Alaska Airlines acquired Virgin America in 2016 and did away with the Virgin brand.
Richard Branson pledged he would launch a new Virgin airline in the U.S., which suggests Branson certainly thought use of the trademark reverted to Virgin. He repeated the claim multiple times.
Yet Virgin Group sued Alaska Airlines, suggesting that Branson could never actually do this. Virgin had no right to use the trademark for an airline in the U.S. anymore – because Alaska Airlines had purchased the exclusive right through 2039 whether they used it or not.
As a result, they argued, Alaska owed $8 million a year for 20 years after eliminating Virgin America. And they won a $160 million judgment.
Alaska’s position was that the Virgin brand is useless to it, and it was a misreading of the agreement to require payments after a change in control and cessation of use. However the U.K. court agreed with Virgin.
If Alaska is going to be held to payments, though, and Virgin cannot partner with any other airline to sell flights in the United States, then Alaska wants to know… how on earth Virgin partners with Delta and sells their flights domestically?
As far as I know, Virgin only sells Delta revenue domestic tickets in conjunction with transatlantic flights. But you can redeem Virgin points for standalone domestic Delta travel through Virgin’s website (and therefore using Virgin’s brand). That, Alaska says, breached the exclusivity granted to it – and repudiates the agreement.
Alaska’s filing asks the court in the Northern District of Georgia to let it subpoena Delta for documents and conduct a Rule 30(b)(6) deposition under 28 U.S.C. § 1782. It seems likely this discovery will be granted.
To win their broader claim the will have to show that the Virgin-Delta sales fall outside the carveouts in their agreement that were intended to allow Virgin to sell connections to their international flights on a variety of carriers, and that the breach was repudiatory so termination of their trademark license is valid.
Domestic points redemptions do seem to be outside the carveout. Whether Virgin seems likely to argue that if this is a breach, that it is not fundamental, and they aren’t selling these Delta points redemptions as Virgin or Virgin-branded.
It’s an interesting question whether Virgin Atlantic “selling Delta-operated stand-alone domestic U.S. flights” to loyalty-program members on its own site breaches Alaska’s U.S. exclusivity for use of the Virgin brand that they’re being force to pay for.
(HT: Enilria)
Another f-ing legal mess
I love it. Frankly I think Alaska has a case here
Whatever the outcome, this case as a whole is likely to underscore the enduring risks of long-term licensing agreements, especially when brand ownership and airline alliances collide.
Worth noting: The US is not a signatory to any convention or treaty in relation to the enforcement of foreign judgments. The recognition and enforcement of an English judgment in the US will depend on the State in which that recognition and enforcement is sought or challenged, Georgia. There are considerable differences between the states. Q of how Alaska bought rights to the name through 2039, Virgin now wanting payments for a TM it didn’t own, a Court giving it to them.
I love it when I see companies strategically litigious. Most GCs I know are non-commercial in thought and sort of limp noodles.
Too bad the airlines don’t redirect their energy & resources from screwing each other & their pax to reinvesting in their own product, service & operation …. The main entities that are guaranteed to benefit are their corporate lawyers {warriors} …. Admittedly, I am intrigued by the upcoming integration of AS & HA … I think the emotional goodwill associated with ‘Pualani’ is even more intense than VX and wonder what ‘tricks’ AS has up its sleeves …
I’d be happy to help you recoup a little bit of that cash, AS…just release your damned premium card already!
It is quite laughable but not terribly surprising that AS doesn’t understand codeshare laws given that it has rushed to get its code put on every airline’s international flights into SEA other than DL.
VS has no traffic rights within the US and doesn’t market its flights within the US and neither does DL.
Offering VS award tickets on DL domestic flights doesn’t change any of that. No VS code within the US that is marketed independently of an international flight bears the VS code.
AS should be more concerned about not losing $160 million/year on their international aspirations.
Pay the $8 million a year Alaska! You eliminated a competitor Virgin America and now rule a larger percentage of the western region of the US.
Be happy! You WON.
