The parties’ submissions
The parties’ submissions
Cabo identified six specific emails which it said included threats of patent infringement:
Mr Larian’s email to Stuart Grant at 07:33 PDT on 23 May 2017, “Please don’t buy knock off. We have a patent and will take action against the copycats” (§117 above).
Mr Larian’s email to Stuart Grant at 08:22 PDT on 23 May 2017, “We do have patent and copyright and we will take legal action and protect our IP” (§118 above).
Mr Larian’s email to Stuart Grant at 09:24 PDT on 23 May 2017, “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. … We invest millions in creating original ideas and innovations and will vigorously protect them” (§120 above).
Mr Larian’s email to Stuart Grant at 18:15 PDT on 23 May 2017, “We will take action against Sinco Toys and any other parties involved to protect our IP” (§122 above).
Mr Larian’s email to Stuart and Gary Grant at 05:45 PDT on 24 May 2017, “we will stop copycats and protect our IP Worldwide. We expect our friends and partners to respect our IP rights” (§124 above).
Mr Larian’s email to TRU on 24 May 2017, “We have patent pending and full copyright and trade dress protection on the LOL concept. We are told that TRU (at least in the UK) is buying this knock off. We are taking legal action against this company in the UK. As we speak” (§137 above).
In addition, Cabo said that oral threats were made by Mr Laughton to each of TRU, Smyths, Argos, Tesco, Sainsbury’s and Asda on 23 or 24 May 2017 (§135–137 and 149 above). Cabo also contended that oral threats were made to AB Gee, but I have already rejected that on the facts (§§151–153 above) so do not need to say anything more about that.
MGA said that when read as a whole, including with the cease and desist letter which was forwarded to The Entertainer on the evening of 23 May 2017 (PDT) the emails to The Entertainer would not have been understood as threatening patent infringement proceedings against either The Entertainer or Cabo, but would instead have understood the complaint to be one of passing off by Cabo. Likewise, MGA said that the email to TRU would have been understood as threatening passing off proceedings against Cabo. In respect of Mr Laughton’s telephone calls to TRU and other retailers, MGA said that it was improbable that these would have been understood as threatening legal proceedings of any kind.
- Heading
- INTRODUCTION
- THE EVIDENCE OF FACT
- MGA’s witnesses of fact
- Mr Larian’s breaches of purdah
- THE EXPERT EVIDENCE
- The economic and valuation experts: preliminary comments
- Assessment of the economic and valuation evidence
- The Decision Tree Model (DTM)
- ISSUES
- FACTUAL BACKGROUND
- The UK toy industry
- Table 1: NPD dolls classifications
- MGA and LOL Surprise
- Section 14
- The founding of Cabo and development of Worldeez
- Section 16
- The initial marketing of Worldeez
- Discussions with the launch retailers
- The Entertainer
- Toys R Us
- Smyths
- Other retailers
- MGA’s intervention
- Contacts with Cabo and Singleton
- The Entertainer
- Toys R Us
- Smyths
- B&M and other retailers
- AB Gee
- Worldeez repackaging and relaunch
- Launch of Worldeez globe in B&M
- Decline in B&M sales after August 2017
- Sales to other retailers
- Licensing and international distribution
- Nickelodeon advertising
- Demise of Cabo
- PROCEDURAL BACKGROUND
- ABUSE OF DOMINANCE CLAIM
- The relevant market definition
- The parties’ submissions
- Mr Colley’s approach
- Mr Parker’s approach
- Section 44
- Conclusions on market definition
- Whether MGA was dominant on the relevant market
- The parties’ submissions
- Table 2: 2017 market shares for Colley and Parker markets (%)
- Table 3: Parker market share estimates for 2018–19 (%)
- Table 4: 2017 market shares for extended Colley market (%)
- Market shares
- Figure 1: Colley diagram of 2017 MGA and competitor market shares
- Competition from products outside the relevant market
- Barriers to entry and expansion
- Countervailing buyer power
- MGA’s conduct
- Conclusions on dominance
- Whether MGA’s conduct amounted to an abuse
- The parties’ submissions
- The overall exclusionary campaign
- MGA’s “response to commercial attack” argument
- MGA’s passing off defence
- Section 63
- Conclusion on abuse of dominance
- UNLAWFUL AGREEMENTS CLAIM
- Agreements with the toy traders
- Discussion and conclusions
- Anticompetitive object or effect
- Discussion and conclusions
- Exemption under the VBER
- Scope of the VBER
- Market share threshold
- Excluded restrictions
- Conclusion on the VBER
- Exemption under s. 9 / Article 101(3)
- Conclusion on the unlawful agreements claim
- PATENT THREATS CLAIM
- Threats of patent infringement proceedings
- The parties’ submissions
- Discussion
- “Person aggrieved”
- Conclusion on the patent threats claim
- CAUSATION AND QUANTUM
- Legal principles
- Quantification of the loss
- The approach to claims for lost profits
- Conclusions on the overarching approach
- Causative effect of MGA’s conduct
- Actionable damage and causation: Cabo’s heads of loss
- Whether Cabo would have traded profitably in the counterfactual case
- Product quality
- Section 92
- Marketing campaign
- Retailer support
- Business plan/financial projections
- Inventory management
- Working capital
- Toy expert evidence on commercial success
- Breakeven analysis
- Table 5: Volumes and working capital required to break even in 2017
- International sales
- Conclusions on whether Cabo would have traded profitably
- The parties’ quantum models
- Mr Colley’s quantum models
- Table 6: Cabo calculations of losses (£m)
- Assessment of Mr Colley’s models
- Mr Parker’s quantum models
- Table 7: MGA calculations of losses (£)
- Assessment of Mr Parker’s significant success model
- Table 8: Loss calculation for significant success model, comparing MGA and Cabo cost stacks (£)
- Assessment of Mr Parker’s moderate success model
- Figure 2: Parker moderate success model: average monthly revenue (£)
- Conclusions on the quantum models
- DECLARATORY RELIEF
- Conclusions
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