Court reduces defendant costs on appeal due to excessive focus on complex jurisdictional issues not central to the main dispute.

THE COURT OF APPEAL

CIVIL

Approved. No redactions needed.

Record Number: 2024 287

High Court Record Number: 2023/3882P

Neutral Citation Number [2025] IECA 235

Allen J. O’Moore J. McDonald J.

BETWEEN:

MERCK KGaA

MERCK SERONO (IRELAND) LIMITED

MERCK MILLIPORE LIMITED

SIGMA-ALDRICH IRELAND LIMITED

and

VERSUM MATERIALS IRELAND LIMITED

APPELLANTS

-AND-

MERCK SHARP & DOHME LLC

And

MERCK SHARP & DOHME IRELAND (HUMAN HEALTH) LIMITED

RESPONDENTS

JUDGMENT (on costs) of Mr. Justice Denis McDonald delivered on 26th November 2025

1. This judgment is concerned solely with the costs of the plaintiffs’ appeal and the defendants’ cross appeal which were the subject of my judgment of 24th September 2025 ([2025] IECA 192) (“the substantive judgment”). The appeal and cross-appeal were taken in respect of a judgment of the High Court dated 18th October 2024 ([2024] IEHC 613) and the orders made on foot of that judgment. These orders involved the setting aside of an earlier order of the High Court dated 21st July 2023 giving leave for the issue and service of notice of the proceedings out of the jurisdiction in New Jersey on the first defendant and striking out the proceedings against the first defendant; staying the first plaintiff’s claim of trade mark infringement against the second defendant pursuant to Art. 136(1)(b) of Regulation 2017/1001 (“the EU Trade Mark Regulation”); and staying the balance of the claims made against the second named defendant pursuant to the inherent jurisdiction of the High Court.

2. The relevant facts and issues have already been addressed in the substantive judgment and will not be repeated here. In this judgment, I will refer to the parties in the same way as I did in the substantive judgment and I will use the same abbreviations.

3. In the substantive judgment (with which Allen and O’Moore JJ. agreed), I indicated that the following orders would be made:

(a) An order dismissing the plaintiffs’ appeal against the High Court order setting aside the order dated 21st July 2023 giving leave for the issue and service of the proceedings on the first defendant out of the jurisdiction in New Jersey and striking out the proceedings against the first defendant;

(b) An order dismissing the defendants’ cross-appeal against the High Court’s refusal of its motion for an order pursuant to Art. 136(1)(a) of the EU Trade Mark Regulation declining jurisdiction in respect of the claim of trade mark infringement against the second defendant;

(c) An order allowing the plaintiffs’ appeal against the order made by the High Court pursuant to Art. 136(1)(b) of the EU Trade Mark Regulation staying the claim of trade mark infringement against the second defendant and the similar order made under the inherent jurisdiction of the High Court in respect of the balance of the proceedings;

(d) An order dismissing the defendants’ cross-appeal against the refusal of its application for an order pursuant to Art. 29 of the Recast Brussels Regulation declining jurisdiction in respect of the trade mark infringement and passing off claims advanced against the second defendant;

(e) An order allowing the cross-appeal of the defendants against the failure of the High Court to stay the proceedings against the second defendant pursuant to Art. 30 of the Recast Brussels Regulation.

4. The overall effect of the orders proposed in the substantive judgment is that the proceedings against the first defendant will be struck out while the proceedings as against the second defendant will be stayed. Thus, although the Court concluded that the High Court was wrong to grant a stay of the proceedings under the inherent jurisdiction of the court, there is no significant practical difference between the outcome of the appeal and the outcome of the High Court hearing. For that reason, I suggested in para. 143 of the substantive judgment that, in circumstances where the plaintiffs’ appeal had failed to reverse the impact of the orders made by the High Court, the defendants were presumptively entitled to their costs of the appeal but I gave time to the plaintiffs to deliver submissions if they wished to make the case for a different order.

