The conservation charity World Wide Fund for Nature has won a second legal battle with the World Wrestling Federation over the right to use the initials WWF.

The court of appeal in London dismissed the federation's challenge to a high court injunction granted last October forcing it to keep to the strict terms of a 1994 settlement with the wildlife charity, under which it promised to restrict severely its use of the initials in its business activities.

But the federation, faced with an expensive rebranding exercise in addition to a bill of around £1m for the legal costs of the dispute, is now expected to seek leave to appeal to the House of Lords.

The charity, whose president emeritus is the Duke of Edinburgh, registered the initials WWF as a trademark in 1961 when it was founded as the World Wildlife Fund.

Although it changed its name to the World Wide Fund for Nature in the UK and several other countries in 1989, it still uses the initials WWF along with the famous panda symbol in advertising campaigns all over the world.

It initiated legal proceedings to protect its global brand and reputation from any "unsavoury" connection with professional wrestling.

The US-based federation - known for encounters between stars such as The Rock, The Undertaker, Hardcore Holly, Hulk Hogan and Ultimate Warrior, which are shown on Channel 4 and Sky in the UK -also sells toys and gifts, including children's school books and backpacks.

It argued that there was no evidence of confusion in the public mind between the two organisations and that to enforce the 1994 agreement strictly was an unreasonable restraint of trade and a breach of the right to commercial freedom of expression under the European convention on human rights.

But Lord Justice Carnwath, sitting with Lord Phillips, Master of the Rolls, and Lord Justice Judge, said today there had been "clear and repeated" breaches of the agreement, which was designed to end the worldwide tit-for-tat legal battles in which the two sides had been engaged over the use of the initials.

The federation contended that it should at least be allowed to continue using the initials in its website address and its logo.

But the judge said the federation should have known that its use of the initials for those purposes was very risky.

"The costs of rebranding now, after some five years of development, are entirely attributable to its own decision to take that risk," he said.

The federation estimates that a brand name change will cost £35m.

A WWF spokesman said: "The federation's breaches of the 1994 agreement diluted and tarnished WWF's identity and the messages associated with it.

"Unfortunately, WWF's repeated requests all failed to convince the federation to abide by the agreement that it freely negotiated and signed, and WWF was forced to bring the action that is the subject of today's ruling."