For the half-year to 30 June 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Alberto Bellan, Darren Meale and Nadia Zegze.

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Tuesday, 25 February 2014

Coexistence of Trade Mercks? An expert writes ...

Many Kats prefer Merc to Merck ...
On Monday, in "Preliminary hearing to rule on Merck-y past", a blogpost on an interim ruling in a trade mark infringement trial before the courts of England and Wales involving the two Merck pharma companies, Merpel asked why anyone should want to use the word MERCK in the first place.  Here's an answer from Christian Schalk (a German attorney based in Leverkusen who headed Schering AG's Corporate Trade Mark Centre till 2007 and is now Senior Trade Mark Counsel in Bayer AG's trade mark department).  Christian writes as follows:
"There are certainly different point of views on the question whether “Merck” is an attractive mark or not. The name “Merck” has its origin in the name of the family which bought a certain pharmacy in Darmstadt, Germany in the seventeen century. This pharmacy later began to carry out its own research and development activities and eventually became the German company, Merck KGaA -- a major German pharmaceutical and chemical company. Therefore, Merck KGaA, still a family-owned company, is certainly one of the oldest companies of the world (for more information, click here and here).

Although the author of this article has no relation with either of the two Merck companies, he nevertheless raises the question, why should a company give up such a traditional trade mark and change its name to something everyone is unaware of and needs to learn?  A name change would willingly destroy one of the company’s  most important IP assets, which is the name MERCK.  This author therefore recommends to stay away from any rebranding activities. Only certain external service providers such as brand agencies would benefit from it, but neither of these companies. The companies themselves, their employees as well as their customers all over the world would be left quite confused.  Most people can at least relate the term Merck to a pharmaceutical company but frankly, some of the “sparkly pharma names” could be the name also for companies in different field of business such as IT or real estate.  Also, with all these merger and acquisition activities in the pharmaceutical industry, how many of these “sparkly” names will still exist in ten years? We will see.

Another question could be: which of both Merck companies should change its name? The answer can be only: “either both or neither”.

The fact that there are two Merck companies has a reason which is independent of both companies and was certainly more than undesired at that time. 
As a consequence of the First World War, in which Germany and the U.S. were in war against each other, all U.S. possessions of German companies were confiscated. The U.S. affiliate of the German Merck company was set up as an independent company in the U.S. which then became Merck, Inc..  As a consequence, there are still two Merck companies in the world and the co-existence of their Merck trade marks is certainly the subject of one or several co-existence agreements between the two companies. For instance, the German Merck company is active in the U.S. under the name EMD. The U.S. company Merck, Inc. is active in Germany under the name “MSD Shark & Dohme”.  There have been certainly also agreements on the use of domain names containing the term “Merck”. When it comes to Facebook or to the new gTLD, things become certainly more tricky. As far as the new gTLD “.merck” is concerned, two cases (here and here) which have been decided by WIPO Panellists last year illustrate that it there sometimes a long way to go till a solution can be found with which both sides can live.

There have been similar situations with other companies. For instance, the German company Bayer also lost its company name in the U.S. during the First World War. Only in the mid-nineties could Bayer reclaim its  U.S. rights in the  Bayer name. Another example is the German company Schering AG, which lost its U.S. rights in the name Schering during the Second World War. Its former U.S. affiliate became then the company Schering-Plough. 
When Schering AG restarted its U.S. business in the seventies, it was not possible to repurchase the U.S. rights in the name Schering from Schering-Plough, so the companies coexisted in many countries of the world except in their respective home markets. The German Schering AG was Berlex, Inc. in North America while Schering-Plough was Essex Pharma GmbH in Germany, Austria and Switzerland. 

