Startup triumphs in patent infringement dispute, yet fails to secure monetary compensation.
Shaking Up the Toy Industry: The High Court's Verdict on MGA Entertainment's Dominance
A groundbreaking decision was made by the High Court in London in June 2025, marking a significant shakeup in the toy industry. The trial dealt with allegations of patent infringement and the abuse of a dominant position by MGA Entertainment (MGA) against Cabo Concepts (Cabo). The case had far-reaching implications for competition in the sector.
The War over Worldeez
In 2017, Cabo, a fledgling toy company, brought forth a line of collectible figurines called Worldeez. Cabo planned to introduce Worldeez in major UK toy retailers, including The Entertainer, Smyths, and Toys R Us (TRU). However, MGA, with its popular LOL Surprise brand, allegedly intervened, claiming that Worldeez had infringed MGA's intellectual property rights.
Cabo accused MGA of using coercive tactics, aimed at excluding Worldeez from the market, through its dominant position. They argued that these tactics included unjustified threats of patent infringement, as MGA lacked relevant patents at the time.
The Battle in Court
Cabo's claims were bolstered by emails and communications between MGA executives and toy retailers. The Entertainer had initially placed an order for 40,000 units and planned a launch event with a popular influencer, but after MGA's threats, the order was canceled, and the event never took place. Other retailers like TRU and Smyths never placed orders, following MGA's intervention.
MGA defended itself by asserting that its actions were a legitimate response to what it perceived as a commercial attack on its LOL Surprise brand. It claimed that Worldeez was a "knock-off" and that it had a right to protect its intellectual property rights.
Judge's Ruling
In her verdict, Mrs. Justice Bacon found that MGA's conduct constituted an abuse of a dominant position. She stated that MGA's threats to withdraw supplies of LOL Surprise were coercive and aimed at excluding Worldeez from the market. The judge also declared that MGA's threats of patent infringement were unjustified, as it did not have any relevant patents at the time.
The judgment also criticized MGA's CEO Isaac Larian for breaches of purdah, which undermined the integrity of the trial process.
Despite being awarded declaratory relief because MGA's conduct constituted unjustified threats of patent infringement proceedings, Cabo's claim for damages was dismissed. The court found that "Cabo would not have been profitable in the counterfactual case."
Key Players and Representation
In the case of Cabo Concepts and another (claimants) v MGA Entertainment (defendant), Cabo was represented by a team from Monckton Chambers, 8 New Square, and One Essex Court, while MGA was represented by Brick Court Chambers.
- The judge's ruling in the Cabo Concepts vs MGA Entertainment case found that MGA Entertainment's conduct in the finance and business sector, specifically the toy industry, constituted an abuse of a dominant position, as it coercively threatened to exclude a competing product called Worldeez.
- In the war over Worldeez, MGA Entertainment, a leading player in the finance and business sector, allegedly used its dominant position to interfere with market entry, causing a fledgling company, Cabo Concepts, to abandon its plans to introduce Worldeez in major UK toy retailers, partly due to unjustified threats of patent infringement.
