Cabo Concepts Ltd v MGA Entertainment (UK) Ltd & Anor

At a case-management stage, the court should select the procedure that deals with the proceedings justly and at proportionate cost. Whether liability, causation and quantum should be split requires a pragmatic assessment of the particular case, including overlap in evidence, duplication, delay, complexity, settlement prospects and the clarity of any proposed division. A split is inappropriate where the proposed stages remain substantially interdependent or where the evidence on liability materially overlaps with causation and quantum. The court also confirmed that a claim involving patent threats may remain in the Patents Court where the principal issues concern competition law and the court can list the matter before a judge with appropriate expertise.

This was the first case management conference in a claim by Cabo Concepts Ltd against MGA Entertainment (UK) Ltd and MGA Entertainment, Inc. Cabo alleged competition-law infringements and unjustified threats of patent infringement concerning the launch and subsequent failure of its Worldeez toy product line. The defendants disputed liability, causation and loss, and relied in part on passing off and other causes for the product’s failure.

The court determined applications concerning transfer from the Patents Court, disclosure, and whether liability and quantum should be tried separately. The central case-management question was whether the proposed split between liability and quantum would produce a clear and efficient division.

1. Transfer. The centre of gravity of the claim lay in the competition claims. The patent-threat issues involved little technical complexity and could be handled within the Chancery Division. However, the Competition List was not a specialist list for the purposes of CPR 30.5(2), and the Patents Court contained judges with competition-law expertise. The application to transfer the claim was therefore refused. The request to docket the case to a named judge was also refused, although listing before a judge with competition expertise was encouraged.
2. Disclosure. The parties’ disclosure proposals were insufficiently developed to permit an informed choice between the competing regimes. By agreement, disclosure was ordered under Practice Direction 51U. The court dispensed with Initial Disclosure under §5.10 unless either party later considered it useful, directed compliance with §7.1 within 14 days, and required the claimant to serve a draft List of Issues for Disclosure by 8 April 2021.
3. Split trial. The applicable test was the pragmatic balancing exercise described in Electrical Waste Recycling Group Ltd v Philips Electronics UK Ltd [2012] EWHC 38 (Ch). The court had to consider the likely costs and benefits of a split, duplication, witness inconvenience, complexity, delay, prejudice, settlement prospects and the possibility of bifurcated appeals.
4. The proposed division between liability and quantum was not clean. Evidence concerning retailers, expected sales, the alleged exclusion from the market and the claimant’s decision to withdraw the product would arise both on liability and on causation or loss. The possible loss scenarios were also largely independent of the precise extent of liability. The claimed distinction between “some harm” and the remaining causation issues did not remove that overlap. The court rejected the submission that a split was the normal order in competition cases based on Sportradar AG v Football Dataco Ltd [2020] CAT 25, and distinguished the counterfactual point in Churchill Gowns v Ede & Ravenscroft [2020] CAT 15 because it concerned a different proposed division.
5. The claim was accordingly directed to a single trial at which liability, causation and quantum would all be determined. The initial trial estimate was four weeks. Sequential opening skeleton arguments were ordered, with the claimant serving 21 days before trial and the defendants 14 days before trial. The technical complexity rating was 1.