As far as domain names were concerned, all websites which were linked with Schering - domain names under a gTLD (e.g.schering.com), were directed to a common website:

 A few years ago, Schering-Plough was acquired by the U.S company Merck Inc. Earlier, in the Spring of 2006,  the German company Merck KGaA sought to acquire Schering AG. What a coincidence! However, a so-called white knight, called Bayer, stepped in and acquired Schering AG.
As far as the two Merck companies are concerned, the companies have coexisted now for nearly a hundred years. They must have somehow managed to find a way to coexist during this very long period of time and even during the first 15 exciting years of the internet. New technical developments such as Facebook and the new gTLDs always bring new challenges for trade marks. It may certainly take some time until there will be a solution for such complicated conflicts. In any event, finding new paths and being creative and innovative when searching a solution of a problem is that what makes trade mark law (or IP law in general) so exciting. Just giving up one of the most important IP assets of a company, a long established company name, would certainly not be an appropriate solution.
The IPKat was fascinated by this narrative and thanks Christian both for explaining how there come to be two Mercks and for placing the explanation within a historical and commercial context.  

Merpel, as one might expect, remains impenitent. Hundreds of years of history are wonderful, but that's all they are: history -- and the history of most businesses, if you go back before the days of, say, Elvis Presley, is largely national. For global traders (which is potentially most companies in the internet era) it makes no sense to work to build up goodwill in a name shared with another business in the same sector, however long you've had it. And how truly valuable are pharmaceutical house marks such as Merck, Schering or GSK in an age in which the sector is so regulated, most purchases are surely made on bases other than whether a drug is made by one company or another, and in a sophisticated market in which consumers can understand when companies rebrand (did anyone get confused when Smith Kline and French, Beckman, Glaxo, Wellcome and Beecham evolved into GSK)?

This resolves into an interesting question, the IPKat concedes. Regardless whether either Merck keeps its name or changes it, how much goodwill is there in the name, in the sense that the name itself attracts and retains the loyalty of customers, and how does one go about valuing it?  

9 comments:

Roufousse T. Fairfly said...

For instance, the German company Bayer also lost its company name in the U.S. during the First World War.

To complicate the narrative, Bayer's personality faded when it was integrated into the infamous IG Farben conglomerate, together with Agfa, Hoechst, and BASF amongst others.

Bayer also lost in many countries one of its best known assets, the "Aspirin" brand, which it endeavored to reacquire since the Great war.

Anonymous said...

I haven't looked a the Register of Companies, but surely "MSD Shark & Dohme" must be a Freudian slip?

Best wishes,

George Brock-Nannestad

Anonymous said...

And this article just goes to prove that external IP counsel are too lacking in commercial awareness.

Anonymous said...

Surely considering just what recognition the "end-user" has (whether the prescriber or drug-taker) is overly simplistic. What about reputation/recognition from suppliers, employees, potential employees (including desirable eminent researchers), (potential) investors, the scientific community, (potential) test-subjects (in clinical trials), healthcare providers, etc... Why would they want to take a new name, wipe the slate clean, and start again with all these people? OK, we could argue over what kind of reputation a big pharma company might have with some of these groups, but the fact remains that there will be name recognition and this will count for something. Particularly in the scientific research/pharma field where, I would suggest, reputation and recognition is linked to trust.

Aaron said...

I think it would be interesting to note the number of longstanding disputes in IP which result from the requisition of businesses by the state.

Mark said...

Bayer also lost the Heroin brand, which may have become a generic name since 1919...? Some old Bayer adverts show both Heroin and Aspirin in the same advert.

Anonymous said...

Not wanting to stand up for your "traditional" name is a sign of weakness. This was certainly the case with the General Radio Corporation, which used its name for about 70 years until it suddenly was changed into the GenRad Corporation. Customers felt alienated, and I have lost trace of it.

Similarly, the radio broadcast and technology magazine Wireless World, originally owned by the Marconi Company, mostly under the publishing house Iliffe, and renowned the World over. It changed to Wireless and Electronics World, lost its grip and disappeared.

There is much more to brand loyalty than is normally considered by management consultants.

Kind regards,

George Brock-Nannestad

Anonymous said...

Surely if the magazine had stayed as "wireless world" it would have disappeared even sooner? Or does George believe it could have weathered the wired storm until the invention of wi-fi?

Anonymous said...

I'm not sure why 18 people people the name should be returned to its previous owner as the war is over. Should all victorious parties in past court claims return all damages-paid to the losing party simply because it was a long time ago?

Do such people feel different about 2nd World War reparations? If not, how hard are they campaigning for the return of property stolen by the Nazis?

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