5. Written submissions on costs were subsequently received from both parties. In their submissions, the plaintiffs argued that it would be more appropriate to award the defendants 50% of their costs. The following points were made in support of that argument:

(a) The plaintiffs emphasised that neither side was entirely successful; the plaintiffs were successful on all but one of their appeal points and the defendants were unsuccessful in the entirety of their cross-appeal, although they did succeed on the basis of Art. 30 of the Recast Brussels Regulation (on which they relied as an additional ground on which the judgment of the High Court ought to be affirmed).

(b) The plaintiff also stressed two matters, namely (i) the complexity of the issues and (ii) they argued that it was reasonable for them within the meaning of s. 169(1)(b) of the Legal Services Regulation Act 2015 (“the 2015 Act”) to appeal against the decision of the High Court to set aside the order granting leave to serve notice of the proceedings out of the jurisdiction. I will refer to this as the “service out” issue.

(c) With regard to complexity, they submitted that the level of complexity was such that the Court should look beyond the simple question of whether the appeal was unsuccessful and that, instead, the Court should make a costs order which reflects the degree of success that the plaintiffs had. They suggested that approximately half of the time preparing for the hearing and half of the time of the hearing itself were taken up with issues which were decided in their favour. While they suggested in para. 28 of their submissions that they should be awarded their costs of those issues, I believe that it is clear from para. 30 of their submissions that the ultimate result of their argument is that they contend that the defendants should not be awarded any more than 50% of their costs.

(d) With regard to their contention that it was reasonable for the plaintiffs to raise the “service out” issue on appeal, they submitted that it was unclear from the High Court judgment why they had been unsuccessful and they suggested that, in the substantive judgment, the High Court judge had been found to have applied the incorrect approach.

6. In response, the defendants referred to a number of well-known cases on the principles which apply under ss. 168 and 169 of the 2015 Act. They also referred to Delaney & McGrath on Civil Procedure, (5th Ed, 2023) at para. 24-30 which provides the following very useful summary of the approach taken by the Court of Appeal in Word Perfect Translation Services Ltd v Minister for Public Expenditure and Reform.[2023] IECA 189: “While s.169(1) provides that a party is presumptively entitled to his costs where he has been ‘entirely successful’, the assessment of success does not require or permit a granular appraisal of the proceedings. Such an approach would materially lengthen the time required to determine the proceedings and increase legal costs-matters which the Court of Appeal expressly reminded the court and litigants to be wary of in Word Perfect Translation Services Ltd v Minister for Public Expenditure and Reform. … The approach embodied in Section 169(1)) promotes a broad-brush assessment of success.”

7. The defendants maintained that, on a broad-brush assessment of success, they were successful overall and that there is nothing which operates to justify a departure from their presumptive entitlement to all of their costs. They argued that, having regard to the conclusions reached in the substantive judgment, there is no basis for the plaintiffs’ contention that it was reasonable for them to appeal against the High Court's determination of the “service out” issue.

8. The defendants also submitted that, even if they should be characterised as having been no more than partially successful, they should still obtain an order for all of their costs. In support of that contention, they referred to the observation of Murray J.in Higgins v. Irish Aviation Authority [2020] IECA 277 that “... having regard to the general discretion in s. 168(1)(a) and 0.99 R. 2(1) a party who is 'partially successful' may still succeed in obtaining all of his costs, in an appropriate case.” In support of this submission, the defendants made the following points:

(a) They argued that, as a matter of substance, the plaintiffs’ appeal had failed in its entirety. They highlighted that the outcome of the appeal was that the case against MSD in this jurisdiction is over and that the case against MSD Ireland remains subject to a stay albeit now on a different legal basis;

(b) They maintained that, even if the Court were to accept in principle the allocation of a portion of costs to particular issues in the appeal, the plaintiffs “have not attempted to justify their contended-for reduction in the respondents' costs with anything approaching the required detail: they have applied far too broad a brush to their analysis, omitting any meaningful engagement whatsoever with the impact of particular issues on the appeal.”

