintiff has exclusive right to use “Merck” as or as part of a mark. There is a carve-out for the 1^st Defendant that it can use “Merck & Co, Inc” or “Merck & Co Limited” as its name provided they are accompanied by geographical identifiers with the USA/Canada, or “Merck Sharp & Dohme” as its name provided the name is accompanied by a geographical identifier with a country other than Germany (clause 3).

(iii)  In all other countries[6], (i) the Plaintiff has the right to use “Merck” as a mark or a name (clause 6); while (ii) the 1^st Defendant would cancel all its registrations and discontinue all uses of “Merck” mark (clause 7); and (iii) the 1^st Defendant would discontinue its use of “Merck” names (clauses 8-9). There are 2 carve-outs for the 1^st Defendant: (i) it can use “Merck Sharp & Dohme” as a mark or name (clause 4); and (ii) it can use “Merck & Co, Inc” and “Merck & Co Limited” as its name, provided they are accompanied by geographical identifier that identify it with the USA and Canada, respectively (clause 5).

7.  Thereafter the parties implemented the 1970 Agreement in a generally cooperative way, corresponding with each other to raise uses of “Merck” by the other party that were considered to breach the 1970 Agreement. However, after the 1^st Defendant’s merger in 2009, the Plaintiff complained that the MSD Group began to breach the 1970 Agreement and infringe the Plaintiff’s marks by using “Merck” outside USA and Canada (in particular through online uses) to aggressively market itself, pursuant to a policy of deliberately not adopting any means to impose territorial restrictions for these online uses even though such technologies are available.

8.  After failing to resolve the disputes amicably with the 1^st Defendant, the Plaintiff commenced litigations in various jurisdictions worldwide.

9.  As mentioned above[7], the first of such litigations took place in England (i.e. the English Proceedings), in which the Plaintiff sued, inter alias, the 1^st Defendant for activities in breach of the 1970 Agreement and infringement of the United Kingdom (“UK”) registered trade marks. The activities complained of included online uses through websites (global and domestic) and social media.

10.  The trial was heard by Norris J, who found in favour of the Plaintiff on both the breach of the 1970 Agreement and trade marks infringement. The matter went on appeal. The Court of Appeal upheld the decision on breach of contract, but allowed the appeal in relation to the trade mark infringement claim and the counterclaim for revocation of registration of trade marks, and remitted those matters back to the trial judge for determination. At the remitted hearing, the trial judge held in favour of the Plaintiff on trade marks infringement.

11.  The disputes between the parties were described in a nutshell in the judgment of the first trial in the English Proceedings:[8]

“At the heart of this action lies the question of how the 1970 Agreement operates in the Internet age. Merck US operates a number of websites, amongst them those having the domain names "merck.com", "merckformothers.com, "merckresponsibility.com" and "merckmanuals.com". These are accessible globally and employ numerous uses of the word "Merck" alone. Merck Global complains that this activity is a breach of the 1970 Agreement or is otherwise unlawful. Merck US says that these websites are targeted at US consumers, and matters of which Merck Global makes complaint are either inevitable accidental references or essentially "overspill" references to rightful use in the USA by Merck US in the course of its worldwide activities. What (if anything) does the 1970 Agreement say about such activity? If it does not provide a code which completely governs this activity, what (if anything) does English trade mark law provide by way of an answer to the dispute?”

12.  In the ASOC, the Plaintiff claims that, in Hong Kong:

(i)  the 1^st Defendant has breached the 1970 Agreement by using the name and mark “Merck” in Hong Kong, through websites targeted at users in Hong Kong; YouTube; and use of the “@merck.com” email;

(ii)  the 3^rd Defendant (the 1^st Defendant’s Hong Kong subsidiary) procured the 1^st Defendant to breach the 1970 Agreement;

(iii)  the 1^st and 3^rd Defendants infringed the trade marks owned by the Plaintiff in Hong Kong.

13.  The claim against the 2^nd Defendant has been dismissed. The 1^st and the 3^rd Defendants (“the Defendants”) dispute all the allegations mentioned in the preceding paragraph. Alternatively, the Defendants claim that: (i) any acts were unintentional and de minimis; and (ii) the Plaintiff is barred from complaining on the ground of waiver, acquiescence or estoppel. The Defendants also counterclaim for revocation of the registration of the Plaintiff’s various trade marks.

