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

In order to address the breaches of contract and trade mark infringements, MSD implemented geo-blocking technology to prevent UK users from accessing its “Merck” branded websites. The effect of that technology was to direct users with UK IP addresses to “mirror” MSD-branded sites, which did not contain the infringing Merck branding. The costs of implementing geo-blocking were a mixture of one-off and recurring costs. The experts agreed that it was appropriate to regard some of these costs in the analysis of economic benefits. Their estimates of the appropriate costs to include were, moreover, very similar: Mr Wynn estimated £3.9m, corrected after the hearing to £3.79m, and Dr Stec estimated £3.3m (before adjustments for inflation and discounting).

Those differences reflected differences of approach, which were explained in detail in an Annex to Mr Wynn’s second report. The differences of approach went both ways: in some respects Dr Stec included costs which Mr Wynn did not include in his analysis; in other respects Dr Stec’s analysis assumed lower costs than Mr Wynn. It is also apparent that the expert process enabled some of the differences between the experts to be resolved, with Mr Wynn adjusting his estimates in several respects after considering Dr Stec’s analysis. Mr Wynn’s approach to this exercise was, in my judgment, conspicuously fair and objective, and I do not accept MSD’s submission that he was reluctant to make adjustments to his estimates: quite the contrary, his evidence on this part of the case demonstrates a willingness to engage with Dr Stec’s evidence and adjust his own estimates accordingly.

The differences between the experts fell into five main categories. It is appropriate to consider these separately.

One-off costs. The experts differed in their approach to one-off costs. Consistent with his approach to the email migration costs, Mr Wynn excluded various one-off costs which would have been incurred in any event, whereas Dr Stec included these. For the reasons set out above, I consider that Mr Wynn’s approach was correct.

Data sources. The experts used different data sources to estimate the costs that MSD avoided in relation to geo-blocking and maintaining compliant mirrored websites during the relevant period. I prefer Mr Wynn’s approach, as explained carefully in his second report, on the basis that it was more closely based on the evidence of actual costs incurred during the relevant period.

Attribution to UK. The experts adopted different approaches to the attribution of global costs to the UK. Dr Stec’s approach was to identify a UK apportionment of his website maintenance cost estimates, based on the UK’s share of global traffic to MSD’s websites (calculated differently for each relevant website). Mr Wynn considered that this approach was not appropriate, because it would result in the apportionment of benefits to countries in which MSD had not ever been accused of misusing the Merck sign. Mr Wynn’s preferred approach was to start off by including all of the costs required for MSD to comply in the UK, and then (in principle) to reduce that by the benefits that MSD would expect to obtain in other jurisdictions as a result of complying with the 1970 Agreement in the UK. He explained that, from an economic perspective, if the cost of compliance in the UK would have resulted in benefits associated with avoiding the need to enter into a licence in another country, that would have reduced MSD’s willingness to pay for a licence in the UK. He considered, however, that he was unable to assess the appropriate deduction because of the uncertainty of MSD’s expectations as to where it might be sued.

I consider that Mr Wynn’s approach is in principle the correct one, but it poses the problem that no estimate of an appropriate deduction has been given by him. This is a point on which the court therefore has to do the best it can on the available information.

In that regard, MSD’s closing submissions noted that Merck had brought proceedings against MSD in 13 other jurisdictions. At the time of the trial in this jurisdiction, proceedings were ongoing in both France and Germany. MSD therefore suggested that if only the benefits in France and Germany were taken into account, that would suggest an attribution of 33% to the UK on that basis. That is, in my judgment, a useful starting approach, but some allowance should also be made for the uncertain nature of the benefits in other jurisdictions. I therefore consider that it is appropriate to apportion 40% of the recurring global maintenance costs to the UK for the www.msd.com and www.msdformothers.com websites. MSD’s closing submissions accepted that no further reduction was necessary for the costs of www.msdmanuals.com, since Mr Wynn had already used a low figure (5% of global maintenance costs) for those costs, based on the evidence of MSD’s witness Mr DeFerrari. The adjusted total figure on this basis is £2.31m.

Merck-branded sites. Dr Stec included website maintenance costs attributable to both Merck and MSD-branded sites, whereas Mr Wynn noted that Merck would have had to maintain its Merck-branded sites in any event, such that the costs of doing so would not have been incremental to the notional licence. He therefore sought to estimate the ongoing maintenance costs specifically for the MSD-branded sites. I consider Mr Wynn’s approach to be correct.

Period covered. Dr Stec’s calculations assumed that the identified total recurring costs should be applied throughout the period of the notional licence, whereas Mr Wynn considered that it would be appropriate to base MSD’s avoided costs on the length of time over which MSD delayed launching each MSD-branded mirror site, so as to include only those costs which with hindsight were incremental to the notional licence. Dr Stec disagreed with Mr Wynn’s approach, on the basis that the licence fee should be modelled on the expectations at the outset of the licence.

On this point I prefer Dr Stec’s approach. On the basis that the notional licence must be assumed to have covered the period from 1 January 2010 to 28 July 2020, I do not consider that a negotiation at the outset of that period could plausibly have taken into account the different time points at which, in the real world, MSD introduced branded mirror sites. The reasonable approach would have been, as Dr Stec modelled, to base the negotiation on the avoided costs throughout the notional period of the licence. Applying that approach to Mr Wynn’s adjusted total (set out above) results in an uplift to the figure, producing a total of £4.33m.

In his closing submissions, Mr Brandreth argued that the court should adopt a figure of £5.9m for the costs of geo-blocking and development/maintenance of mirrored websites. That was of course substantially higher than the figure calculated by Mr Wynn. Mr Brandreth based that figure on his own calculations relying on (among other things) the 2016 witness statement of Ms Ambrose. To the extent that Mr Brandreth’s submissions addressed points explored in the expert evidence, I have addressed them above. I do not, however, consider it appropriate to adjust the figures discussed in the expert evidence by reference to evidence or analysis not addressed by the experts, for the reasons set out above.

I therefore consider that the appropriate figure to use for the avoided website costs is £4.33m (prior to any adjustment for inflation and discounting).