WWF World Wide Fund for Nature (formerly World Wildlife Fund) v World Wrestling Federation Entertainment Inc.

Hearing dates : 6, 7 and 8 December 2006

This is an appeal from an order made on 16 February 2006 by Mr Justice Peter Smith on a preliminary issue in proceedings brought by WWF – World Wide Fund for Nature (formerly World Wildlife Fund) and World Wildlife Fund Inc (hereafter, together or individually—save where it is necessary to distinguish between them –“the Fund”) against World Wrestling Federation Entertainment Inc (now known as “World Wrestling Entertainment Inc” and, hereafter, “the Federation”).

The background

The underlying dispute between the parties arises from the use by the Federation of the initials WWF in connection with its activities as promoter and organiser of live wrestling events. Those initials had long been associated with the work of the Fund. The Fund is, of course, a well-known charity, active throughout the world in the field of environmental protection and conservation.

On 20 January 1994 the parties entered into an agreement (“the 1994 agreement”) which was intended to compromise extensive litigation (comprising some 54 sets of proceedings in relation to trade mark and unfair competition disputes in 21 jurisdictions) and to regulate use of the WWF initials for the future. The agreement did not seek to reserve to the Fund an exclusive right to use the initials. But, as the judge explained at paragraph [19] of his judgment, [2006] EWHC 184 (Ch), clause 2.1 of the agreement contained substantial restrictions on the use that could be made by the Federation:

“[19] By that clause the Federation undertook forthwith to cease and thereafter to refrain from using or causing to be used the Initials whether in printed or written or other visual form in any country of the world in or for the purpose or in connection with its business. It also agreed immediately to cease and thereafter refrain from using or causing to be used the Initials orally in any language in any country of the world in or for the purpose or in connection with the promotional sale or in any other connection with any goods whatsoever; to cease and thereafter to refrain from the encouragement directly or indirectly of support including donations or otherwise for charitable or similar purposes: and to cease and thereafter to refrain from the promotion or sale of or in any other connection with services other than those permitted.”

The permitted use of the initials was in respect of the Federation's logo, occasional use during sports events, use in printed material approved for production or distribution prior to 15 November 1993 (but not distributed after 31 March 1994), and use in visual presentations published or recorded prior to 15 November 1993. The 1994 agreement applied to the United States of America in relation to printed, written, visual or other uses; but not as to the oral use of the initials in relation to goods.

These proceedings were commenced on 17 April 2000. The Fund claimed an injunction to enforce the terms of the 1994 agreement and damages to be assessed. The Federation admitted that it was in breach of terms of the 1994 agreement (subject to some dispute as to the scope of the restrictions imposed by the agreement); but asserted that those terms were void, either at common law as unreasonable restraint of trade or by virtue of the provisions of article 81 (formerly article 85) of the EC Treaty.

By application notice dated 30 January 2001, the Fund sought summary judgment. That application came before Mr Justice Jacob in July 2001 and was successful. By paragraph 1 of the order which he made on 1 October 2001, Mr Justice Jacob restrained the Federation from using the initials WWF save in accordance with the agreement. By paragraph 3 of his order he directed an inquiry “whether the Claimants have sustained any and if so what damages by reason of the Defendant's breaches of the Agreement and the Letter Agreement referred to therein …”. In that context “the Agreement” is the 1994 agreement; and “the Letter Agreement” means an agreement made between the Federation and World Wildlife Fund Inc and recorded in a letter dated 12 September 1989. The judgment handed down by Mr Justice Jacob (to which I shall need to refer in more detail later in this judgment) is reported at [2002] FSR 32, 504. The principal terms of the 1994 agreement are set out at paragraph [12] of that judgment (ibid, 512–515).

The order of 1 October 2001 was upheld by this Court on appeal ( [2002] EWCA Civ 196; [2002] FSR 33, 530). Permission to appeal from the order of this Court was refused by the House of Lords on 10 June 2002.

In the course of the hearing before Mr Justice Jacob the Fund had sought permission to add a claim for: “An order that the Defendant account to the Claimants for all profits that it has made by using the initials WWF otherwise than as permitted by the terms of the Agreement”. In support of the claim for an account of profits the Fund sought to amend its particulars of claim so as to add a new paragraph in these terms:

“11. Further the claimants seek an order that the defendant account to the claimants for all profits that the defendant has made by its use of the initials WWF in breach of the Agreement. The claimants contend that an account of profits is an available remedy for breach of contract in the circumstances of the present case. The circumstances are:

11.1 the defendant has done the very acts that it expressly agreed that it would not do;

11.2 the defendant's breach of the Agreement have been deliberate, widespread and repeated;

11.3 an account of profits is an available remedy for trade mark infringement and should therefore as a matter of principle be available for breach of a trade mark delimitation agreement;

11.4 the purport of the defendant's defence (for example at paragraph 23 of the Defence and Counterclaim) is that the defendant intended or considered it likely that when it signed the Agreement it would disregard its obligations under the Agreement;

11.5 the difficulty of obtaining full compensatory damages not only for the claimants but also for the National Affiliates who operate worldwide;

11.6 the inadequacy of protecting the claimants from past breaches by way of injunction.”

Mr Justice Jacob refused the application to amend. There was no appeal from that part of his order.

The damages claim

On 29 October 2004 the Fund served a pleading described as “Claim for Damages”. After reciting the procedural history, the claim was set out (in summary) at paragraph 6:

“6 The claim for damages falls under two main heads:

(a) Firstly, the Claimants seek damages based on what the Defendant would reasonably have had to pay as 'quid pro quo', in effect a licence fee, for the Claimants to relax their rights under the Agreement;

(b) Secondly, the Claimants seek special damages in respect of professional fees and other expenses incurred as a result of the defendant's breaches of the Agreement (not being fees and expenses incurred in the present proceedings)… . .”

Paragraphs 7 and 8 set out the Fund's case as to the “Legal basis for claiming a reasonable payment”. It was said that the Federation had agreed (under article 2 of the 1994 agreement) to very substantial restrictions on its use of the initials WWF; and that, from at least February 1997, the Federation had ignored those restrictions and had “used the initials WWF in respect of its activities on a worldwide basis”. Accordingly the Fund was entitled to “a reasonable payment from the Defendant in respect of its use of the initials WWF in breach of the Agreement”. The Fund indicated that it would rely on the decisions in Wrotham Park Estate Company Limited v Parkside Homes Limited [1974] 1 WLR 798, Attorney General v Blake [2000] 4 All ER 385 and Experience Hendrix LLC v PPX Enterprises Inc [2003] EWCA Civ 323.

On 23 March 2005 Mr Justice Patten gave the Fund permission to amend paragraph 8 of the claim for damages. The permitted amendment (which was made on 25 March 2005) introduced four additional paragraphs (or sub-paragraphs):

“8a The Claimants' primary contention is that the principles contained in these judgments [ Wrotham Park, Blake and Experience Hendrix] establish that where a covenantor breaches a restrictive covenant, the covenantee is entitled to claim as damages a reasonable payment in respect of the hypothetical release of the covenant.

8b Alternatively the Claimants contend that they are entitled to such a payment in circumstances where the Defendant deliberately breached the Agreement and where the Claimants have an interest in preventing the Defendant's use of the initials and/or an interest in preventing the Defendant making a profit from the use of the initials.

8c As to the deliberate nature of the breach, the Defendant at least from January 1997 intentionally disregarded the restrictions contained in the Agreement relating to the use of the...