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

Dr Stec’s consistent position was that Mr Wynn’s comparables analysis was fundamentally flawed. He advanced numerous criticisms. Fundamentally, his position was that given the unique parameters of the hypothetical negotiation in the present case, there was no reliable comparable licence, and that no number of adjustments to a non-comparable licence would lead to a reliable royalty result.

Dr Stec noted that Mr Wynn’s starting point of 0.33% was taken from Merck’s intragroup healthcare division licences, which were in turn based on the results of the EY benchmarking study. His criticism of that was that the sample sizes in the two sets of licences used by EY to calculate “arm’s length” royalty rates (as described at §88 above) were so small that the comparator rates calculated on the basis of the differences between the two licence sets were statistically meaningless. An economically and statistically valid analysis using the approach adopted by EY would, he said, require:

On the first of those two points, Dr Stec noted that the EY benchmarking study did not provide an analysis of whether the difference between the two sample sets was statistically significant. He therefore carried out his own analysis using the standard T-test methodology for measuring statistical significance. His conclusion was that the differences between the means of the two groups was not statistically significant. As he put it: if the T-test fails to show any statistically meaningful difference between the means of the two groups, then it cannot be concluded that the set 1 licence agreements included any premium on the royalty rate relative to the set 2 agreements. He reached the same conclusion using an alternative statistical test.

Dr Stec’s conclusion was therefore that the difference between the two sets could not, in statistical terms, be distinguished from zero. In other words, the comparator licences identified by the EY study provided no statistically meaningful evidence that the value of a licence for an umbrella brand alone was anything greater than zero.

On the second point, Dr Stec noted that even if a statistically significant difference between the two groups had been identified, the numerous differences between the two sets of licences meant that it would not have been possible to attribute any difference between royalty rates in the two sets to the umbrella brands alone.

Dr Stec made various further criticisms of Mr Wynn’s approach. I highlight the above points, however, because they formed the central basis of the cross-examination of Mr Wynn on this point.