Alaska Airlines (AS, Seattle Tacoma International) has lost an appeal in a USD160 million trademark dispute with the Virgin Group that will cost it millions in annual royalty payments for the next 15 years.
In a judgement handed down remotely on June 11, Judge Stephen Phillips, writing on behalf of a three-judge panel, confirmed a High Court judgement in 2023 that the royalty is a flat fee for the right to use the Virgin name, regardless of its actual use, thereby Virgin's interpretation of the contract was correct.
The High Court had ruled that Alaska Airlines must pay an USD8 million annual minimum royalty fee until 2039, even though it stopped using the Virgin brand in 2019.
Virgin America had merged with Alaska Airlines in July 2018. Virgin America ceased to exist on that date and all its rights and obligations were assumed by Alaska Airlines, which effectively became party to the licensing agreement by which the Virgin Group had granted Virgin America the exclusive use of certain Virgin names and trademarks. In exchange, Virgin America was to make royalty payments, with a minimum royalty initially set at USD7,978,200 but increasing in line with a price index during the 25-year term of the licence.
By May 30, 2019, Alaska Airlines ceased using the Virgin brand in its airline operations and stopped paying Virgin from July 16, 2019. However, the Virgin Group claimed the licence agreement was valid for another 20 years.
The Virgin Group welcomed the High Court decision. "Alaska Airlines' acquisition of Virgin America in 2016 came with a brand licensing agreement lasting until 2039, with clear obligations. We are pleased the Court of Appeal agreed with the High Court and dismissed Alaska’s appeal, underscoring the value of the Virgin brand and confirming our legal rights," a spokesperson said.
Alaska Airlines was not immediately available for comment.
