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)

________________________

BETWEEN

________________________

________________________

D E C I S I O N

________________________

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