THE AMENDMENT APPLICATION

14.  I first deal with the Amendment Application.

15.  In the proposed §47A, the Plaintiff pleads a further breach of the Defendants in the form of the alleged wrongful use of “Merck” in events and promotional materials. The Defendants object the amendment on the ground that some of complaints are time-barred.

16.  In making the amendment, the Plaintiff makes it clear that the Plaintiff’s claim only covers complaints within 6 years before the application to amend and so it would not prejudice the Defendants’ right to rely on the limitation defence. The matters averred in the proposed §§47(a)-(d) certainly relate to facts and events which occurred before 10 August 2016, which was 6 years prior to the present Amendment Application. The Plaintiff confirms that they are not relying on these facts and events as part of its claim, but claims that they are still relevant in two ways:

(i)  References to the events can still be found online, and hence the Defendants are continuing to use “Merck” in violation of the 1970 Agreement. The Plaintiff is accordingly entitled to injunctive relief to restrain them from doing so, which is not barred by any limitation period.

(ii)  They are evidence that the Plaintiff will rely on to support the inference that the Defendants generally had within the limitation period or continue to have a practice of using “Merck” in events and promotional materials, and hence committed the breach pleaded in the main body of §47A.

17.  I do not accept these arguments for the following reasons.

18.  First, any cause of action that the Plaintiff might have, whether in breach of contract or trade mark infringement, arising out of the matters pleaded at §§47A(a), (b), or (c) accrued on the date when the materials were published. The running of time is not affected by the fact that the alleged infringing materials remained accessible online. Further, the evidence suggests that such materials remained online on third-party websites and not the ones operated by the Defendants. As there is no claim that the Defendants are responsible for the contents of those websites or are able to control them, there is no sustainable claim based on these past events.

19.  Second, evidence needs not be pleaded and so the Plaintiff is able to rely on these past events to draw the necessary inference even if the same are not pleaded. In order to avoid the risk that the Plaintiff may rely on the facts and events in §§47A(a)-(d) as part of the basis of its claim beyond mere evidence, I disallow the amendments contained in §§47(a)-(d).

20.  For the proposed amendments in §§47(e) and (f), the Defendants object them on the ground that the averments contained therein are frivolous. They relate to an event known as BIO International Convention 2022, and the issues are whether the Defendants are responsible for the related promotional materials and whether these materials are targeted at Hong Kong. In my judgment, there is no basis to say that the Plaintiff’s claim based on these materials is bound to fail, and so I allowed the amendments relating to the claim based on these materials.

21.  The proposed §49A relates to instances of confusion. According to the Plaintiff, these contain actual examples of members of both professionals (at (a) and (b)) and members of the public (at (c) to (h)) being confused as to whether particular goods or services originated from the Plaintiff or the Defendants.

22.  The Defendants object the amendment on the ground that there is no allegation that these purported instances of actual, likely, or likely contributory confusion were caused by any wrongful act by the Defendants. According to their case, the parties each operate globally and, in accordance with the 1970 Agreement, share the use of “Merck” throughout the world a corporate name and trademark. Proper observance of the 1970 Agreement by both parties does not eliminate the propensity for confusion to arise. Under such context, merely to point to instances of confusion does not advance the Plaintiff’s case.

23.  I do not accept such objection. It is the Plaintiff’s pleaded case that the use of “Merck” by the 1^st or 3^rd Defendant in websites is likely to cause confusion and hence amounts to trade mark infringement. However, the Defendants dispute the likelihood of confusion, and they expressly plead that “there is no material or actionable likelihood of confusion amongst members of the public that any goods or services of the Defendants are derived from or connected in the course of trade with the Plaintiff”. In particular, the Defendants aver that: (i) ordinary members of the public would not be confused because the Defendants’ products are not intended for direct sale to them; and (ii) doctors would not be confused because they have an in-depth knowledge of pharmaceuticals. Under such circumstances, the Plaintiff should be allowed to use actual instances where ordinary members of the public and professionals are confused to support its case and to undermine the Defendants’ case. The Defendants are entitled to argue at the trial that these examples are irrelevant, but it should be left to the trial judge to decide whether such instances of confusion do support the Plaintiff’s case on breach of contract or trade marks infringement.

