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

The Cabo founders came up with the idea for a new collectible toy, Worldeez, on a family holiday together in 2014. They were inspired by watching their own children’s interest in unboxing videos and surprise collectible toys such as Kinder Eggs and capsules sold in vending machines. Their idea was for a range of collectible dolls from countries around the world, complemented by other objects associated with each country.

The design process started in early 2016, with the help of an external designer, Mr Olivier. The initial range featured eight countries (UK, France, Italy, Brazil, India, Egypt, Japan and the US) with fifteen figurines for each country: a boy and girl figurine, plus thirteen figurines of associated cultural items. The UK range included, for example a teacup and a Loch Ness monster. The France range included a croissant and an Eiffel Tower figurine.

The Cabo founders did not themselves have any experience of the toy market: for that they relied on Singleton. Mr Sivner had already expressed an interest in Singleton expanding into having its own “intellectual property”, and was aware of the growing market for collectibles. Mr Sivner and Mr Lazarus agreed to enter into a business partnership with the Cabo founders to bring the product to market.

Cabo was incorporated in August 2016 with an initial capital investment of £25,000 from each of Mr Sivner and Mr Lazarus, and investments of £12,500 from each of Mr and Mrs Michaelson and Mr and Mrs Cohen. Mr Sivner and Mr Lazarus each held 25% of the shares in Cabo, with the four Cabo founders each holding 12.5%. The directors of Cabo were Mr Michaelson and Mr Lazarus. Singleton agreed to provide the further funding required to market the products and to fund (at least) the initial production costs. The extent of its willingness to provide ongoing funding was, however, later a source of disagreement within Cabo, and remains a disputed issue in these proceedings.

It was agreed that the Cabo founders would manage the design, marketing and sales of Worldeez. In addition to providing financial support, Singleton was to provide the use of its operational infrastructure and contacts within the toy business, including contacts at a number of leading retailers. In August 2016 Mr Sivner introduced the Michaelsons to Mr Garnham, who had been involved in the development of the Moshi Monsters brand. He offered advice on the design of the Worldeez characters, suggesting the addition of eyes to all of the figurines. Mr Garnham said that he did this as a favour to Mr Sivner, and because he liked to encourage entrepreneurs in the toy industry. He thought that the initial design of the product was too basic, but that it had a better chance of success once the design had been changed.

A factory in China was identified to manufacture the products, and Mr Michaelson and Mr Cohen attended the Hong Kong toy fair in January 2017 where they showed samples of the product to Stuart Grant. He was enthusiastic about the product, and offered advice on the size and packaging. Initially, the Cabo founders had considered packaging the figurines in a toy suitcase, but Stuart Grant felt that this lacked the necessary “wow factor”. Mr Cohen then came up with the idea of a globe design, which fitted the travel theme and was already present in the “O” in the Worldeez logo (which was drawn as a globe). Mr Cohen further suggested the use of a key to unlock a compartment in the globe. The Cabo founders then finalised the artwork for the packaging and wrapping. They were told by the packaging company that they would need two layers of wrapping (one vertical and one horizontal) to cover the globe.

The final “hero” or anchor product of the Worldeez range was the Worldeez globe, consisting of a pink spherical capsule covered in two layers of plastic wrapping which (originally, before it was changed in the circumstances described below) displayed an image of the Italian girl figurine “Bella” riding on a scooter down a rainbow through the sky, the sky being represented with a blue background.