@Hall Decker: If I understand this correctly, Alaska is suing Virgin in England, to be released from paying royalties for the “Virgin” name which it no longer uses. If Alaska wins the case, they won’t need to have that judgment enforced in Georgia because if Alaska is awarded monetary damages, they can collect them from Virgin in England.
The only thing Alaska is looking for from a court in Georgia is an order that Delta provide documents and deposition testimony which may be used by Alaska in their lawsuit against Virgin.
Typical. Brit ct rules in favor of brit company. Get a US ct to overrule that BS. Yea. Go Alaska!!
@ Tim Dunn — What an arrogant comment. I’m quite sure Alaska Airlines knows more than you about “codeshare law.”
I predict this settles out of court. Liars dont like to have their lying subpoenad. Of course, none of the aforementioned parties would ever lie, but just in case.
….. Good luck to AS in pursuing LHR slots and/or UK service in their continuing international aspirations !
… lol
Gene,
the only arrogance is from AS.
To assert that DL is marketing the Virgin name is beyond laughable.
and, no, AS is NOT asserting that it has it figured out. It wouldn’t be filing to view documents between DL and VS if it understood what was going on.
If anything, AS should be suing Virgin Atlantic for using the Virgin name in the US.
It is a nuisance suit to detract from the fact that AS is clueless about international operations which is pretty rich considering they have committed to a widebody fleet of dozens of aircraft and have more than a dozen foreign carrier codes on AS flights.
bossa,
yes, AS will quickly find out that flying to Narita and Gatwick and arriving at 2 pm at European airports with 4 pm departures won’t get them much brand loyalty esp. when their planes have mechanicals and there are no ways to protect passengers until the next day.
@gene
Tim Dunn the lawyer always knows more about the law than anyone else.
Oh wait… No, it’s just the same knowledge he brings to everything else in the comment sections alone. Useless and even Delta didn’t want it.
@ Tim — People can just book Delta and sleep for three days on the floor at ATL.
@Tim Dunn – You’re absolutely correct that Virgin Atlantic doesn’t have U.S. domestic traffic rights and isn’t violating “codeshare law” per se. Award redemptions on Delta-operated domestic flights via VS do not, in isolation, breach U.S. aviation regulations. But this isn’t a case about DOT enforcement or cabotage. It’s a contract dispute under English law, centered on whether Virgin Group breached an exclusivity provision in its trademark license with Alaska. So while your regulatory framing is technically accurate, it overlooks the actual basis of Alaska’s claim.
@Gene – I can appreciate where you’re coming from regarding Tim’s assumptions about what Alaska “doesn’t understand.” Filing for discovery under §1782 isn’t a sign of ignorance, it’s a necessary legal step when evidence resides with a third party (Delta, in this case). That said, your suggestion that someone is lying or that this will all settle quietly out of court is purely speculative. There’s no evidence (yet) of bad faith or dishonesty, only a complex contract fight playing out through proper channels.
Bottom line, the case will likely hinge on how the English court interprets the exclusivity clause and what the Delta discovery actually reveals.
I came here for @Tim Dunn’s reaction, and I wasn’t disappointed. Keep climbing, sir!
Sort of related to this mess, for those with a standard AS Lounge membership ($595), Alaska’s recent move from JFK T7 to T8 is a major blow, because Alaska closed their lounge in T7, and they don’t have one in T8, so you’d need Lounge+ ($795) to access Admirals Clubs, but Alaska didn’t give folks much of a heads up, so there are some AS customers with the standard membership who are quite upset with the airline. Not me, but I know a guy…
Max,
no, lawyers don’t know more than anyone else and esp. judges.
Lawyers get paid to either make you spend money to get something you otherwise couldn’t get by yourself or defend you from having to give up something you might have to give up.
Gene,
we realize you are incapable of refraining from throwing shade at DL but the discussion is about the use of the Virgin name. The only Virgin signage in ATL is controlled by DL that works VS flights; the reverse is largely true at LHR.
@ 1990 — $795? When did Citi raise the AA Executive card AF? And, do you frequently fly Alaska??