24.  I therefore allowed the amendment contained in the proposed §49A.

DISCOVERY RELATING TO THE DISPUTED CATEGORIES

25.  I will deal with each of the Disputed Categories in turn.

(i)  Category 1

26.  Category 1 covers communications intended for the Plaintiff but wrongly sent to the Defendants (and vice versa) after the Backstop Date. There are also likely to be situations, whether as a matter of courtesy or customer service, the Plaintiff had redirected or forwarded misdirected communications to the Defendants (and vice versa), and those are the targets for discovery under Category 1(c). The Plaintiff claims that, as likelihood of confusion is a disputed issue, instances of confusion by persons in Hong Kong, such as misdirected communications, would be clear evidence of confusion.

27.  I agree that the documents in such category are relevant. Though the Defendants have repeated the argument that instances of confusion per se is not evidence of a breach of the 1970 Agreement or trade marks infringement[9], whether such misdirected communications can advance either party’s claim should be a matter left to be decided by the trial judge. The court should not disallow the discovery of these possible relevant documents.

28.  However, I agree with the Defendants’ submission that the scope of discovery requested by the Plaintiff is too wide. It covers discovery on a global scale. There is a qualification in Category 1(c) that communications must have been “sent to and/or pertaining to Hong Kong” but Categories 1(a) and (b) contain no such qualification. As I see it, any documents not “sent to and/or pertaining to Hong Kong” will not assist the Plaintiff in proving the pleaded infringements in Hong Kong. Hence, I agree with the Defendants that Categories 1(a) and (b) should contain similar qualification.

(ii)  Category 2

29.  Category 2 covers complaints made by the Plaintiff concerning the Defendants’ use of “Merck” (Category 2(a)) and steps taken by the Defendants in response (Category 2(b)), in particular in relation to the use of “Merck” online and in email addresses (Category 2(c)). The Schedule 1 Preamble ensures that the documents to be disclosed are only those relevant to these proceedings.

30.  I allowed the discovery under Categories 2(a) and 2(b). The Defendants argue that the Plaintiff permitted or tolerated the use of “Merck” and the Defendants have detrimentally relied thereon, and hence the Plaintiff has generally waived or acquiesced or estopped from complaining about any breach or infringement. In particular, it is alleged that the Plaintiff took no steps in relation to the Defendants’ websites or use of “@merck.com” email addresses. The Plaintiff denies these allegations, saying that it did make complaints and take adverse action. Under such circumstances, disclosure of documents under Categories 2(a) and 2(b) is necessary for the court to deal with such issue.

31.  On the other hand, I agree with the Defendants that Category 2(c) is exceptionally broad, which relates to unspecified “complaints” about the use of “Merck” in respect of Internet domain names, websites, Twitter, Facebook, YouTube or other social medial and e-mail addresses. There is no time window, and it is not confined or tied to Hong Kong in any way. In other words, it may embrace any complaint whether or not it has anything to do with the Plaintiff’s pleaded allegations.

32.  In reply to such complaint, the Plaintiff agrees that the discovery should be limited to “what was disclosed in the English proceedings plus Hong Kong specific documents”. In my judgment, the Plaintiff has to demonstrate why it has to obtain further documents in Category 2(c) after obtaining the documents in the English Proceedings and those in Categories 2(a) and (b) above. As I do not see the necessity at this stage, I decline to make any order under Category 2(c), but granted liberty to the Plaintiff to re-apply after obtaining the documents in Categories 2(a) and (b).

(iii)  Categories 3 and 5

33.  Category 3 relates to all documents created after 12 May 2012 containing the use of “Merck” (except with the permitted use by reference to their connections to the USA) by the Defendants in electronic and hard copy publications circulated in Hong Kong (Category 3(a)), materials made available at events held in Hong Kong (Category 3(b)) and promotional materials made available in Hong Kong (Category 3 (c)). Category 5 is a discovery directed to both the Plaintiff and the Defendants for screenshots and other images of the parties’ websites stored in hard copy files or retrieved from electronic storage.

34.  In the English Proceedings, Nugee J made a similar order for discovery relating to Categories 3 and 5 (“the UK Order”) following a contested hearing in February 2014. For Category 3, the UK Order contains a specific term to the effect that the Defendants’ documents are to be searched for by searching for the Defendants’ “Zinc” system for UK documents containing the term “Merck” that have been “Approved to Disseminate”.

