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

At 07:33 PDT on 23 May 2017, two minutes after receiving Mr Laughton’s first email regarding Worldeez, Mr Larian emailed Stuart Grant, forwarding him the Tiana unboxing videoand saying “Please don’t buy knock off. We have a patent and will take action against the copycats”. He then emailed Mr Laughton forwarding his message to Stuart Grant and instructing Mr Laughton to “Cut their shipment now until we get an answer”. It is not disputed that this was an instruction to suspend MGA’s deliveries of LOL Surprise to The Entertainer, which at the time amounted to around $2m worth of the product. Mr Laughton responded confirming that he had done so. Mr Larian replied by repeating his instruction to block supplies to The Entertainer. He followed this with a general instruction to Mr Laughton, stating that “Any retailer that buys knock off will be black listed and not get goods. This will be our policy”.

Mr Larian then sent a long email to both Stuart and Gary Grant (at 08:22 PDT), copying in Mr Laughton and Ms Elizabeth Risha (MGA’s general counsel). He informed the Grants that “We do have patent and copyright and we will take legal action and protect our IP. Andrew [Laughton]: stop LOL shipments to Entertainer please”. That latter instruction was, of course, entirely performative and included purely for the purpose of intimidating the Grants, given that Mr Laughton had already confirmed that he had cut deliveries to The Entertainer.

Stuart Grant was (like Mr Larian) in Las Vegas to attend the toy fair, and replied at 09:01 PDT:

“I’m shocked to read your reaction below, the worldeez product is completely different to lol. The ball opens with a key to unlock 2 surprise 2cm … of course you are completely entitled to pull deliveries of your product but with all the plans we have to support the series 2 launch to pull at this stage would be a great shame. I am more than happy to provide a sample to you of worldeez so you can see the difference for yourself.”

Mr Larian’s response at 09:24 PDT was as follows:

“We have a patent for this concept of layers of surprise in a ball.

And this item has even copied the color of our balls as well as the shrink wrap in clear intent to palm off our good will and trade mark and trade dress.

It’s really disappointing.

… We invest millions in creating original ideas and innovations and will vigorously protect them.”

Later that day, Mr Laughton spoke to Gary Grant, who Mr Laughton described (in his evidence to the court) as “very emotional”. Following the call Mr Laughton confirmed in an email to both Stuart Grant and Mr Larian (at 20:03 BST, 12:03 PDT) that he was cancelling all of The Entertainer’s orders for LOL Surprise, in order to “protect our property and our development”. It was, however, apparent that by that stage Mr Larian had not seen the Worldeez product and was not at all sure that it was, indeed, an infringement of any of MGA’s rights, because he replied to Mr Laughton’s email (at 12:06 PDT, 20:06 BST) saying “Ask for a sample to see if it’s really a knock off”. Mr Laughton simply replied within minutes saying, “It so is Isaac. Totally unacceptable”.

Stuart Grant replied to Mr Laughton and Mr Larian (17:17 PDT, 01:17 BST on 24 May 2017) complaining that The Entertainer was being “picked on”, and noting that it was one of many retailers stocking the product. He asked that Mr Larian make contact directly with Mr Lazarus. Mr Larian responded (18:15 PDT) that MGA was not picking on The Entertainer, and would “take action against Sinco Toys and any other parties involved to protect our IP. If other retailers are also going to buy and sell infringing products, we will also stop shipping them”. Mr Larian then forwarded to Stuart and Gary Grant the cease and desist letter that had been sent to Mr Sivner (18:20 PDT, 01:20 BST on 24 May 2017).

At 08:00 BST on 24 May 2017, midnight PDT, Gary Grant weighed in, repeating the complaint that The Entertainer had been victimised and “caught in the crossfire” given that “all major retailers” were listing Worldeez. He said that the correct course of action was to serve notice on the company placing the product on the market. Just over an hour later, however, the Grants capitulated. Stuart Grant sent an email to Mr Larian (copied to Mr Laughton and Gary Grant) stating that:

“In light of your legal action, not wanting to be caught in any cross fire and pending legal ruling we have put our worldeez orders on hold. Can you please confirm with this action you are prepared to re instate our lol orders?

Isaac we really feel like a piggy in the middle and just want to be fair to both parties. And if the situation was against you I’m sure you would appreciate retailer support.”

Both Mr Laughton and Mr Larian replied thanking Stuart Grant for his confirmation. Mr Laughton confirmed that he had reinstated The Entertainer’s orders. Mr Larian’s email (sent at 05:45 PDT) repeated his position that “We bring new innovation to the toy business and we will stop copycats and protect our IP Worldwide. We expect our friends and partners to respect our IP rights.”

Mr Larian did not, however, leave things there. Later that day (i.e. 24 May) he emailed the Grants to tell them that he had seen Mr Sivner and Mr Lazarus at the toy fair, and that they had agreed that “their ball” was a “knock off” of LOL Surprise. He continued:

“They don’t want a law suit. So our lawyers are going to let them know how and what changes they must make.

Which brings me to this. Why would Entertainer (or any retailer) support a blatant knock off? Whether MGA or any other toy company? …

All retailers in the U.K. Have confirmed they aren’t going to buy this knock off.

We will enforce our IP vigorously and cease any shipment of infringed products at custom.

Please ask your buyers to respect original IP.”

