Alaska Airlines has lost an appeal in a $160 million trademark dispute with the Virgin Group, which will require it to pay millions in annual royalties over the next 15 years. On June 11, Judge Stephen Phillips, representing a three-judge panel, upheld a 2023 High Court ruling stating the royalty is a flat fee for using the Virgin name, regardless of usage, aligning with Virgin’s contract interpretation.
Virgin America Airbus A319 landing at McCarran International Airport
The High Court ruled that Alaska Airlines must pay an $8 million annual minimum royalty fee until 2039, even though the airline stopped using the Virgin brand in 2019. When Virgin America merged with Alaska Airlines in July 2018, all its rights and obligations, including a licensing agreement with Virgin Group, transferred to Alaska Airlines. This agreement required royalty payments initially set at nearly $8 million annually, adjusted for inflation over a 25-year period.
By May 2019, Alaska Airlines had ceased using the Virgin brand and stopped payments from July 2019. However, Virgin Group contended that the license agreement remained valid for another 20 years. Virgin Group celebrated the High Court’s decision, stating,
“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.”
Alaska Airlines and Virgin America aircraft’s tail in a single frame
Alaska Airlines has yet to comment on the ruling. The decision highlights the significant financial and contractual implications that can arise from corporate mergers and acquisitions. The financial impact of this ruling is expected to be substantial, affecting the airline’s financial planning and potentially influencing its strategic decisions in the coming years.
This case serves as a notable example of the complexities and potential pitfalls associated with corporate mergers and acquisitions. For Alaska Airlines, the focus now shifts to managing the financial consequences of the court’s decision while continuing to navigate a competitive industry landscape.