Irish Court of Appeal Rules on Service and Jurisdiction in IP Dispute

In an intellectual property dispute about the use of the trade mark “Merck”, the Irish Court of Appeal has offered guidance on the jurisdiction of the Irish courts. The judgment considers how Irish courts decide cases where parallel proceedings involving the same parties are already in train in another EU Member State. Our Intellectual Property team reviews the decision and its impact on litigants in Ireland.

In an intellectual property dispute involving Merck KGaA (Merck Germany) and Merck Sharp & Dohme LLC (MSD), the Irish Court of Appeal has issued a ruling. The decision deals with the complex issues of service of proceedings outside of Ireland. It also considers the jurisdiction of Irish Courts to hear multi-jurisdictional disputes. The Court of Appeal ultimately upheld the High Court decision setting aside service of the proceedings on the first named respondent and striking out the claim against it. It also granted a stay on the balance of the proceedings. However, it disagreed with the High Court as to the basis for the grant of the stay. We review the decision and provide key takeaways for Irish litigants.

Background

The case involved a long running and geographically extensive dispute between Merck Germany and MSD. The dispute concerned the use of trade marks incorporating the name “Merck”.

Merck Germany is the registered owner of the following three Irish trade marks, all of which contain the name “Merck”.

It also owns an EU trade mark (EUTM) for the word mark “Merck” as well as a variety of national trade marks in a number of other territories.

On the other side of the dispute is the MSD group of companies which is headquartered in Rathway, New Jersey. The competing entities are separate independent businesses with distinct operations. They entered into a co-existence agreement in 1955. The agreement governed their respective use of the word “Merck” in different territories. That was replaced by another agreement in 1970 which continues to govern the relationship between the parties.

Litigation

Merck Germany argues that under the 1970 agreement, it was agreed that it was exclusively entitled to use the name Merck in all countries of the world other than:

• The US
• Canada
• Germany
• Cuba, and
• The Philippines

MSD does not agree with this interpretation of the agreement. Consequently, litigation was commenced by Merck Germany in England and Wales in March 2013 and later in Germany. Merck Germany claimed trade mark infringement of its EUTM No. 283986 for the word “Merck.” Allegations of unfair competition and other rights asserted by Merck Germany under German law also formed part of those claims. In addition to those proceedings, Merck Germany has also brought proceedings against MSD companies in Australia, Singapore, Hong Kong, China, Switzerland and France. In addition, proceedings were commenced by a number of MSD companies in the Courts of New Jersey against Merck Germany in 2016. MSD alleged breaches of the 1970 agreement and trade mark infringement arising from a promotional campaign which Merck Germany pursued in the US.

Irish proceedings

The Irish proceedings began with an application to the High Court in July 2023. The application sought leave to issue proceedings and to serve notice of proceedings on MSD in New Jersey. That application was initially successful and was grounded on an affidavit sworn by Merck Germany’s solicitor.

In short, Merck Germany made claims on the following three grounds in the Irish proceedings:

1. Breach of the 1970 agreement by MSD
2. Trade mark infringement regarding the three Irish trade marks, and
3. Passing off

Service out of the jurisdiction

MSD challenged the jurisdiction of the Irish High Court and argued that the claim made by Merck Germany against it had no more than a weak connection with Ireland. As a result, MSD argued that it should not be required to litigate the case in Ireland. It also argued that Merck Germany had failed to comply with the requirements of Order 11 of the Rules of the Superior Courts in Ireland (RSC). Order 11 RSC requires a party to obtain the Court’s permission before serving proceedings outside the jurisdiction.

To do so, the party must provide evidence to the Court about the comparative cost and convenience of bringing the case in Ireland versus the residence of the proposed defendant.

The High Court agreed with MSD on these arguments. The Court of Appeal took a similar view. It noted that the Court must be satisfied on the basis of the criteria set out in Order 11, that Ireland is the appropriate forum for hearing the breach of contract claim made against MSD. The case must be capable of being suitably tried in Ireland in the interests of both sides and in the interests of justice. The affidavit of Merck Germany’s solicitor, the Court of Appeal held, made no attempt to address the issue of the suitability or unsuitability of New Jersey as a forum. That failure was “fatal” on an application of this kind. It was “particularly troubling” the Court held, that not only was that evidence absent from the original affidavit grounding the original ex parte application under Order 11, but also that the gap in evidence was not cured by Merck Germany during the subsequent exchange of affidavits in the case. Equally, the gap in evidence was deemed to be “all the more significant” in circumstances where there were already proceedings in being between the parties in the Courts of New Jersey.

Application for a stay

MSD also sought relief on the issue of parallel proceedings in more than one Member State of the EU. MSD therefore sought relief on the following grounds:

• Article 136(1)(a) of the EU Trade Mark Regulation (EUTMR) which deals with simultaneous and successive civil actions on the basis of EUTMs and national trade marks which are pending in the Courts of two or more Member States. i.e. where in one action the EUTM is relied on and in the other, national trade marks. In that situation, Article 136(1)(a) applies. Any Court other than the one that first took the case must automatically step back. The first Court will continue to handle the matter if the trade marks and the goods or services they cover are the same.

• Article 136(1)(b) grants the Court discretion to stay proceedings where the parallel proceedings concern identical trade marks protecting similar goods or services, or where the trade marks concerned are similar and protecting identical or similar goods or services.

• Articles 29 and 30 of the Recast Brussels Regulation. Article 29 addresses proceedings involving the same cause of action between the same parties in the Courts of different Member States. In this situation, any court that was not the first to take the case must pause its proceedings. It has to wait until it is clear whether the first court has the right to hear the case. Article 30 on the other hand, applies where there are “related proceedings” in being in more than one Member State. It has no requirement that the parties be the same but the application of this rule is not mandatory. Instead, the court that took the case second has the option to pause its proceedings if it chooses to.

In this case, the Court of Appeal was satisfied that a stay in the Irish proceedings was appropriate. The appeal hearing in the German proceedings is expected to take place later in 2025. By contrast, the Irish proceedings are still at an early stage, with a trial likely in 2027. This difference in timing weighed strongly in favour of granting the stay of the Irish proceedings. For those reasons in particular, the Court of Appeal held that a stay should be granted under Article 30 of the Recast Brussels Regulation.

Comment

Clearly this is not the final chapter in this dispute. However, there are a number of key learnings for litigants in Ireland from this decision.The first is regarding the difficulties associated with applications to serve High Court proceedings on a defendant who is based outside of Ireland.

Merck Germany in did not set out in their grounding affidavit the comparative cost and convenience of bringing proceedings in Ireland compared with New Jersey. Since MSD, was based in New Jersey, that failure proved fatal to the application.

When making these types of applications, it is therefore important that litigants in Ireland consider the specific requirements mandated by Order 11 of the Rules of the Superior Courts.

Separately, the judgment serves as a reminder of the EU rules regarding parallel proceedings in two Member States involving the same parties and the same cause of action. In those circumstances, litigants are warned not to abuse the Court process with multiple actions in multiple territories. Also, it is important to note that Courts will use their discretion and will grant a stay of any later proceedings where they deem it just and convenient to do so.

For more information and expert advice, contact a member of our Intellectual Property team.

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