Notwithstanding the capitulation of the Grants, Mr Larian expressed continued disappointment with The Entertainer in an email exchange with Mr Laughton the next day (25 May). Mr Laughton replied claiming that he was even more disappointed, and noted that “I am reviewing their orders and forecast and will allocate accordingly … They are greedy”. The clear inference from that email was that Mr Laughton was intending to reduce The Entertainer’s allocation of LOL. Mr Laughton begrudgingly accepted, in cross-examination, that he was thereby seeking to appease Mr Larian.

On 31 May 2017 Gary Grant emailed Mr Larian to confirm The Entertainer’s position:

“I have followed the email trail regarding [Worldeez] with interest. I am not sure I agree with your view that the products conflict but clearly you are unhappy and if there is enough crossover I have better things to chase and life is too short than to fall out with you. I also value the relationship we have with you, this has taken years to build and it’s not something we wish to put at risk …

For the reasons above we have decided not to run the [Worldeez] ball which I understand is the only product in the range you are unhappy with. The concept clearly does not clash with LOL in-fact it’s more like Shopkins than anything else … for this reason we have decided only to stock the 5 and 10 pack [Worldeez] product, I am sure you will be happy with this decision?

I hope you can see we have responded and respected to your concerns and look forward to another successful trading year with all your brands”.

Stuart Grant accepted that, as this email made clear, the reason that The Entertainer decided not to stock the Worldeez globe was because of the objections of MGA, and that The Entertainer would have supported Cabo and stocked the Worldeez globe if it were not for MGA’s intervention. He maintained that this was an “independent” decision by The Entertainer. I do not accept that characterisation. The decision was one that was taken with great reluctance in the face of MGA’s threats to withdraw all supplies of LOL Surprise to The Entertainer.

Mr Larian replied to Mr Grant with a lengthy email on 1 June 2017, which included the claim that Mr Sivner had agreed that Worldeez was “too similar” to LOL and that Cabo would change the design of the shrink wrap to make it “very different” to LOL before launching the product. In the same email Mr Larian asserted that The Entertainer could “go ahead and buy [Worldeez] … if you really don’t see a product conflict”, but noted, pointedly, that “you, as a retailer can buy anything you want, the same way a supplier can choose who to sell to and not”. It was put to him in cross-examination that this was a reminder of MGA’s threats to stop supplying LOL to The Entertainer. Mr Larian’s initial denial was followed by a comment which confirmed that this was indeed precisely the intention of that email:

“If you choose to go and buy a knock off, that’s your choice. I don’t like it, but you don’t need the original product. That’s my choice not to sell the original product to – whether it’s Entertainer or another retailer who buys the knock off.”

MGA’s position remained unchanged through the course of 2017. On 7 September 2017 Gary Grant emailed Mr Laughton attaching a picture of Worldeez and asking “These are now [in] Toyshop’s that are selling LOL … can we buy now?” Mr Laughton replied, with careful opacity, “You can of course buy what you want Gary. It’s totally your choice.” Gary Grant complained:

“You know that’s not a straight answer … we support you in all ways and feel we are being penalised as we have bowed to pressure yet others are still receiving LOL stock and selling worldeez … what does this level playing field look like? We have only one weeks stock of LOL left … can you find us more stock as we stay exclusive to MGA?”

Mr Laughton replied, again opaquely: “As I have said it’s totally your decision Gary, it’s your business. I believe you have stock arriving.” The inference to be drawn from that email exchange was, however very clear: as Mr Laughton eventually accepted when cross-examined on this point, he didn’t want to say explicitly that if The Entertainer bought the Worldeez globe then it would not be supplied with LOL, but that was what Mr Laughton wanted Gary Grant to understand.

On 15 February 2018, Stuart Grant again emailed Mr Laughton seeking clarification of the products to which MGA took objection. Mr Laughton again refused to answer the question, claiming that “We have no issue with you stocking anything”. Gary Grant, in response the next day, yet again complained about the position being taken by MGA:

“we clearly need to avoid direct copies but we feel the net has been thrown very wide beyond what is reasonable …

It seems to me that if MGA believe that a toy is a copy and infringes its IP or [copyright] it will take legal action and in the unlikely event that we have any of these potentially infringing products in stock we will withdraw them from sale without question.

To date I am unsure that any such action has been taken so we must assume that all current known products are non-infringing and therefore acceptable to MGA.

If by inference MGA are trying to restrict our right to stock non infringing products it does not feel like a partnership. We go the extra mile for all our partners and value genuine relationships so the subtle threats of non-supply feels unreasonable. If we stock lines where MGA have not taken legal action and cease and desist action has not been issued, we have to assume that is fine to sell, otherwise this leaves us not quite knowing where we stand … hence our request for guidance.”

Mr Laughton forwarded that email exchange to Mr Larian saying “Don’t comment or stop Stuart [Grant] coming to showroom – let’s see how big their balls are. Asda and Argos confirmed they are not stocking.”

A week later on 23 February 2018, in response to a request by Stuart Grant for more stock of LOL products, Mr Larian replied copying Mr Laughton: “Let me look. WM has the exclusive Zuru SHIT surprise and we don’t want LOL to hurt those sales at WM. May be we can give some of their allocation to others in the UK.” Mr Larian then asked Mr Laughton “Do you think he got the message?” Mr Laughton replied “Well I certainly did and im quite slow towards the end of the week.” Again, as the exchange between Mr Larian and Mr Laughton confirmed, Mr Larian’s email to Stuart Grant was a thinly-veiled threat to The Entertainer that their allocation of LOL would be reduced if they sold products to which Mr Larian took objection.