HP-2020-000016 - [2025] EWHC 1451 (Ch)

MGA’s conduct was an abuse of its dominant position, contrary to the Chapter II prohibition and Article 102 TFEU, in the form of an exclusionary campaign based on threats to withdraw supply of LOL Surprise to existing customers, accompanied and reinforced by threats of litigation and disparaging claims that Worldeez was a “knock off” of LOL Surprise.

MGA’s conduct involved agreements with The Entertainer, TRU and Smyths which were in principle restrictive of competition by object; but those agreements were exempt under the VBER and therefore not prohibited by the Chapter I prohibition or Article 101(1) TFEU.

MGA made unjustified threats of patent infringement proceedings, within the meaning of s. 70 of the 1977 Act, to The Entertainer, TRU, Smyths and other retailers. If necessary, I would have found those threats to be causative of any loss suffered by Cabo as a result of MGA’s conduct.

Cabo’s damages claim ultimately turned on a claim that Cabo would have traded profitably but for MGA’s conduct. Having regard to all the evidence before the court, including in particular, the evidence of Worldeez’ quality as a product, the strength of Cabo’s marketing campaign, the extent of retailer support for Worldeez, Cabo’s financial projections and operational abilities, the working capital available to Cabo, the toy expert evidence on Cabo’s likely commercial success, and the analysis of the sales required to break even in 2017, I consider that Cabo would not have traded profitably in the counterfactual case.

It is therefore not strictly necessary to consider the quantification of Cabo’s loss. Nevertheless, an assessment of the quantum models of Mr Colley and Mr Parker, for Cabo and MGA respectively, supports the conclusion that Cabo would not have been profitable in the counterfactual case.

Cabo’s claim for damages therefore fails. It is, however, appropriate to make a declaration that MGA’s conduct constituted unjustified threats of patent infringement proceedings.