Wrestling federation licensee allowed to sell WWF branded videogames

In World Wide Fund for Nature v World Wrestling Federation Entertainment Inc, the Court of Appeal has ruled that certain classic videogames of World Wrestling Federation (Federation) performers can be sold by THQ/Jakks Pacific LLC - a blow to efforts by the World Wide Fund for Nature (Fund), which had stopped the sale of the games through lower court legal action.

THQ is one of the Federation's licensees and under its licence, it develops, publishes and distributes on a worldwide basis, video and computer games featuring wrestling characters. Since an agreement between the Fund and the Federation was reached in 1994 preventing the Federation from using the logo WWF, THQ had taken steps to eliminate all references to the logo from the packaging and promotional materials of existing games, and had not incorporated the logo into any new games. However, approximately 12 existing games had the WWF logo embedded in their computer programming codes. In terms of cost and technical difficulty, it was impossible for THQ to re-programme these games to remove all references to the WWF logo.

The Fund successfully moved to stop the sale of the video games. The High Court granted an injunction and declared that THQ and the Federation would be in contempt of court if the games were sold.

THQ appealed the decision and the Federation intervened in the appeal. After hearing the arguments, a three-judge panel reversed the High Court's decision, repudiated all of the Fund's arguments, and ordered the Fund to pay the legal costs of both THQ and the Federation, an amount likely to exceed £75,000. In its holding, the Court of Appeal made three main points:

• The injunction imposed obligations on the Federation, but not on independent contractors such as THQ.
  
  
• The Federation has some responsibility for the acts of its licensees. However, it would be in contempt of the injunction only if it failed to take all reasonable steps within its power to prevent such acts, and there was no evidence that the Federation had failed to exercise this power to the required extent with regard to THQ.
  
  
• Even if there was a contempt of the injunction by the Federation as a result of THQ's acts, these are the acts of an independent third party and, therefore, THQ could not be said to have aided and abetted in the Federation's breach.

This case casts an interesting light on the dynamics of the relationship between licensor and licensee, especially where the licensee plays a crucial role in the overall profitability of the licensor's business.

Jeremy Dickerson, DLA, London