WWF- World Wide Fund for Nature & Anor v World Wrestling Federation Entertainment Inc

Factual and Procedural Background

This appeal arises from an order dated 16 February 2006 by Mr Justice Peter Smith concerning a preliminary issue in litigation initiated by a charitable environmental organization ("the Fund") against a wrestling entertainment company ("the Federation"). The dispute centers on the Federation's use of the initials "WWF," which had long been associated with the Fund's environmental work.

In 1994, the parties entered into an agreement ("the 1994 agreement") to resolve extensive trademark and unfair competition litigation globally. The agreement imposed significant restrictions on the Federation's use of the initials, including ceasing use in various forms worldwide, with some limited permitted uses. The Fund commenced proceedings in 2000 seeking to enforce the 1994 agreement and damages for breaches.

The Federation admitted breaches but contended that the agreement was void as an unreasonable restraint of trade or under European Community law. The Fund obtained summary judgment in 2001 restraining the Federation's improper use and an inquiry into damages. This order was upheld on appeal, and permission to appeal to the House of Lords was refused.

The Fund sought to amend its claim to include an account of profits for breaches but was refused permission in 2001, with no appeal from that refusal. Subsequently, the Fund served a claim for damages based on a reasonable payment (a "Wrotham Park" basis) for the Federation's breaches, relying on established case law. The preliminary issue before Mr Justice Peter Smith was whether the Fund was entitled to claim damages on this basis.

Legal Issues Presented

1. Whether the Fund is entitled in law to claim damages on the basis of a reasonable payment (Wrotham Park damages) as a quid pro quo for relaxing its rights under the 1994 agreement.
2. Whether the Fund's claim for such damages is barred by previous refusals to amend the claim to include an account of profits or by principles of res judicata or abuse of process.
3. The nature and juridical basis of damages awarded on the Wrotham Park principle: compensatory or gains-based.
4. The appropriate approach to assessing damages on the Wrotham Park basis, including the role of hypothetical negotiations and relevant factors.

Arguments of the Parties

Appellant's (Federation's) Arguments

• The award of damages on the Wrotham Park basis is not a general remedy and should only be available in exceptional or unusual circumstances.
• The Fund's pleaded case does not support a claim to Wrotham Park damages as a matter of law.
• The Fund failed to prove the factual basis necessary to claim such damages, based on unchallenged evidence.
• The judge erred in allowing the inquiry to proceed on the approach he identified, and discretion should have been exercised to refuse damages on this basis.
• The Fund is precluded by res judicata and abuse of process from pursuing Wrotham Park damages, having previously been refused permission to claim an account of profits and failing to appeal that decision.

Appellee's (Fund's) Arguments

• The Fund contends that damages on the Wrotham Park basis are compensatory, not gains-based, and are appropriate where actual financial loss is difficult to quantify.
• The Fund argues that it is entitled to damages representing a reasonable payment for the hypothetical release of the covenant breached by the Federation.
• The Fund denies that the previous refusal to permit an account of profits claim precludes the current claim for Wrotham Park damages.
• The Fund maintains that the claim for damages on the Wrotham Park basis is a distinct and permissible remedy, supported by case law including Attorney General v Blake and Experience Hendrix.

Table of Precedents Cited

Court's Reasoning and Analysis

The court undertook a detailed examination of the legal principles underlying damages awarded on the Wrotham Park basis, tracing the development from the original Wrotham Park decision through subsequent key authorities, including Attorney General v Blake and Experience Hendrix. It emphasized that such damages are compensatory, designed to put the claimant in the position they would have been had the breach not occurred, assessed by reference to a hypothetical negotiation for release of the covenant immediately before breach.

The court rejected the characterization of Wrotham Park damages as a gains-based remedy distinct from compensatory damages, noting that the remedy addresses situations where financial loss is difficult or impossible to quantify but compensation is nonetheless just. It distinguished this from an account of profits, which is an exceptional remedy requiring specific circumstances.

The court considered the Federation’s argument that the Fund was precluded from pursuing Wrotham Park damages due to prior refusal of an account of profits claim and principles of res judicata and abuse of process. It found that the Fund had deliberately chosen not to pursue Wrotham Park damages at the earlier stage and had failed to disclose this intention to the court, thereby misleading the court and the Federation. This conduct constituted an abuse of process, as it undermined finality and efficiency in litigation.

Accordingly, the court held that the Fund was not entitled to raise the claim for Wrotham Park damages at this late stage and that the appeal should be allowed on this ground. The court did not find it necessary to address other grounds of appeal, but expressed no doubt that, absent abuse of process, the judge’s legal conclusions on the availability of Wrotham Park damages were sound.

Holding and Implications

The court granted permission to appeal on the issue of abuse of process and allowed the appeal on that ground. It held that:

The Fund is barred by abuse of process from pursuing a claim for damages on the Wrotham Park basis in these proceedings, having deliberately elected not to raise such a claim at an earlier stage and having misled the court and the Federation.

The direct effect of this decision is to strike out the Fund’s claim for Wrotham Park damages at this stage. The court did not set new precedent on the substantive law of Wrotham Park damages but reaffirmed established principles concerning their compensatory nature and the circumstances in which they may be awarded. The decision underscores the importance of finality in litigation and the necessity for parties to present their full case at the appropriate time, avoiding abuse of court process.