The Virgin Group Sues Alaska Airlines

DALLAS - The Virgin Group is suing Alaska Airlines (AS) for US$160m in a dispute over a trademark deal.

The hearing, which commenced on Monday, October 10 in a London court, has seen Virgin demand that AS make a "minimum royalty" payment of US$8m annually until 2039.

This follows the US$2.6bn acquisition of Virgin America (VA) in 2016.

Obliged to Pay

Virgin's lawyer, Daniel Toledano, said, "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."

However, Alaska argues that, following the merger in 2018, the airline stopped using the Virgin brand in 2019.

Virgin claims that even though it has stopped using the branding as the legal successor to Virgin America, it is still obliged to make the annual payment.

A "Surprising" Move

Tom Weisselberg, representing Alaska, told Judge Christopher Hancock that "Virgin's interpretation is an obviously surprising one."

Weisselberg explained that AS has "complete freedom" to carry out its operations without paying royalties to Virgin so long as it does not use its trademarks. This fits with a clause added to an earlier version of the trademark license following concerns raised by the U.S. Department of Transportation.

They argue that the terms included in 2007 when VA sought approval to operate a domestic airline in the United States were intended to safeguard the company's ability to operate "completely free of the Virgin brand."

The hearing continues.

Featured Image: Alaska Airlines acquired Virgin America in 2016. Photo: Brandon Farris/Airways