A multi-million dollar lawsuit was filed against Alaska Airlines in October last year. The Virgin Group claimed it was entitled to at least $8 million per year in trademark royalty payments from 2016 until 2039.
In 2016, Alaska Airlines acquired Virgin America—a former subsidiary of Virgin Group—in a deal worth around $2.6 billion. According to the Virgin Group, the details in that agreement required Alaska Airlines to make annual royalty payments for using the Virgin America brand name. Still, the Seattle-based airline argued against this as it has not used the Virgin brand since 2018. It also claimed that details of the royalty payments were not made clear to them at the time of the takeover.
Photo: Courtesy of Airbus SAS
“Virgin’s interpretation is an obviously surprising one,” said Tom Weisselberg, a lawyer for Alaska Airlines, last year in court. “If Alaska really was subject to a nine-figure obligation spanning decades, one would expect that would be clearly spelled out.”
However, representatives for Virgin Group, including its affiliate companies Virgin Aviation TM Ltd and Virgin Enterprises Ltd, argued that a trademark license agreement between Virgin Group and Virgin America Inc was made in 2014, requiring the royalty payments to be made even if its parent company discontinued the brand name.
“The minimum royalty is due as a debt, as consideration for the grant of the right to use the Virgin brand, irrespective of whether, and if so how much, the Virgin brand is actually used by Alaska,” said Daniel Toledano, a lawyer for Virgin.
The case was taken to the High Court of Justice in London, England, where a judge on Thursday ruled in favor of Virgin Group, requiring Alaska Airlines to make the royalty payments totaling around $160 million.
Photo: Courtesy of Alaska Airlines
Judge Christopher Hancock said in a written ruling that the royalty payment is a “flat fee payable for the right to use the Virgin brand,” irrespective of whether that right was taken up or not.
“Virgin America should pay a continuing minimum fee for the right to re-use the Virgin brand, whether or not they chose to do so,” said Hancock. He added that the terms of the agreement “must be approached from the perspective of Virgin and Virgin America … and not from the perspective of Alaska.”
Responding to the verdict, a spokesperson for Virgin Group said, “We are pleased the court agreed with our arguments.” However, Alaska Airlines was less than pleased with the outcome and stated its intention to challenge the ruling, with a spokesperson for Alaska saying the case is “without merit and we intend to appeal the decision.”