Virgin Group is suing Alaska Airlines Inc for approximately $160 million in a London court over a trademark deal.
Lawyers for Virgin units Virgin Aviation TM Ltd and Virgin Enterprises Ltd argued that Alaska must make a roughly $8 million “minimum royalty” payment each year until 2039 under a trademark license agreement reached in 2014 between Virgin and Virgin America Inc, which was acquired by Alaska’s parent company in 2016.
Virgin granted a trademark license to Virgin America to use the Virgin brand in connection with the operation of a U.S. domestic airline before Alaska Air Group Inc. completed its $2.6 billion acquisition of Virgin America.
Alaska merged its operations with Virgin America in 2018 and says it stopped using the Virgin brand the following year.
Virgin argued that Alaska Airlines, as the legal successor to Virgin America Inc, is obliged to make the annual payment even if it has stopped using the Virgin brand.
But, Alaska’s lawyers told Judge Christopher Hancock that a clause introduced to a previous version of the trademark license to address concerns from the U.S. Department of Transportation gives Alaska “complete freedom” to perform its operations without paying royalties to Virgin so long as it does not use its trademarks.
They argue that terms included in 2007, when Virgin America was seeking clearance to operate a U.S. domestic airline, were designed to preserve Virgin America’s ability to operate “completely free of the Virgin brand”.
“If Alaska really was subject to a nine-figure obligation spanning decades, one would expect that would be clearly spelled out,” Weisselberg argued in written submissions.
The case is Virgin Aviation TM Limited and another v Alaska Airlines Inc, CL-2019-000742
