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

Ultimately, MGA’s only real defence to the abuse claim, in relation to its threats to withdraw supply, was its contention that MGA’s conduct was a legitimate and proportionate response to an attack on its commercial position. MGA had pleaded a passing off defence (which is addressed below). Its commercial attack argument did not, however, rely on a claim that Worldeez was passing off LOL Surprise. Rather, the way in which MGA put its case in its closing submissions was to say that even if there was no passing off as a matter of law, there was a commercial attack which involved “unfair or objectionable conduct, to which MGA legitimately and obviously wished to respond”, since: (i) MGA had expended time and effort in the creation of LOL Surprise; (ii) the external appearance of the Worldeez globe “reasonably appeared in May 2017 to be a copy of LOL Surprise”; (iii) it was likely that any sales made by Cabo would be because of the globe’s similarity to LOL Surprise. That was, in MGA’s submission, the sort of attack on its commercial interests which entitled it to take action.

MGA’s argument therefore appeared in substance to be that it was objectively justified in threatening to withdraw supply, because it reasonably thought that the original packaging of the Worldeez globe was a copy of LOL Surprise and therefore objectionable in some (undefined) sense, even if could not bring claim in passing off. That argument is hopeless and I unhesitatingly reject it.

First, it is well-established that it is entirely legitimate for a product to look like another trader’s product, so long as it is not passed off as a product of that other person (and provided, of course, that no other intellectual property rights are infringed – but MGA does not rely on any others). As Jacob J stated trenchantly in Hodgkinson & Corby v Wards Mobility [1994] 1 WLR 1564, at 1569–70:

“There is no tort of copying. There is no tort of taking a man’s market or customers. Neither the market nor the customers are the plaintiff’s to own. There is no tort of making use of another’s goodwill as such. There is no tort of competition. …

At the heart of passing off lies deception or its likelihood, deception of the ultimate consumer in particular. … Never has the tort shown even a slight tendency to stray beyond cases of deception. Were it to do so it would enter the field of honest competition, declared unlawful for some reason other than deceptiveness. Why there should be any such reason I cannot imagine. It would serve only to stifle competition.”

Absent passing off, therefore, there was nothing objectionable or unfair about the presence on the market of the Worldeez globe: it was normal and healthy competition on the merits. Cabo was entitled to market and promote the product, and the key retailers were entitled to stock it and advertise it to their customers. Doing so was (to use the language of United Brands)“regular commercial practice”: it was a legitimate and normal course of conduct for the retailers to stock the Worldeez range, if they chose to do so, alongside any of the other collectible toys in their stores.

MGA was entitled to respond to that by competing on the merits, for example by offering a superior or more innovative product, or by implementing a better marketing campaign. What MGA was not entitled to do was to stifle legitimate competition by exercising its market power to cut off the main retail outlets for the globe. The fact that MGA had invested time and effort in the creation of LOL Surprise makes no difference to that analysis: the fact that an innovative product may, sooner or later, meet with competition from rivals is an entirely normal feature of a competitive market.

Secondly, I do not accept that MGA’s conduct was a response to a genuine belief that the Worldeez globe was a copy of LOL Surprise even in the original Worldeez packaging design. Mr Larian’s initial barrage of emails, including instructions to Mr Laughton to cut supplies of LOL Surprise to The Entertainer, was sent before he had seen any physical sample of the Worldeez globe. Only several hours later, after multiple emails sent to The Entertainer making clear that its supplies of LOL Surprise would be cancelled, did Mr Larian’s ask Mr Laughton for a sample of the product “to see if it’s really a knock off”. It was then not until the next day that Mr Larian actually saw the globe, at his meeting with Mr Sivner and Mr Lazarus at the Las Vegas toy fair. By then MGA had already extracted an agreement from The Entertainer that it would not stock the globe.

