Virgin Aviation Ltd v Alaska Airlines Inc. [2024] EWCA Civ 622 (on appeal from [2023] EWHC 322 (Comm))
The Court of Appeal has dismissed Alaska’s appeal in the dispute between Virgin and Alaska concerning a trade mark license agreement (TMLA) between the parties.
Virgin obtained judgment in its favour at first instance in February 2023, which Alaska later obtained permission to appeal. Following a hearing in March 2024, the Court of Appeal today handed down judgment dismissing the appeal and upholding the declarations made at first instance.
Under the TMLA, Virgin had licensed to another entity, Virgin America Inc., the right to use the Virgin brand in connection with the operation of an airline in the United States. Subsequently, Virgin America was acquired and merged with Alaska Airlines Inc., and Alaska assumed all of Virgin America’s rights and obligations under the TMLA. Alaska later determined to cease using the Virgin brand.
A dispute subsequently arose as to whether the TMLA required Alaska to continue paying the Minimum Royalty for the duration of the TMLA. Virgin contended that the Minimum Royalty was due irrespective of whether Alaska chose to continue using the brand. Alaska argued that the obligation to pay was only engaged if there had been some usage of the brand. A subsidiary dispute arose as to whether or not the TMLA permitted Alaska to cease using the brand entirely.
At first instance, the judge held that Virgin’s case succeeded on both fronts: on a true construction of the TMLA, the Minimum Royalty remained payable even if Alaska elected to cease using the brand. Moreover, Alaska was under an obligation to continue using the brand to at least some extent in any event.
The judge’s decision was upheld by the Court of Appeal, which noted that the Minimum Royalty remained due notwithstanding the prohibition on royalties payable in respect of revenues derived other than from use of the Virgin brand. In respect of Alaska’s reliance on a ‘trumping’ provision, the Court held that words which gave one clause prominence over all others would only be engaged if there was in fact a conflict between the relevant clauses of the contract: “Words giving primacy to one provision must of course be given effect where appropriate, but only to the extent that there would be an inconsistency or conflict between that provision and another.”
Daniel Toledano KC and Joshua Crow, instructed by Slaughter and May, acted for Virgin, the Respondent.
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