Alaska Airlines Paying $160 Million Amid Virgin Trademark, Now Sue Delta Tie-Up

3 godzin temu

SEATTLE- Alaska Airlines (AS) was forced to pay $160 million for the Virgin trademark it no longer uses, following a UK court ruling. The airline is now targeting Delta executives, seeking testimony on Virgin Group’s ongoing use of the brand in the US through its partnership with Delta.

Virgin America, acquired by Alaska Airlines in 2016, was shut down and rebranded. Despite no longer using the name, Alaska must continue payments to Virgin Group under an agreement that grants Alaska exclusive rights to the Virgin brand for US airline services until 2039. The conflict has escalated into legal action over alleged breaches of this exclusivity.

Alaska Airlines $160 Million Virgin Trademark

Virgin America (VX) ceased operations after its acquisition by Alaska Airlines (AS) in 2016. As part of the $2.6 billion deal, Alaska gained exclusive rights to the “Virgin” trademark for US airline services until 2039, whether it used the name or not.

However, when Alaska discontinued the Virgin America brand, a dispute arose over whether payments were still due.

Virgin Group claimed the agreement obligated Alaska to pay $8 million annually for 20 years. In 2023, a UK court sided with Virgin, enforcing the $160 million judgment.

Alaska argued that the brand held no residual value and that the payment clause was misapplied after the Virgin brand was retired.

But the legal tensions did not end there. Alaska contends that Virgin has undermined its exclusive US trademark rights by partnering with Delta Air Lines (DL) and facilitating domestic flight redemptions via Virgin Atlantic’s website.

Alaska believes these redemptions violate the terms of exclusivity and effectively repudiate the agreement.

Virgin’s Delta Partnership

Virgin Atlantic (VS), operating out of London Heathrow (LHR), allows loyalty program members to redeem points for standalone domestic flights operated by Delta Air Lines (DL) in the US, including from major hubs like Atlanta (ATL) and New York (JFK).

Although these tickets are typically purchased in connection with transatlantic flights, they can also be redeemed independently.

Alaska Airlines claims this arrangement violates its exclusivity rights under the original Virgin licensing deal.

Reported by View From the Wing, Alaska is now pursuing legal discovery in the US, filing in the Northern District of Georgia to subpoena Delta for documents and schedule a deposition under Rule 30(b)(6) via 28 U.S.C. § 1782.

To build their case, Alaska must prove that Virgin’s collaboration with Delta falls outside the carve-outs in the agreement, specifically, that the sales of standalone US domestic flights were not permissible under the clause allowing international connection sales.

If the breach is found to be repudiatory, Alaska may seek to terminate the license entirely or reduce its financial obligation.

Airlines’ Loyalty Programs and Partnerships

This case underscores growing complexities in airline brand licensing and frequent flyer partnerships.

Virgin Atlantic’s integration with Delta, especially through the SkyTeam alliance and their transatlantic joint venture, creates overlapping brand use that Alaska contends infringes on its rights.

While Virgin may argue that these redemptions are not marketed as “Virgin” flights and are part of normal loyalty offerings, Alaska is positioning the matter as a material breach.

The outcome could influence future interpretations of exclusivity clauses in trademark licensing agreements, particularly in the aviation sector.

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