By Sam Tobin
LONDON (Reuters) - Virgin Group won its trademark case against Alaska Airlines Inc for approximately $160 million on Thursday, with a judge in London ruling that it is entitled to royalties even though the U.S. airline no longer uses the Virgin brand.
Virgin units Virgin Aviation TM Ltd and Virgin Enterprises Ltd argued Alaska is liable to pay a roughly $8 million “minimum royalty” payment every year until 2039.
It said a 2014 trademark licence agreement between Virgin and Virgin America Inc, which was acquired by Alaska's parent company in 2016, required the annual payment even if Alaska stopped using its branding.
Judge Christopher Hancock said in a written ruling on Thursday that the minimum royalty was “a flat fee payable for the right to use the Virgin brand, whether or not that right is taken up”.
A spokesperson for Virgin said Alaska’s acquisition of Virgin America included “a branding agreement lasting until 2039 with clear obligations”, adding: “We are pleased the court agreed with our arguments.”
A spokesperson for Alaska said the case is “without merit and we intend to appeal the decision”.
Virgin granted a trademark licence to Virgin America to use its brand in connection with the operation of a U.S. domestic airline before Alaska Air (NYSE:ALK) Group Inc. completed its $2.6 billion acquisition of Virgin America.
Alaska merged its operations with Virgin America in 2018 and stopped using the Virgin brand the following year.
Virgin told London’s High Court in October that Alaska, as the legal successor to Virgin America Inc, is obliged to make the annual payment.
Alaska’s lawyers argued that an agreement requiring it to pay $8 million a year for trademarks it has no intention of using was “commercially nonsensical”.
However, Hancock ruled the agreement stated that “Virgin America should pay a continuing minimum fee for the right to re-use the Virgin brand, whether or not they chose to do so”.
The judge added that the terms of the agreement “must be approached from the perspective of Virgin and Virgin America ... and not from the perspective of Alaska”.