35.  The Plaintiff submits that the disclosure of these documents is necessary for the Plaintiff to establish its case that the Defendants were in breach of the 1970 Agreement or infringed the Plaintiff’s trade marks. The Plaintiff should be allowed to select the instances of confusion which it wants, rather than be arbitrarily confined to the instances that it has incidentally been able to find on its own and any examples “cherry-picked” by the Defendants. Further, the English court made a similar order regarding these two categories (i.e. the UK Order) and so there should be no reason for the Hong Kong court not to do the same.

36.  On the other hand, the Defendants oppose the discovery on the following grounds:

(i)  Such kind of discovery exercise is really a “fishing expedition”. The Plaintiff is asking the Defendants to provide huge volumes of documents fitting a vague description in the hope that they may reveal infringements that are not pleaded.

(ii)  As mentioned above[10], not any document would infringe the Plaintiff’s rights if it uses the word “Merck”.

(iii)  The Defendants have significant concern about the width and proportionality of the discovery exercise. The Defendants are part of an enormous group of companies with some 70,000 employees worldwide, mainly based in the US. As Category 3 is currently defined, it appears to require an enormous search. Such an exercise would be wholly disproportionate. The evidence from the English Proceedings shows that the execution of an order similar to that sought here (although of course focused on the infringements alleged in England) resulted in the collection of some 1.3 million documents. Yet, such expensive and time-consuming disclosure exercise in the English Proceedings produced very few documents that were actually used at trial.

(iv)  Though a significant amount of the work has already been performed in the context of the English, Singaporean, and Australian actions, the present claim in Hong Kong deals with substantially different time periods (for example the English searches were conducted some 9 years ago in around 2014), and further, that the searches were carried out for documents relevant to the allegations of infringement in those jurisdictions, not Hong Kong.

(v)  In the English Proceedings, the UK Order provides for identified individual databases and the inboxes of particular users to be searched using specific sets of search protocols. Instead of attempting to obtain a wide order it now seeks, the Plaintiff should have adopted the same approach in the English Proceedings and be responsible for identifying realistic, proportionate, and focused search categories or protocols.

37.  Obviously, the scope of the subject discovery is a matter which has been troubling the courts in different jurisdictions. Despite the observation made by Nugee J in a hearing on 19 February 2014[11], the English court still made the discovery order as mentioned in §36(v) above. The Plaintiff is entitled to find out if there are further infringements which it is not aware of, and indeed it is not uncommon for a plaintiff in an intellectual property claim to plead that full particulars of the infringement would be supplied after the completion of discovery. The problem with this case lies on the scale of the work that is involved in the discovery exercise.

38.  Unlike the English Proceedings, this court does not know how the Defendants kept their documents relating to publications or promotional materials circulated in Hong Kong. In my judgment, if similar exercise has been conducted in other jurisdictions, there is no reason why such exercise should be refused simply on the ground of oppressiveness or non-proportionality. Only the Defendants know about how their documents are kept, and so the Defendants should take the initiative in proposing practical search protocols as to how they can comply with the Plaintiff’s request for these relevant documents. As the Defendants have made no such suggestion before me, I would allow the discovery under Category 3 without the similar search protocol in the UK Order.

39.  For Category 5, it is in identical terms as those made in the UK Order. Again these documents may be relevant in deciding whether there was confusion as to the use of the trade name or mark “Merck” in Hong Kong. As the Defendants have no difficulty in complying with such discovery in the English Proceedings, I do not accept that they can oppose the Plaintiff’s request on the ground of oppressiveness or non-proportionality. I therefore allow the discovery under Category 5.

40.  I make a costs order nisi that:

(i)  The costs of the Amendment Application under §1 of the ACMS be costs in the cause.

(ii)  The Plaintiff shall get 2/3 of the costs of the application relating to discovery concerning the Disputed Categories under §3A of the ACMS.

(iii)  Subject to the aforesaid, the costs of the ACMS be costs in the cause.

41.  The costs order nisi shall be made absolute 14 days after the date of the handing down of this Decision and Reasons for Decision.

Mr Julian Lam, instructed by Bird & Bird, for the Plaintiff

Mr Timothy Parker, instructed by Hogan Lovells, for the 1^st and 3^rd Defendants