Alaska Airlines has lost an appeal in a $160 million lawsuit brought by billionaire entrepreneur Sir Richard Branson’s Virgin Group for use of the defunct airline brand Virgin America.
The Virgin Group, a multi-national venture capital firm that licences its name and branding in a slew of business fields, sued Alaska Airlines in London’s High Court after the Seattle-based carrier refused to pay royalties on the Virgin America brand when it decided to shut down the airline.
Lawyers acting on behalf of Virgin successfully argued that Alaska Airlines was legally required to pay $8 million per year in royalties through to 2039 despite the fact that Virgin America no longer exists.
Alaska Airlines acquired Virgin America in 2014 to get a foothold in California, where the airline was dominant. It initially intended to keep the brand going, but just two years later, Alaska Airlines decided to assimilate Virgin America and retire the brand.
On May 30, 2019, Virgin America was shut down, and Alaska Airlines stopped making royalty payments to the Virgin Group.
In its defense, Alaska Airlines tried to convince the High Court that it wasn’t liable to pay royalties because it didn’t intend to use the Virgin America brand in the future, thereby triggering its contractual termination rights of the trademark agreement.
Following the Virgin Group’s initial court victory last February, Alaska Airlines slammed the ruling as “without merit” and vowed to appeal the decision.
On June 11, however, Alaska Airlines learned that its appeal had failed after a three-judge panel in the Court of Appeal ruled that Virgin Group was right in claiming that the royalties agreement applied whether the Virgin America brand was being used or not.
The Virgin Group welcomed the ruling, saying that the judgment underscored the “value of the Virgin brand”. Alaska Airlines has, however, declined to comment.
