HC-2013-000089 - [2025] EWHC 2376 (Ch)

Mr Wynn took the view that by linking its products and services to Merck in the UK, MSD may have avoided costs which it would have otherwise incurred in developing and marketing the MSD brand. While he had not seen any estimates of the cost of developing MSD as an independent brand, he considered that MSD would have had to spend at least as much as Merck’s expenditure on differentiating itself from MSD, which was one of the purposes of Merck’s rebranding exercise which commenced around 2013. Mr Wynn estimated the UK-attributable costs of the rebranding exercise at up to £2m over the period of the notional licence. On that basis his estimate of MSD’s avoided marketing costs was at least £2m.

Dr Stec’s position was that he had seen no evidence of any material avoided marketing costs. If, however, a portion of the costs of the Merck rebranding exercise were to be taken as a proxy for MSD’s avoided marketing costs, Dr Stec’s estimate of the appropriate figure was £566,000.

Starting with the question of whether any marketing figure should be included at all, Mr Wynn’s approach was in my judgment a reasonable approach to take, given the necessarily uncertain nature of the exercise. Both the trial judgment and the remitted matters judgment found that MSD’s conduct was a deliberate attempt to push the boundaries in the interests of promoting its business (trial judgment §181, remitted matters judgment §99). The remitted matters judgment commented (at §89) that MSD had implemented “a policy to bring before the market in the UK the sign ‘Merck’ in relation to the products of [MSD] at every opportunity”. It would be unreal to suggest that this did not carry a marketing advantage. In the absence of any other basis on which that advantage should be quantified, Mr Wynn’s use of Merck’s own costs in distinguishing itself from MSD was an acceptable proxy.

The question is then how a suitable proportion of the rebranding costs should be calculated. The experts agreed that it was necessary to start by estimating a portion of the total global costs of the rebranding exercise that could be regarded as attributable to the UK, using the UK share of MSD’s global revenues (3.2%). That produced a figure of £2m. It was also common ground between the experts that the rebranding exercise was not purely driven by a desire to differentiate Merck from MSD: there were also other factors such as geographic fragmentation and divisional sub-brands. Where the experts differed was in how to account for that in their cost estimations.

Dr Stec took the view that a suitable way of attributing a portion of the £2m to the purpose of differentiating between Merck and MSD was to consider the proportion of the UK figure that should be attributed to Merck’s healthcare revenues, on the basis that the overlap between Merck’s and MSD’s UK operations was in the healthcare field, and Merck’s healthcare division was therefore the division that was most likely to have been negatively impacted by MSD’s conduct. That was, in my view, a reasonable approach to take – and indeed highly conservative in Merck’s favour, given that the result of that analysis was to take all of the “healthcare” rebranding costs as the appropriate figure. That produced his figure of £566,000.

Mr Wynn did not put forward any alternative approach, simply saying that he did not think that there was a reliable way to work out where the right figure sat between zero and £2m. That was not a justifiable approach to take. Having recognised that taking the entirety of the UK-attributable rebranding costs would overstate the costs attributable to Merck’s differentiation of itself from MSD, it was necessary to come up with some basis to reduce the figure of £2m. Dr Stec’s approach was the only methodology available to the court which sought to do that. It may not have produced a perfect proxy, but in the context of what is inevitably a highly uncertain estimation, the court’s task is to do the best it can with the material available, rather than to strive hopelessly for absolute precision.

On that basis I consider that the appropriate figure to use for avoided marketing costs is £566,000 (prior to any adjustment for inflation and discounting).