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)
and if AS wants to know what rules the Virgin Group has for the use of its brand, AS needs to ask the Virgin Group, not DL.
It is precisely because AS lost the case against the Virgin Group that they want to try and find anyone else – but DL DOES NOT HAVE THE RIGHT TO USE THE VIRGIN GROUP’s NAME OR LOGO.
I suspect that is PRECISELY what DL will tell the court = any court
Tim, I appreciate your engagement, but several key points in your comment misstate both the legal framework and the factual underpinnings of Alaska’s case.
First, the issue isn’t whether Delta operates domestic flights under the Virgin brand directly, but whether Virgin Atlantic through its marketing channels and digital interfaces is promoting or facilitating the sale of Delta’s domestic U.S. segments under the “Virgin” name. That includes booking itineraries with a U.S.-domestic leg as part of a VS-coded international itinerary, which Alaska alleges may infringe its exclusive territorial license. Again, this is a trademark use issue, not merely an operating certificate issue.
Second, your assertion that “the UK courts have not said that what AS is asserting is true” is only half right. The UK courts did affirm that Alaska holds an exclusive license for the Virgin brand in U.S. air transportation and must pay for that exclusivity regardless of actual use. That exclusivity is valuable precisely because it bars others from using the mark in overlapping sectors, including any unauthorized co-branding or marketing of U.S. domestic flights by third parties under the Virgin name. The court didn’t rule on Alaska’s U.S. claims because it lacked jurisdiction. But it certainly validated the underlying exclusivity that gives Alaska standing to pursue infringement.
Third, while Delta may argue that it has no control over Virgin Atlantic’s branding, the reason Alaska is subpoenaing Delta executives is to establish the nature of Delta’s involvement in co-marketing, code-sharing, and joint commercial strategy, especially since Delta owns 49% of Virgin Atlantic and handles much of its U.S. sales infrastructure. That makes Delta potentially relevant under both Rule 26 and 28 U.S.C. § 1782, which governs discovery in aid of foreign proceedings.
Finally, suggesting that this case is frivolous simply because “a lawyer is willing to push it” ignores the very real legal precedent that exclusive licensees have enforceable rights under U.S. trademark law, particularly under the Lanham Act. Whether Alaska ultimately prevails is up to the courts, but there is clearly a plausible legal basis for asserting infringement if the Virgin mark is being used in a manner that undermines Alaska’s contractual exclusivity in the U.S. market.
Let’s not pretend the questions Alaska is raising are legally meaningless or procedurally improper. There’s a lot more substance here than you’re giving credit for.
Has anyone actually reviewed the documents that give Alaska Airlines the license to the Virgin America name? Virgin (the overall company) was going to continue doing business so the structuring of the name rights has to be quite detailed.
@jns – Yes, the licensing documents have been very closely reviewed, particularly in UK court proceedings where Virgin Group successfully enforced Alaska’s obligation to pay royalties. The contract was specifically structured to account for Virgin Group’s ongoing global business while granting Alaska sole U.S. rights.
@Mike Hunt, do any of Virgin’s continuing operating groups operate at any places in the USA? Virgin Voyages seems to be based in Florida. Does Virgin Atlantic fly to the USA anywhere? Does Virgin Australia fly to the USA anywhere? It seems to me that those operating groups would still retain the rights to operate under their name even if the Virgin name is also licensed to Alaska Airlines. So I doubt the claim of sole U.S. rights. The devil is in the details and the UK court has not checked in to this conversation and I doubt that they would release any details even if they did.
@jns – Yes, Virgin Atlantic, Virgin Voyages, and Virgin Australia all operate or market services in the U.S., but the issue isn’t whether they can exist in the U.S. It’s whether they can use the “Virgin” name in connection with U.S. domestic airline services, which is the precise category covered by Alaska’s exclusive license.
The UK High Court confirmed that Alaska inherited an exclusive right to use the Virgin name for U.S.-based airline operations and that this exclusivity had standalone value, even if Alaska chose not to use it. Other Virgin-branded entities can operate in unrelated industries or international markets, but they cannot use the brand in ways that encroach on Alaska’s licensed category: domestic air travel within the U.S.
The devil is in the details.
Mike,
either you are participating in this case or you truly can’t see that this is a jilted competitor that lost a case and is looking for a reason to try to argue the agreement it signed is invalid.
Delta does not market VS services in the US. Period. Full stop. Virgin Atlantic applies with the DOT for codesharing authority.
You cannot buy a flight on Virgin Atlantic even with miles in the US. You can exchange those miles for a Delta flight which is sold and operated solely under the Delta name.
AS wants you and the court to believe that a foreign carrier operating codeshare flights is equivalent to a license they chose not to use because they though the Alaska brand is so powerful.
The reality is that AS has virtually no brand value outside of the western US and even less in Europe and Asia where it thinks it wants to fly. The other choice they have is Hawaiian which is just as limited to a single geographic region.
Sometimes you can think so hard that you lose common sense – which appears to be where you are. Or else you are involved in the case and trying to litigate it for AS.
