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

A party abuses the court’s process where, viewed broadly and on the merits, it seeks to advance a claim which it could and should have advanced earlier, having invited the court to determine a closely related remedy on the basis that the later claim would not be pursued.

Damages assessed by reference to the reasonable price of releasing a restrictive covenant are compensatory. They may be awarded for past breaches despite the absence of identifiable financial loss and alongside an injunction against future breaches. Such damages are distinct from, although juridically similar to, an account of profits.

The Fund and the Federation settled worldwide trade mark and unfair competition litigation through a 1994 agreement restricting the Federation’s use of the initials WWF. After the Federation breached that agreement, Jacob J granted an injunction and ordered an inquiry into damages. He refused permission to add a claim for an account of profits.

The Fund subsequently claimed damages measured by the reasonable price of a hypothetical release from the restrictions. Peter Smith J held that such relief was available in law, while leaving factual entitlement for the damages inquiry: [2006] EWHC 184 (Ch).

The Federation appealed. It argued, among other matters, that the claim was barred by res judicata or constituted an abuse of process because the Fund could and should have advanced it with the earlier application for an account of profits.

1. Appeal allowed unanimously. The Fund’s claim for damages assessed by reference to a hypothetical release of the restrictive covenant was an abuse of process. It had considered, and decided not to pursue, that claim when seeking an account of profits before Jacob J. If it intended to preserve the alternative, it was bound to disclose that position so that Jacob J could determine the application for the more extensive remedy on an informed basis.

2. The governing abuse inquiry required a broad, merits-based judgment addressing whether, in all the circumstances, the party was misusing the court’s process by raising an issue which could have been raised earlier. Relevant public and private interests included finality, protection against being vexed twice in the same matter, and economy and efficiency in litigation. The Fund’s later claim was inconsistent with those interests. The Federation had been entitled to proceed on the basis that the unadvanced claim was not being pursued.

3. There was no cause of action estoppel or issue estoppel. Jacob J had decided only that the case was not sufficiently exceptional to justify an account of profits. He had not decided whether inability to quantify financial loss justified damages on the Wrotham Park basis.

4. Damages measured by the reasonable price of a hypothetical release are compensatory, although they are juridically similar to an account of profits. Where an injunction restrains future breaches, damages may compensate for the temporary deprivation caused by past breaches even if no identifiable financial loss is proved. The hypothetical release ordinarily begins immediately before the first breach and ends when the injunction takes effect.

5. It was unnecessary to decide the remaining grounds. Chadwick LJ nevertheless considered that, absent abuse, the declaration of legal availability made below was correct. Maurice Kay and Wilson LJJ agreed.

1. Court of Appeal (Civil Division): By [2007] EWCA Civ 286, allowed the Federation’s appeal and held that pursuit of the claim for Wrotham Park damages was an abuse of process.
2. High Court, Chancery Division: Peter Smith J held that the Fund was entitled in law to seek damages measured by the reasonable price of relaxing the covenant, while leaving factual entitlement to the inquiry: [2006] EWHC 184 (Ch).
3. Earlier proceedings: Jacob J granted an injunction enforcing the 1994 agreement and directed an inquiry into damages. He refused permission to add a claim for an account of profits. That injunction was upheld by the Court of Appeal in [2002] EWCA Civ 196, and permission to appeal was refused by the House of Lords.