World Wide Fund for Nature & Anor v World Wrestling Federation Entertainment Incorporated

An injunction binds the defendant, not independent third parties, unless its wording clearly provides otherwise. A reference to licensees does not impose absolute liability for acts performed independently under existing agreements. The defendant must, however, take all reasonable steps within its power to prevent prohibited acts by licensees. A licensee does not aid and abet contempt merely by exercising pre-existing contractual rights or paying royalties. Stranger contempt requires wilful interference with the administration of justice and an intention to interfere or impede, proved to the criminal standard. Legitimate commercial conduct fell well short of that threshold. The appeal was allowed and a carefully confined negative declaration was directed.

The appellant, THQ/JAKKS Pacific LLC, was a licensee of the World Wrestling Federation Entertainment Incorporated under a 1998 agreement for worldwide video games featuring its wrestling characters. Existing games contained the Federation’s WWF scratch logo embedded in their gameplay, although the Federation was subject to an injunction obtained by the World Wide Fund for Nature and the World Wildlife Fund Incorporated.

THQ applied within the existing proceedings for a declaration that continued marketing would not breach the injunction or constitute contempt, alternatively for a stay. Jacob J, in the Chancery Division, refused relief on 26 November 2002. The appeal concerned the scope of the injunction, the Federation’s contractual power to control THQ, third-party contempt, and the discretionary stay.

Appeal allowed. All three judges agreed that THQ’s continued sale of the existing games would not, on the evidence, make THQ or the Federation liable for contempt.

1. Scope of the injunction. The injunction was directed to the Federation. It did not, absent clear words, impose absolute responsibility for acts independently performed by an independent contractor under an existing agreement. The reference to licensees restrained the Federation from authorising or causing future prohibited acts; it did not impute every independent act of a licensee. The reasoning was consistent with Marengo v Daily Sketch [1948] 1 All ER 406. Pioneer Concrete [1995] 1 AC 456 concerned employees acting as the company and had no parallel with independent contractors.
2. Reasonable control. The standard formulation in Hone v Page [1980] FSR 501, adopted in A-G for Tuvalu v PDC Limited [1990] 1 WLR 926 and Re Supply of Ready Mixed Concrete [1992] 1 QB 213, applied. The Federation could be in contempt if it had power to stop THQ’s use and unreasonably failed to take all reasonable steps within that power. Clause J(2) gave the Federation a sufficiently broad power of control to engage with the Fund’s asserted rights, but the precise limits of reasonableness and proportionality were left open. The Federation had issued a direction, and no failure to take reasonable steps was shown.
3. Third-party contempt. THQ’s independent commercial conduct did not amount to aiding and abetting, even if the Federation might otherwise have been in contempt. The payment of contractual royalties did not create concerted action. Following the guidance in Attorney General v Punch Ltd [2002] UKHL 50 and Attorney General v Times Newspapers [1992] 1 AC 191, stranger liability based on deliberate frustration required wilful interference with the administration of justice and an intention to interfere or impede. THQ’s conduct fell well short of that standard.
4. Stay and relief. The stay issue did not arise. Carnwath LJ indicated that private contractual rights should ordinarily be enforced and that THQ should seek recourse against the Federation. Blackburne J and Gibson LJ would instead have granted a stay because THQ faced substantial losses, the Fund showed no financial loss, recovery against the Federation was uncertain, and undertakings were available. The court allowed the appeal and directed that a suitable negative declaration be drafted narrowly, following Messier-Dowty Ltd v Sabena SA [2000] 1 WLR 2040.

• Court of Appeal (Civil Division): allowed the appeal and directed that suitable declaratory relief be prepared. [2003] EWCA Civ 401
• Chancery Division: Jacob J refused THQ’s application for a declaration or stay on 26 November 2002.