Alaska Airlines is being sued by billionaire entrepreneur Richard Branson’s Virgin Group for $160 million over claims the Seattle-based airline is contractually obliged to continue paying it $8 million per year for the next 16 years for the use of the Virgin America name even though the brand was retired back in 2018.
The Virgin Group, a multi-national venture capital firm which licences out of the Virgin name and branding in various business fields, is bringing the case to London’s High Court where its lawyers will argue that Alaska Airlines agreed to pay royalties for the Virgin America brand when it took over the carrier.
The minimum royalty payment that Alaska Airlines must, according to Virgin, is $8 million per year until 2039, Reuters reports. The details are set out in a trademark use agreement reached in 2014, two years before Alaska finally acquired Virgin America and four years before the brand was eventually retired.
Alaska Airlines purchased Virgin America to get a foothold in California where the airline was dominant, but the acquisition and assimilation of the airline have been beset with difficulties.
In its defense, Alaska Airlines told a High Court judge earlier this week that it had made it clear that it never intended to use the Virgin America brand again and that Virgin Group have used have exercised its contractual termination rights of the trademark agreement.
Alaska Airlines argues that the Virgin Group has also breached the trademark agreement by giving Virgin Atlantic permission to market codeshare domestic U.S. flights operated by Delta that made use of the distinctive Virgin logo.
The case was filed in 2019 when Alaska Airlines suddenly stopped paying royalties to Alaska Airlines but is now only being heard in court. The court case is expected to cost in excess of £7 million ($7.7 million).