Mike,
as usual, you offer solid commentary but the notion that there is anything in the DL-VS contract that is any different than in DL-SkyTeam contracts or DL contracts with any foreign carrier.
I doubt very seriously if there is because DL doesn’t market Air France or Latam flights other than as part of alliance or JV agreements – OF WHICH THE FOREIGN CARRIER IS A PART.
Alaska has a bug up its backside that they have to pay for something that they don’t want anyone else to use.
Virgin Atlantic HAS paid for the right to use Virgin trademarks and has the right to use its name anywhere it operates.
The issue is Alaska vs. Virgin Atlantic, not with Delta. AS simply wants to try to push another angle of their loss because DL is VS’ partner (and part owner) but DL has no control over the use of VS’ name any more than AS has of China Airlines or Lufthansa.
Maybe we’ll hear how these goes but you don’t settle in nuisance suits when the party suing you has no clue what they are talking about.
@Gene — Pardon any confusion; not AA Citi Exec; rather, the lounge membership fee tiers for Alaska.
@Tim Dunn – Thank you for the thoughtful and measured reply. You raise very valid points about the nature of Delta’s joint ventures. And of course, you’re also absolutely right that Delta doesn’t typically “market” its partners’ flights beyond what’s permitted in the context of JV or alliance agreements, and that Delta isn’t in the business of unilaterally pushing foreign carriers’ branding in the U.S. domestic market. All very true.
That said, the key distinction here (and where the Alaska-Virgin situation diverges from a typical JV) is that the dispute isn’t about generic alliance behavior, but about exclusive trademark rights granted under a specific license. Virgin America (now Alaska) held what the English Court has already affirmed was an exclusive license to use the Virgin brand in connection with U.S. domestic operations. The crux of the claim is that Virgin Group, through Virgin Atlantic, may have enabled U.S. domestic marketing activity (e.g. booking or loyalty redemptions) under the Virgin brand that contravenes that exclusivity.
Whether Delta “controls” VS’s branding isn’t the issue; it’s whether Virgin Group, by working with Delta in this manner, facilitated activity that breached the clause. Alaska isn’t alleging Delta committed wrongdoing, it’s using §1782 to access Delta’s internal data that may reveal the extent and nature of the alleged infringement. That’s entirely appropriate and common in cross-border litigation involving third-party evidence.
Lastly, I would just submit that the assertion that Alaska “has no clue” doesn’t quite track with their legal posture, at least from what I’ve read so far. They’ve lost a major judgment and are still pursuing this through precise procedural mechanisms, suggesting strategic motives. Whether it’s ultimately a nuisance suit or a contractually grounded claim is up to the English courts to decide, but Alaska’s actions are consistent with a legitimate effort to enforce exclusivity in a high-stakes commercial license, not just sour grapes over a financial loss.
Timmy,
I just said you can keep your mouth shut vs trying to be a legal commentary on something you know nothing about. Lawyers do a great job finding various sides of an issue without your ignorant commentary. But I think we can all agree that this will be an interesting case to watch and Alaska has much better internal counsel and 3rd party counsel than your opinions.
Your mom’s basement wants you back.
Certainly sounds like a drafting issue not fully clarified by the parties prior to executing the contract. Should not happen if the lawyers were doing a thorough job, but it did, and errors happen. The courts are there to interpret it and there are rules on contract interpretation to guide them.
@ 1990 — You do realize that the Citi AA Executive card comes with an Admirals Club AND Alaska Lounge membership?
max,
it is clear that you ONCE AGAIN stick your nose into something solely to try to pile on – when you know nothing.
go play on the freeway.
Mike,
AS’ entire notion that DL or any other airline is marketing another carrier simply by placing its code on their flights is flawed. There isn’t a court in the US that would equate codesharing to what AS was required to do which was to pay for the use of Virgin trademarks for ITS OWN OPERATION regardless of whether they chose to terminate that operation or not.
Get back to me when 1. DL provides its internal documents to AS – those types of requests are frequently squashed and 2. AS wins anything and 3. it is possible that DL could countersue and demand lawyers’ fees.
It is a NUISANCE case and AS knows it.