(Reuters) - Virgin Group is suing Alaska Airlines Inc for approximately $160 million in a London court over a trademark deal, telling a judge on the first day of a trial on Monday that it is entitled to royalties even if the Virgin brand at issue is no longer in use.
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.
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, ” Virgin’s lawyer Daniel Toledano said in written submissions at the start of a week-long trial at London’s High Court.
Tom Weisselberg, representing Alaska, told the court that “Virgin’s interpretation is an obviously surprising one”.
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
For Virgin: Daniel Toledano KC and Joshua Crow, both of One Essex Court Chambers, and Slaughter and May.
For Alaska: Tom Weisselberg KC, of Blackstone Chambers, and Edward Ho, of Brick Court Chambers, and Jones Day.
This article originally appeared in Reuters
Photo: REUTERS/Loren Elliott