The former claims the latter is obligated to pay $8 million a year in royalties until 2039, and that payments should have started after Alaska acquired Virgin America in 2016.
Terms outlined in a trademark license agreement between Virgin Group and Virgin America in 2014 lead Virgin to believe it is entitled to the payments, which from 2016 until now, equal a sum of at least $160 million.
Virgin America ended up merging with Alaska Airlines, however, Alaska stopped using the Virgin brand name a year after the merger.
Daniel Toledano, the lawyer for Virgin, said, “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.”
Alaska Airlines, however, says it is not legally required to pay royalties to Virgin due to a clause introduced in a prior version of the trademark license agreement. The airline claims the clause gives the airline the freedom to operate without paying Virgin as long as it does not use the Virgin brand.
Tom Weisselberg, a lawyer representing Alaska Airlines, said, “Virgin’s interpretation is an obviously surprising one. If Alaska really was subject to a nine-figure obligation spanning decades, one would expect that would be clearly spelled out.”
What’s the come for the future:
The case began on Monday in London‘s High Court. It is expected to continue for a week.