Blue merle is a recessive gene/trait. Only certain breeds have merle... Yorkies do not. It's impossible to have a purebred Yorkie that is blue merle, it had to have been mixed with something. There is a lot of controversy over merle in general.... merle on merle breeding is super bad. I know it usually causes blindness/deafness.
It's most common in Australian Shepherds and Border Collies. With that said, it's one of my favorite "colors" on a dog -- I just think it's soooo pretty!
http://upload.wikimedia.org/wikipedi...blue_merle.jpg