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)
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.