American Merck and German Merck’s TM battle doesn’t involve covered “advertising injury”

EMD Millipore Corp. v. HDI-Gerling Am. Ins. Co., 2021 WL
66441, No. 20-cv-10244-ADB (D. Mass. Jan. 7, 2021)

Is trademark infringement (or similar) “advertising injury”
because a trademark is an advertising idea? I’ve always thought that’s the core
of what a trademark is, which makes many insurance policies seem conflicting to
me, but the exclusions for trademark are often pretty clear. In this case
growing out of underlying German Merck v. US Merck litigation, the court finds
that the TM-like claims don’t involve covered advertising injury because the
parties’ campaigns weren’t allegedly similar, only their names.

One of the plaintiffs here is Merck KGAA (aka MKGD), the
German Merck (the US government split US Merck off in WWI). The relevant
policies covered “personal and advertising injury,” including “[o]ral or
written publication, in any manner, of material that slanders or libels a
person or organization or disparages a person’s or organization’s goods,
products or services” and “[t]he use of another’s advertising idea in [an
insured’s] ‘advertisement.’ ” The policies didn’t define “disparage” or
“advertising idea.” There was also an exclusion for “‘personal and advertising
injury’ arising out of the infringement of copyright, patent, trademark, trade
secret or other intellectual property rights.” The exlusion further states that
“such other intellectual property rights do not include the use of another’s
advertising idea in [an insured’s] ‘advertisement,’ ” and that the exclusion
“does not apply to infringement, in [an insured’s] ‘advertisement,’ of
copyright, trade dress or slogan.”

US Merck sued MKGD for trademark infringement, trademark
dilution, unfair competition, false advertising, and cybersquatting, and New
Jersey state law claims for trademark infringement, trademark dilution, unfair
competition, deceptive trade practices, and breach of contract. The two Mercks
have entered into coexistence agreements around the world, under which MKDG
cannot use the trademark “MERCK,” or attempt to acquire rights in any trademark
containing “MERCK,” in the United States or Canada. They’ve fought over this
agreement for internet and other uses.

MKDG is permitted to use the word “Merck” as part of a firm
or corporate name in the United States but only in the phrase “E. Merck,
Darmstadt, Germany,” and only if the four words are given equal prominence.
Nevertheless, MKDG allegedly used the trade names “MERCK,” “Merck KGaA,” and
“Merck KGaA, Darmstadt, Germany” in the United States, including on a website
and social media, and allegedly used “Merck KGaA” and “MERCK” in ways so “prominent
and widespread that they function as a trademark.” This included promotion and
sale of products called “SedalMerck®,” “Merckognost®,” and “MRCKβ Protein,” as
well as signs at kiosks at multiple industry conferences.

Merck also alleged that MKDG engaged in two marketing
campaigns “specifically intended to confuse consumers as to MKDG’s history”: MKDG’s
“Original” campaign, referring to MKDG as “the Original Merck” and Merck as
MKDG’s “younger brother/sister.” Likewise, its “125 Years” campaign allegedly
touted that it has been in the United States for 125 years, even though, in
reality, MKDG has been re-established in the United States only since 1971. Finally,
MDKG allegedly registered a number of domain names virtually identical to
Merck’s registered “THE MERCK MANUAL.”

Prior Massachusetts cases have interpreted “advertising
idea” broadly, including use of the name of an athlete: A “wide variety of
concepts, methods, and activities related to calling the public’s attention to
a business, product, or service constitute advertising ideas.” Here, MKDG argued
that the advertising idea was using the “MERCK” name, in connection with the
“Original” and “125 Years” campaigns, to draw attention to the business and
attract customers. But the court agreed with the insurer that Merck didn’t
allege that it had used either “Original” or “125 Years,” and thus the
advertising idea allegedly used was not “another’s.” “To the contrary, the few
allegations in the NJ Litigation complaint about Merck’s advertising efforts
are so vague that it is impossible to divine anything about the content of its
advertisements or the style, manner, or method in which it advertises.”

Likewise, the underlying complaint didn’t plausibly allege
disparagement. Most of the statements identified were about MKDG, not about
Merck, and they didn’t say anything bad about Merck. A restaurant that
advertised “fresh” and “delicious” food would not disparage competitors by
implication. Even if “younger” was pejorative, that didn’t reference any
specific good or service and thus wasn’t disparaging. Also, the policies could
have included false advertising or publications that harmed another’s
reputation if this kind of conduct was supposed to be covered, instead of using
“disparage.” Anyway, the gravamen of the claim was false association: using
Merck’s good reputation for itself. “While harm resulting from badmouthing
would be an injury covered by the policies, harm resulting from falsely
implying an affiliation is not.”

 

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