The case is STILL between AS and the Virgin Group. DL has no rights to Virgin’s brand and logos any more than AS does for JL. VS lost a case and wants to try to get DL to pay for its own rebranding from a regional airline that no one outside of the west coast will ever recognize.
AS is already in way over their heads and looking for anyone to blame for their strategic failures.
@ Tim Dunn – Tim, I’m not involved in the case, just following it closely and trying to stay grounded in what the legal filings and rulings actually say.
You’re correct in that Delta doesn’t operate domestic flights under the Virgin brand. But that’s not the threshold for infringement. Alaska’s position, as laid out in both their U.S. complaint and the earlier UK proceedings, is that Virgin Atlantic’s marketing and commercial activity may be leveraging the “Virgin” brand to promote Delta-operated domestic segments to U.S. consumers, particularly in the context of codeshare booking paths and international itineraries. That’s what gives Alaska concern, not the operational certificate or DOT filings.
As for the notion that Alaska is simply trying to unwind an agreement it regrets, you may notice that UK courts already ruled that the trademark license remains binding and Alaska must pay for it. The current legal action is not an attempt to invalidate the contract. It is an attempt to enforce the exclusivity it paid for. Courts have consistently held that exclusive licensees can bring infringement claims if a third party uses the mark in their protected territory and category, even if that third party is a codeshare partner or affiliate.
Your argument seems to suggest that unless Delta is painting “Virgin” on a domestic aircraft, there is no issue. But under trademark law, it is not just who operates the flight, it is how the brand is being used to market or sell it. That is why Alaska is seeking discovery from Delta, not because Delta owns the Virgin brand, but because it may be involved in how that brand is being used in U.S. air travel.
Reasonable people can disagree on how strong Alaska’s case is. But dismissing it as sour grapes from a jilted competitor ignores the actual legal theories at play and the fact that Alaska is seeking to protect a contractual right that, according to the courts, remains very much in force.
Anyway, there is really no need for any further back and forth here. We will all see where this ends up sooner or later. And I fully expect one of us will end up eating humble pie, which is very nourishing indeed.
Mike,
it is time to let the case play out.
The reality is that AS fought for Virgin America and overpaid trying to block B6 which would have been a far better fit. AS didn’t understand what it was signing up for and it is not a surprise that Virgin Group won the case on the basis that Virgin America had the right to use the Virgin Brand for decades.
It is beyond foolish to suggest that putting the VS code on a DL operated flight comes anywhere close to the type of agreement that AS acquired.
It is even more incredulous that you can’t seem to understand that the Virgin Group controls the use of its own brand so if AS wants to know what DL is allowed to use, they need to ask the Virgin Group and its licensees, not DL.
AS is trying to venue shop because it doesn’t want to try to win a case in the UK and yet I will bet you that DL will say that they don’t have any rights to the use of Virgin’s brand and the case is between AS and the Virgin Group, not DL.
Get back w/ me when this is settled.
an aside on a specific post: “Get back to me when 1. DL provides its internal documents to AS – those types of requests are frequently squashed.” The first day of Evidence Class in law school begins with “almost everything is ‘discoverable.’ There’s exceptions for some ‘work product’ (oral reports from Expert Witnesses, if they’re in writing they have to be handed over), documents that won’t advance the case (e.g., how much was the lawn crew paid in ’23), etc. There’s often Requests for Sanctions ’cause the other side WON’T voluntarily hand over ‘internal documents.’ Contracts, financials, even handwritten notes from negotiations or operation absolutely must be.
I can certainly see AS point. This probably only came up because Virgin successfully sued AS. In the process of mutual discovery, AS noticed some questionable practices which they couldn’t litigate in UK court due to jurisdiction issues. Now that the original case is done, Alaska wants to claw back any rights that were violated and they want payment for such violations, which softens the blow from the original case. It’s pretty logical and the courts will make the final decision, but AS could have a case here, especially since DL is a significant owner of Virgin.
and it doesn’t take a law degree to know that people make incorrect statements and then come to wrong conclusions based on their wrong “facts.” There are legal processes to argue that an inquiry is invalid because the basic assumptions are wrong.
and it doesn’t take a law degree to know that people make incorrect statements and then come to wrong conclusions based on their wrong “facts.” There are legal processes to argue that an inquiry is invalid because the basic assumptions are wrong.
Virgin Atlantic DOES NOT SELL solely domestic space within the US. Period. Full Stop.
You cannot buy a solely domestic flight on Virgin Atlantic’ website.
Virgin Atlantic DOES sell seats from London to cities in the US as part of its ability to market its products throughout the US. IT markets the space, not Delta
Final observation for the moment: It is evident that the Virgin brand has been utilized as both a sales and redemption mechanism in connection with standalone U.S. domestic air travel operated by Delta Air Lines. On that basis alone, Alaska has grounds to argue that Virgin Group may be in breach of the TMLA, and that Delta has acted with knowledge of and participation in that unauthorized use.