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

MGA’s arguments differed across the different communications relied on by Cabo, and it is therefore necessary to consider these separately.

Emails to The Entertainer. MGA emphasised that it did not at any point threaten legal proceedings against The Entertainer, and cited Mr Grant’s evidence to the effect that he did not consider Mr Larian’s emails to be threatening to sue The Entertainer. Rather, MGA said that its emails indicated that action would be taken against the maker of Worldeez.

I agree that the emails to The Entertainer would have been understood as threats against Cabo rather than against The Entertainer. But that is irrelevant for the purposes of the patent threats claim, since the threat does not have to be made against the recipient of the communication; rather, it is sufficient that threats of patent infringement proceedings have been made against “another person”. MGA’s emails to The Entertainer explicitly threatened legal action against Cabo, as the maker of Worldeez, and also referred to Sinco which MGA thought was associated with Cabo.

MGA’s attempt to characterise those threats as relating to passing off rather than threatening patent infringement is entirely unreal. MGA accepted (indeed positively asserted) that the emails to The Entertainer must be read as a whole. Read in isolation, the emails sent by Mr Larian at 18:15 PDT on 23 May 2017 and 05:45 PDT on 24 May 2017 did not specifically refer to the intellectual property rights said to be infringed, but merely cited “IP” or “IP rights” in general terms. The three preceding emails did, however, all expressly claim that MGA had patent rights and asserted that MGA would take action to protect its intellectual property rights. The natural and obvious interpretation of the emails, read as a whole by a reasonable person in the position of The Entertainer, was that MGA was intending to bring patent infringement proceedings against Cabo and potentially other entities involved in Cabo.

The fact that Mr Larian expressed himself in hasty and intemperate terms, and referred in his emails to a miscellany of other supposed intellectual property rights such as copyright and trade mark rights, does not change the clear implications of Mr Larian’s communications. Indeed it is notable that the three emails which referred to specific intellectual property rights said to be held by MGA all referred expressly to patent rights. By contrast, none of the five emails sent to The Entertainer referred to passing off.

MGA could therefore garner no support from the emails themselves for the contention that they should be understood as threatening a passing off action. That is why MGA’s main point on this was that the emails to The Entertainer should be read in the light of the cease and desist letter which was sent to Cabo on the evening of 23 May 2017 (PDT), and forwarded by Mr Larian around the same time to The Entertainer. MGA argued that the letter would have been understood as articulating a claim in passing off rather than a claim for patent infringement.

While that letter (described at §§106–108 above) undoubtedly did include a claim which in substance was likely to have been understood as a complaint of passing off, it is notable that the first paragraph of that letter expressly claimed that “MGA currently has a patent pending for L.O.L. Surprise!”, and the second page of the letter demanded that Cabo “in general refrain from any infringement on L.O.L. Surprise! products or trade dress, or any other intellectual property of MGA”. Accordingly, far from dispelling any impression that MGA was intending to rely on its patent rights as against Cabo, that letter reinforced Mr Larian’s repeated references (in his emails) to his claimed patent rights in relation to LOL Surprise.

Indeed, that was precisely the way that Cabo and its solicitors understood that letter. The response from Cabo’s solicitors sent to MGA on 26 May 2017 (see §114 above) noted the claims of “patent pending” and asked MGA to identify any patent or patent application on which it relied. Cabo went on to deny any patent infringement “for the simple reason that you do not hold any patent or patent application the territorial scope of which encompasses this jurisdiction”. With some prescience, the letter continued:

“… it has come to our client’s attention that you have also issued threats to UK retailers (including The Entertainer (Amersham) Limited) that dealings in the Worldeez product will constitute patent infringement. Our client perceives there to be a very real risk that orders for the Worldeez product will be cancelled, and that other orders will not be placed for that product, by such retailers directly as a result of your threats, in which case our client will suffer substantial financial loss directly attributable to your threats.”

Cabo’s solicitors thus interpreted the cease and desist letter, and MGA’s communications with (at least) The Entertainer, in the way in which I consider those communications should objectively be interpreted, namely as making threats of patent infringement proceedings.

Email to TRU. MGA’s email to TRU likewise clearly threated legal action against Cabo, and claimed that MGA had a “patent pending” on LOL Surprise. MGA’s suggestion that this email would have been understood, again contrary to its clear wording, as a threat of proceedings for passing off rather than patent infringement, is hopeless. The email did not refer to passing off or the conditions for passing off. MGA sought to infer a reference to passing off from Mr Larian’s complaint about TRU “buying this knock off”. But as I have already found, Mr Larian habitually used his “knock off” mantra in a loose and pejorative sense, alongside a miscellany of allegations of different intellectual property rights (see §334 above). Nothing in the context would have suggested to the recipient of the TRU email that, having referred explicitly to a pending patent, the statement that MGA was “taking legal action against this company in the UK. As we speak” meant a claim in passing off rather than a patent infringement claim.

