Toy giant ordered to pay costs after UK disclosure fail
Doll maker accused of missing 1m documents | IP dispute delayed by four years | UK company sues after rival ‘forced’ toy stores not to sell similar products.
The LOL Surprise! doll maker MGA Entertainment has been accused of a “serious failure” to comply with their disclosure obligations during a case brought by smaller rival Cabo Concepts initially brought in 2020.
The claimant, maker of the Worldeez toy range, sued MGA for damages owing to an adjournment, after MGA allegedly missed more than 1 million documents during the disclosure process of an anti-competition suit.
While the parties are awaiting the full judgment, a hearing took place yesterday in the UK High Court (Patents Court) in which Justice Joanna Smith ordered MGA to pay Cabo ‘thrown-away’ costs on an indemnity basis, and 45% on account (approximately £700,000), to cover expenses incurred due to the delay of the case caused by the missing documents.
Cabo said it had incurred legal costs of approximately £1.5 million in preparation for the trial.
The original case, which should have been heard this year, will now be heard in October 2024.
In its skeleton argument, the claimant asked the court to “appreciate the prejudice in human terms that Cabo has suffered as a result of that delay.
“Cabo is not a large corporation or experienced litigant, but a collaboration between the four individuals who tirelessly devoted their collective energies to bringing a new toy product to market—only to find themselves excluded from that market by MGA in 2017, just at the point when their product was on the verge of commercial success.”
Disclosure ‘errors’
Cabo claimed that MGA had informed the court on June 6, 2022, three weeks before the trial was set to commence, that it had missed almost 85,000 documents during the data collection process underlying its disclosure.
The claimant adds that while “the full extent of the errors is still continuing to emerge”, there appears to be approximately 900,000 documents not initially collected from custodians.
According to MGA, approximately 30,000 of these respond to agreed search terms and therefore require review. This brings the number to around 1.1 million documents originally captured by MGA, alleges Cabo.
Richard Spector, partner at Spector Constant Williams which is representing Cabo Concepts, told WIPR: “This case in court highlights the seriousness of what is a highly unusual and significant disclosure failure.
“This was not an instance of one or two missing documents in a disclosure before a case. Approximately, 800,000 documents were not harvested for disclosure despite the fact that MGA’s lawyers, Fieldfisher, had represented to the court at the CMC in July 2021 that MGA had the requisite experience to carry out the task in-house, and that there would be supervision—including from Fieldfisher.
"The problem only came to light just before trial, and so significant was this oversight that the original case, a competition and intellectual property dispute between our client and the defendant, is delayed until October 2024—four years after proceedings began.”
He added that while SCW is “pleased” with the judge’s decision yesterday, “no client should have to wait that long for their dispute to be heard”.
“In this instance, that delay could have been easily avoided had MGA agreed to Cabo’s proposal before the CMC to have oversight from an independent e-disclosure provider."
Worldeez loses out to LOL Surprise!
Cabo Concepts issued pre-action correspondence in 2019 to MGA Entertainment (UK) and MGA Entertainment (based in the US), and began proceedings in 2020.
As explained in the court decision, handed down in March 2021 in the UK Patents Court, Cabo produced a similar toy range at a similar time as the LOL doll range, but accuses MGA of using its market dominance to monopolise toy retailers to stock their products.
It also alleges that MGA is claiming to have a non-existent patent in order to persuade retailers to only sell its toys, thereby excluding Cabo’s Worldeez products.
Cabo claims that orders for Worldeez products from UK retailers were cancelled, leading to the ultimate demise of the products in early 2018.
LOL Surprise! dolls, which the judge described as “an extremely successful product line”, were first presented to retailers in the US from June 2016, and made available for sale in the US from October 2016. They were launched in the UK from February 2017.
According to the court document, they are described by MGA as: “The LOL Surprise! product line comprises a range of dolls characterised by proportionately oversized and cartoon-like head and eyes, with a range of collectible and interchangeable accessories; contained in a surprise format requiring unwrapping of a spherical ball container wrapped with layers of tight plastic material, in a blue "cyan" colour with a pastel palette, and a prominent speech bubble.”
‘Unjustified threats of patent infringement’
Cabo’s toy range, Worldeez, was a series of small plastic collectible character toys and cards, and the flagship product was a globe, opened with a collectible key to reveal two Worldeez characters and collectors' cards hidden inside.
Cabo attempted to launch its Worldeez product line in around April and May 2017. It had arranged a review on a YouTube channel presented by a 'child influencer' and set up three major UK specialist toy retailers to launch the Worldeez product line. It said discussions took place for in-store launch events and that orders were placed.
The defendants wrote a letter of complaint to the claimant dated 23 May 2017, claiming that the Worldeez products were marketed in packaging which was confusingly similar to that of the LOL products.
The claimant alleged that, at around the same time, the defendants “embarked on a campaign to put pressure on UK toy traders not to buy, stock or supply Worldeez toys”. This course of conduct is alleged to include “unjustified threats of patent infringement”.
Cabo claims that the planned UK launch events in July 2017 were cancelled and that by September 2017, orders for its products from UK retailers were cancelled, leading to the demise of the products in 2018.
WIPR approached Fieldfisher, but it said it was unable to comment on the case at this time.
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