Sometimes, two parties may have independently and innocently acquired intellectual property rights and commercial goodwill in two similar (or in some cases, identical) trading names, and they may have even registered their own trademarks in respect of their use of their trading name. When one of the parties then becomes aware of the other’s use of the trademark, a dispute can arise over which party may be infringing the trademark of the other.
However, in some cases, the parties may be willing and able to agree terms for a ‘co-existence’ agreement, which sets out how each party is permitted to use their own trademark without it infringing the trademark of the other party. This is perhaps easiest where the two parties operate in entirely different sectors, industries or countries, but a carefully negotiated co-existence agreement can potentially work even in situations where both parties operate in the same field.
Merck v Merck
A co-existence agreement was at the heart of the recent Court of Appeal case of Merck KGaA v Merck Sharp & Dohme LLC & Anor [2025] EWCA Civ 343. This was the latest chapter in a long-running dispute between the German-based pharmaceutical company Merck KGaA (referred to in the Court of Appeal judgment as “Merck Global”) and the defendant group of US-based pharmaceutical companies (referred to collectively in the judgment as “Merck US”).
Merck Global and Merck US had originally been part of the same group of Merck companies, until the US-based assets were seized from the German-based parent company in the aftermath of WWI. Over the decades that followed, many agreements were entered into between Merck Global and Merck US over their respective uses of the Merck name and trademarks.
A key co-existence agreement was eventually entered into in 1970 which (in short) allowed Merck US to use the “Merck” name in the US and Canada, while Merck Global would use the “Merck” name in the rest of the world (except for Cuba and the Philippines, where the parties had concurrent rights to use the name).
Breach of the co-existence agreement
However, in 2013 Merck Global commenced litigation against Merck US for breach of the 1970 co-existence agreement and infringement of Merck Global’s UK trademarks. The original judgment in 2016 was largely in Merck Global’s favour, but both sides appealed various points. In 2020 the High Court determined that Merck US had breached the 1970 co-existence agreement and had infringed Merck Global’s UK trademarks (despite some of the trademark registrations being partially revoked), and the High Court held that an injunction should be granted to restrain further breaches of the co-existence agreement and/or infringements of the trademarks.
However, by 2021 Merck Global was alleging that Merck US had breached the Court Order imposed by the High Court, and in 2024 the High Court granted Merck Global an order declaring that Merck US had breached the 2020 Court Order.
The Court of Appeal
Merck US then appealed against the declaration on various grounds, including arguing that it had been inappropriate for Merck Global to seek a declaration that the 2020 Court Order had been breached, because it should have instead made a (more onerous) application for contempt of court against Merck US.
However, the Court of Appeal rejected Merck US’ appeal on all grounds. In doing so, the Court of Appeal also provided some useful guidance for those negotiating co-existence agreements, particularly in relation to issues such as the use of trademarks in specific jurisdictions, and the effect of disclaimers and advertisements on websites in the context of compliance with a co-existence agreement.
Lessons to be learned
The long-running dispute between Merck Global and Merck US demonstrates the importance not only of ensuring that you comply with the terms of a co-existence agreement, but also of attempting to specify with as much clarity as possible precisely what is and is not permissible when negotiating and drafting the terms of a co-existence agreement.
Of course, the Merck case is an extreme example, where both sides were seeking to use an identical trading name in the same (pharmaceutical) industry, meaning that the only material differentiator was where each of them was permitted to use the name. In the majority of cases, parties to a co-existence agreement are able to find mutually acceptable ways of defining the scope and limitations of their respective uses of their trade names, which will enable them both to continue with their businesses without either having to rebrand or inadvertently infringing the other party’s intellectual property rights.
For more information on this or any other issue relating to Life Sciences and intellectual property disputes, please contact Michael Axe by emailing Michael or by calling him on +44 (0)1628 502448.
This article is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from taking any action as a result of the contents of this article.