It is, moreover, apparent that while Mr Larian repeatedly protested that the Worldeez globe was a “knock off” of LOL Surprise, he was using that phrase in a loose and pejorative sense, on the basis of a cursory and impressionistic assessment that the external packaging of the globe looked somewhat similar to that of LOL Surprise. It did not reflect any considered analysis of what was objectionable about the globe, and certainly was not based on any assessment of how the globe might have infringed any specific intellectual property rights held by MGA. That is clear from the panoply of accusations made by Mr Larian before seeing the globe or receiving any advice from his lawyers, ranging from threats of patent and copyright infringement to references to MGA’s “trade mark and trade dress”, and vague complaints about “palm[ing] off of MGA’s good will”.

The cease and desist letter sent from MGA’s in-house lawyers on 23 May 2017 (see §106 above) likewise referred in vague terms to a patent pending, without identifying which patent; contended that Worldeez (in general, not limited to the globe or its external packaging) was likely to mislead or deceive consumers in a whole range of respects; and demanded that Cabo not only refrain from offering the product in packaging that resembled the LOL Surprise packaging, but also that it refrain from other unspecified infringements of MGA’s intellectual property rights in relation to LOL Surprise. As set out above, Cabo’s request that MGA identify the patent or patent application upon which it relied met with no answer.

Even when MGA did involve external solicitors, the letter from Mishcon de Reya sent on 26 May 2017 (§114 above) was even less specific, simply alleging that “your Worldzee [sic] product … infringes our client’s intellectual property rights in its L.O.L. Surprise! Products” and requiring the destruction of all existing stock. The objections in that letter were (again) not limited to the globe or its external packaging; and the letter did not identify any specific intellectual property right alleged to have been infringed. The letter should never have been sent. It was oppressive, entirely unreasonable, and provides no basis for an assertion that MGA was entitled to object to the Worldeez globe.

Indeed, given that MGA involved its lawyers so quickly after it became aware of Worldeez, if there was any suggestion that MGA genuinely believed that it had any grounds to object to Worldeez (or at least the Worldeez globe), one would have expected to see some evidence to that effect. There is, however, none; and in fact the evidence indicates the contrary. In the email exchange between Mr Laughton and Mr Larian on the day of the launch of the Worldeez globe at B&M (§159 above), Mr Laughton asked Mr Larian directly whether retailers could legally buy the globe. Mr Larian replied saying that he would “ask the lawyers” (suggesting, surprisingly in light of the letters and emails that had been sent, many by him, that he did not know the answer to that question). A few days later, on 6 July 2017, Mr Larian told Mr Laughton “Retailers who buy knock off: we can’t tell them not to buy these. But, they are black listed … and will not be allowed in MGA showrooms if they buy ANY LOL knock off.” When asked about this email in cross-examination, Mr Larian avoided engaging with the questions put to him. The point of the email was, however, clear on its face: Mr Larian evidently understood by then that he had no legal basis for objecting to the sale of Worldeez, such that his only leverage was to withhold supplies of LOL Surprise.

In similar vein, when MGA’s Amazon account manager asked Mr Laughton on 7 July 2017 whether she should initiate Amazon’s take-down procedure in relation to Worldeez, which would require confirmation that MGA had a good faith belief that the listings violated its rights, Mr Laughton replied “No you can’t do this. It’s up to them if they want to run it at the moment”. Mr Laughton accepted that he said this because he had been told by Mr Larian that MGA had no right to prevent retailers from taking Worldeez.

Thirdly, MGA’s submissions in this regard glossed over the fact that the packaging of the Worldeez globe was rapidly changed by Cabo before the globe was launched, but it is clear that MGA did not lift its objections to the product. That belies the suggestion that MGA’s conduct was genuinely a response to a commercial attack.

MGA’s attempted justification of its conduct as a response to a commercial attack therefore fails both as a matter of law and on the facts. Ultimately, if MGA had a genuine belief that the Worldeez globe interfered with its rights on any proper legal basis, its remedy was to bring proceedings on that basis. A dominant firm is not entitled to simply circumvent the proper legal procedures (with the inherent uncertainty of litigation) by taking retaliatory anti-competitive action against a product on the basis of a claimed belief that that product’s similarity to its own product was unfair or objectionable.