CL-2022-000507 - [2025] EWHC 2505 (Comm)

Fecha: 03-Oct-2025

The prior proceedings

The prior proceedings

23.

The issue in the prior proceedings was whether clause 3.7 of the TMLA relieved Alaska of its obligation to make the MR payment if it ceased using the Marks (it being common ground that, in that eventuality, it would not be required to make payments under clause 8.1 by reference to the volume of Gross Sales).

24.

Mr Hancock KC at [161(1) and (2)] held that the MR was “a set sum payable for every year of the contractual term, regardless of the level of usage of the Virgin brand” and that it was, in effect “a flat fee payable for the right to use the Virgin brand, whether or not that right is taken up”. (emphasis in original). At [162(2)], he found that Virgin America wished “to continue to have the right to use the Virgin brand, and was prepared to pay for this.”

25.

He also addressed what was expressly put forward as an alternative case by Virgin – that if the MR was not payable if the Marks were not used, then Alaska was in breach of clause 3.6 in not making some use of them. At [174], he stated:

“I agree that this issue does not really matter in the light of my conclusions on Issue 1. However, I would conclude in any event that Alaska (or more accurately Virgin America) were obliged to use the Names or Marks under Clause 3.6, at least to some extent. It logically follows that in ceasing to do so, they acted in breach of contract. I accept, too, that the measure of loss for such breach is the amount of the Minimum Royalty, payable as damages rather than as a debt.”

26.

I am told that this represented an independent finding by Mr Hancock KC irrespective of his decision that the MR was payable even if there was no use of the Marks, that it was recorded in a declaration and that declaration was left undisturbed by the Court of Appeal (who did not find it necessary to address this point). That is not how I read [174] of Mr Hancock KC’s judgment, whose premise is that the absence of use would deprive Virgin of the MR (hence damages for non-use being the amount of the MR), whereas the effect of the main part of the judgment is that there would be no such deprivation. Rather, the finding reads as an alternative finding if the principal argument advanced by Virgin was rejected. The declaration granted is in similar terms, embracing the finding as to the damages recoverable. Nor is the characterisation of [174] as a free-standing determination consistent with the case advanced by Virgin (who clearly advanced this as an alternative case) and the decision of the Court of Appeal not to address this issue. In these circumstances, I do not propose to approach these applications on the basis that the clause 3.6 issue has been decided.

27.

In the Court of Appeal, Phillips LJ at [26] found that “the language of the Licence, the factual matrix and commercial considerations all point firmly to Virgin being entitled to at least the [MR] in exchange for the rights Alaska holds for the remainder of the term of the Licence”. He noted at [27] that the language of the TMLA should be accorded “particular weight … given that it is a professionally drawn contract between commercial parties.”

28.

At [30] Phillips LJ noted that:

“What clause 3.7 does not provide is that Alaska can cease all usage of the Virgin Brand … and at the same time avoid paying the Minimum Royalty or indeed any sum at all in respect of the rights it would continue to hold, if not use. Clause 3.7 can and should be understood consistently with the rest of the Licence, reading it as obliging Alaska to continue at least some usage of the Virgin Brand, or at any rate to pay the Minimum Royalty for its right to do so … [T]he Minimum Royalty is not in fact a sum calculated by reference to actual usage (or a ‘royalty’ at all) but a minimum payment Alaska must pay to Virgin for the Airline Rights granted under clause 3 of the Licence.”

29.

There are further passages in Phillips LJ’s judgment which are of relevance to the issues before the court:

At [32], he referred to the Exclusivity Obligation, stating:

“Alaska's contention is that it should be entitled to hold (and effectively “sterilise”) valuable intellectual property rights for up to 25 years, and yet pay nothing. If nothing else, it is plainly of value to Alaska that the well-known Virgin Brand should not be used by one of its competitors in the US airline marketplace. It is not appropriate to consider the adequacy or otherwise of that consideration, but it is plain that some payment would be expected and indeed required” (emphasis added).

ii)

While that passage points to the Exclusivity Obligation as something of value received in return for the MR even if Alaska does not use the Marks, it does not, in my view, involve a finding that this is the sole benefit for which the MR is paid, as the emphasised wording makes clear: the words “if nothing else” are intended to show that the Court of Appeal was not seeking to identify the sole benefit of the TMLA in the event Alaska chose not to use the Marks. As Phillips LJ made clear earlier in the judgment at [26] and [30], those benefits include the right to use the Marks, regardless of whether and to what extent Alaska chooses to avail itself of that right.

iii)

At [34], he noted that on Alaska’s case, “there would be a huge and unjustifiable difference between the use of a single Name or Mark in any part of Alaska's operation (perhaps by mistake), which would trigger the Minimum Royalty payment of nearly US$8m, and a complete de-brand, where nothing would be payable. There is no commercial or rationale justification for such an arbitrary distinction with huge financial consequences, which cannot have been intended by the parties.”

30.

There was some debate as to whether the case which Alaska is now running was consistent with the reasoning of the Court of Appeal, and, if so, whether that precluded Alaska from advancing its case. For present purposes, it is sufficient to say that I respectfully agree with and gratefully adopt the conclusions reached by the Court of Appeal, whether formally binding in the case before me or not, because they are obviously correct and have been found to be so.