9. It should be noted that, in their submissions, both sides approached the matter on a collective basis. In para. 30 of the plaintiffs’ submissions, the case was made that it would be fair to award the defendants 50% of their costs of the appeal and of the hearing in the High Court. They did not seek to break this down as between the MSD and MSD Ireland. The defendants took a similar approach in their submissions asking for a single order for 100% of their costs. This is notwithstanding the fact that the case against MSD was pursued solely by the first plaintiff, Merck Germany, and was confined to allegations of a breach by MSD of the 1970 co-existence agreement. It was also the case that the application under O. 12, r. 26 (i.e. the “service out” issue) solely concerned MSD. No case of trade mark infringement or passing off was asserted against MSD. The claim of trade mark infringement was asserted by Merck Germany against MSD Ireland alone but the passing off claim against MSD Ireland was asserted by all four plaintiffs.

10. In circumstances where the parties, in their submissions, have proceeded on a collective basis, a similar approach will be taken in this judgment.

Decision on costs

11. Taking a broad-brush approach, there is merit in the defendants’ argument that, in substance, the appeal of the plaintiffs failed. The appeal in respect of the “service-out” issue failed in its entirety. I cannot accept the suggestion that it was, in some way, reasonable for the plaintiffs to appeal the decision of the High Court on that application. While it is true that the High Court judge went too far in his description of the applicable test, it was at all times clear that the plaintiffs had failed to place any sufficient evidence before the court to satisfy the express requirements of O. 11, rr. 2 and 5.

12. On the other hand, given the time and energy spent by the parties on the issues under the EU Trade Mark Regulation and Art. 29 of the Recast Brussels Regulation, there is some scope for debate as to whether the defendants can truly be said to have been entirely successful in the appeal or in the underlying application before the High Court. Even if it could be said that they were entirely successful, it is clear from s. 169(1)(b) of the 2015 Act that the Court can have regard to their conduct and consider whether it was reasonable for them to pursue some of the issues raised by them in the appeal and in the application to the High Court. In my view, it was plainly not reasonable, within the meaning of the 2015 Act, for them to have pursued the appeal (or the application made to the High Court) under the EU Trade Mark Regulation or under Art.

29 of the Recast Brussels Regulation. The outcome on those issues depended on the defendants’ being in a position to show that the parties to the proceedings in Germany are “the same parties” as the parties to these proceedings in Ireland. In particular it was necessary to show that MSD Ireland (the defendant to the trade mark infringement claim in Ireland) was the same party as the defendant to the trade mark infringement claim in Germany. The case law of the Court of Justice makes clear that, in order to satisfy that requirement, it is necessary to show that the interests of both companies are “identical and indissociable”. For the reasons outlined in para. 102 of the substantive judgment, I came to the conclusion that the defendants had failed to place any sufficient information before the Court as to the relationship between MSD and MSD Ireland to support a finding that the interests of both companies are identical and indissociable within the meaning of the case law of the Court of Justice. The approach taken was at an extremely high level. I expressed the view that the evidence which the defendants chose to place before the court did not provide the court with sufficient detail to make an independent assessment of the matters asserted. In the circumstances, this essential element of the relevant test was not satisfied and the applications under the EU Trade Mark Regulation and Art. 29 of the Recast Brussels Regulation failed.

13. It cannot be said that the issues under the EU Trade Mark Regulation and Art. 29 of the Recast Brussels Regulation were inconsequential in terms of the time and attention devoted to them. They occupied a substantial element of the two-day hearing of the appeal and they also took up a significant part of the written submissions and books of authority. In the circumstances, it seems to me that it is entirely appropriate in this case that the defendants’ failure on this issue should be reflected in the order for costs. Taking a broad-brush approach, I believe that it is fair to say that an appeal focused on the “service out” issue and Art. 30 of the Recast Brussels Regulation would have comfortably finished within one day. I also believe that the work done in preparing for the appeal would have been reduced by the same proportion.

14. Taking these factors into account, I believe that it is appropriate to reduce the award of costs made in the defendants’ favour in the High Court and, given that the focus should have been sharper on appeal, I believe that a somewhat higher reduction should be imposed in respect of their costs of the appeal. I would be prepared to allow them two thirds of their party and party costs of the application before the High Court and 50% of their party and party costs of the appeal.

15. Allen and O’Moore JJ. agree with the order that I propose and the reasons for it.