MGA also suggested that having seen the reference to “patent pending” in the email to TRU, a reasonable recipient would have taken advice which would have revealed that MGA could not immediately bring infringement proceedings. It relied in that regard on comments by Mann J in Nvidia v Hardware Labs [2016] EWHC 3135 (Ch), §§21–22, that in an “appropriate case” a threats letter should be treated as it would be viewed with the benefit of legal advice. The situation contemplated there was, however, one in which a threats letter was “couched in legal technical terms”, as compared with a letter “addressed to a businessman about business matters”. The email to TRU, by contrast, fell into the latter category. It was not drafted in technical legal terms, but was sent by Mr Larian to the management of TRU, in what was clearly a business context, expressed in direct and forthright language, and in terms which were readily intelligible to the recipients. It is, as Cabo noted wholly unrealistic to suppose that TRU would have sought legal advice in order to interpret that email, and Mr Larian cannot have expected the recipients to do so.

In any event, as MGA acknowledged, a threat of patent proceedings made prior to a patent grant can be construed as a threat to bring proceedings once the patent was granted, which is an actionable threat of patent infringement proceedings: Brain v Ingledew Brown [1996] FSR 341, pp. 347–8 (per Aldous LJ). Even if, therefore, legal advice had been taken, that would not have suggested that no infringement action was intended, but would rather simply have indicated that infringement proceedings were intended once the patent had been granted.

The email to TRU was, in my judgment, clearly and obviously a threat of patent infringement proceedings.

Mr Laughton’s telephone calls. On 24 May 2017 Mr Laughton reported by email to Mr Larian that he had spoken by telephone to “all major retailers” who “all agreed” that they would not take the Worldeez globe in its current format (§136). His oral evidence was that this referred to telephone calls with TRU, Smyths, Argos, Tesco and Sainsbury’s. He was asked about what he had said to TRU:

“Q. And you also accept in your evidence you would have explained to them that Isaac Larian believed that Worldeez, for example, infringed MGA’s patent rights …?

A.

I probably didn’t go into too much detail. … I don’t remember what I said, but I assume I would have said, ‘We may have a problem with regards patent with regards the balls’.

Later in the cross-examination, Mr Laughton was asked about his similar conversations with the other retailers:

“Q. … you fairly accept that you would have flagged your understanding from Isaac of MGA’s issues with the Worldeez globe at the time, which is it infringed MGA’s intellectual property rights?

A.

Yes.

Q. So you would have said to them in the same way, ‘MGA’s view is this infringes the patent’, for example?

A. We have some issues with it. Isaac believes it infringes the patent and we are just trying to solve it, yes.”

MGA pointed out that these answers were given in response to leading questions, and that Mr Laughton was speculating as to what he had said seven years previously rather than recalling the precise words used. Mr Laughton was, however, asked about this twice, once in relation to TRU, and then again in relation to the other retailers, and gave essentially the same answer, in substance agreeing with the proposition that he had told the retailers that MGA believed that Worldeez infringed its patent. Mr Laughton was not shy of claiming a lack recollection when he wished to avoid answering a question, but notably did not do so on this point.

Mr Laughton’s responses were, moreover, consistent with Mr Larian’s emails to The Entertainer and TRU (copied or forwarded to Mr Laughton), which as set out above had repeatedly asserted patent rights and threatened to bring legal proceedings. Mr Laughton had also himself complained to Mr Sivner in a text message exchange on 23 May 2017, either the same day as or the day before his telephone calls with the toy retailers, that Worldeez “infringes on our patent with LOL – we will protect so expect contact from MGA legal today” (§105 above). While MGA asserted that it was improbable that a retailer would have understood a layman such as Mr Laughton to be threatening legal proceedings of any kind, that is precisely what he did in his text message exchange with Mr Sivner.

In that context it is, in my judgment, very likely that Mr Laughton in his telephone calls with retailers not only did indeed assert that MGA considered that Worldeez (or at least the Worldeez globe) infringed its patent. It is also likely that he made clear in those conversations (whether expressly or impliedly) that MGA intended to enforce those rights if necessary. Cabo is therefore right to characterise those calls as making oral threats of patent infringement proceedings.