Due to a disagreement on the use of the business’ trademarks during its merger with Virgin America, Virgin Group is suing Alaska Airlines for $160 million. At a stated price of $2.6 billion, Alaska Airlines merged with Virgin America in 2016. Alaska reportedly had to pay $8 million in annual royalties through 2039.
They argue that they are no longer required to pay Virgin because Alaska no longer utilizes the Virgin name. According to Virgin, Alaska is still obligated to make yearly payments. Alaska must pay the minimal royalty as a debt in exchange for being allowed to use the Virgin trademark, Virgin lawyer Daniel Toledano stated, regardless of whether and to what extent Alaska actually uses the Virgin trademark.
Weisselberg further contends that due to protections put in place in 2007 to allow the airline to operate “completely unbranded from Virgin,” Alaska is protected from further payments to Virgin.
Regardless of how Alaska Airlines operates its own business following the merger, Virgin wants the money they claim to be entitled. If Alaska has the measures in place to keep them from having to make those payments, they also have a good case, especially in light of the fact that the Virgin America name is no longer in use.
The time between now and 2039, though, is quite a minefield because if such an arrangement were signed, Alaska would have to start paying Virgin by that date. Of course, it makes sense that this issue ended up in court, as an impartial arbitrator is required to render a particular judgment based on the law.
It is heading to court because both sides have compelling arguments. The judge’s work is made a little more challenging in this sense because it is unknown who will win. The judge will probably be able to make an intelligent judgment.