Seeing Double: Merck KGaA Asks Court to Order Facebook to Explain Why Its Page Now Belongs To Merck & Co.
Last week Merck KGaA asked a federal court to order Facebook Inc. to explain how the German drug manufacturer lost its page to a competitor. The page in controversy has been assigned to Merck KGaA’s American competitor Merck & Co., which is contrary to an agreement from 2010 that assigned http://www.facebook.com/Merck to Merck KGaA. The dispute involves a trademark infringement claim based on the title and rights to the “Merck page” on the social media website and is indicative of a growing trend of large companies litigating based on online-presence. Merck KGaA has not, however, taken any action against its U.S. counterpart.
For a trademark infringement claim to succeed, a complainant must allege that the consumer will likely be confused by the defendant’s use of a mark or word. Courts will look to the presence of eight factors in considering whether a likelihood of confusion exists. Those factors are: (1) strength of the mark, (2) similarity of the marks, (3) overlapping/proximate relationship of goods or services, (4) evidence of actual confusion, (5) marketing, (6) sophistication of the relevant consumer, (7) intent of the defendant, (8) and likelihood of expansion into other markets (if the trademark owner is not present in that industry already). This eight part test has been articulated and applied in many claims, including one of the more famous trademark cases, AMF, Inc. v. Sleekcraft Boats.
Merck KGaA is the German-based ancestor of the American drug manufacturer Merck & Co. Both companies trace their origin back to the same owner from 1668 that purchased and operated a drug store in Darmstadt, Germany. Following World War I the subsidiary company, Merck & Co., was confiscated from the parent company in Germany and made to be an independent company. As a result, since both companies carry virtually the same history and have been operating for over a century, bad faith use of the name Merck is very unlikely.
However, the agreement between Merck KGaA and Facebook allegedly executed in March of 2010 for exclusive rights to the “Merck Page,” may be used to establish some sort of bad faith action by Facebook or Merck & Co. since Merck KGaA claims it had already purchased and created its own page. The terms of the agreement have not been discussed at length this point in the proceedings; however, Facebook’s explanation of how the page changed hands from Merck KGaA to Merck & Co. may establish some crucial information that could amount to a trademark infringement. The other seven elements are heavily contingent upon the factual record that Merck KGaA is able to round up in establishing a likelihood of confusion. While the outcome of this case is not readily apparent, it is becoming clearer that companies are preparing for battles in the new realms that technology may bring.
Online presence is now a new focus of trademark owners since many consumers are more focused on gathering information and buying products online. Past trademark disputes have implicated Facebook, Google, and other internet based companies’ failure to protect the exclusivity of certain trademarks. While social media websites and search engines cannot police all of their content and parse for trademark infringing data, trademark owners have argued that a system should be established for enjoining the misuse of trademarks. Google has responded by making their policy more explicit regarding trademark infringements in AdWords and by establishing a complaint procedure. Although Merck GaA may be seeking additional damages for breach of contract, ultimately it should set its sights on encouraging Facebook to create a more transparent and elaborate trademark complaint and enforcement mechanism as well.