Damages inquiry in trade mark infringement—economic benefits approach preferred over comparables analysis (Merck KGaA v Merck Sharp & Dohme LLC)
IP analysis: The High Court ruled on a rare inquiry into damages following breach of contract and trade mark infringement, holding that: (1) it was appropriate to award damages based on a notional licence fee; (2) that the evidence provided meant that a comparable licence analysis was not a reliable basis for assessing the notional licence value; and that (3) in that context, the appropriate valuation basis was the economic benefits approach. Applying the economic benefits approach, the court calculated the notional licence fee based on the licensee's (ie the defendant's) avoided operating costs (including website, social media and marketing costs), adjusted for inflation and discounting using a 4% discount rate. This decision provides helpful guidance for practitioners on damages quantification methodologies in trade mark infringement cases, particularly highlighting the evidential requirements when seeking to rely on a comparables analysis and the practical application of the economic benefits approaches. Written by Charlotte Peach, senior associate at Taylor Wessing LLP.