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

Recital (A) to the TMLA notes the Second Defendant’s beneficial ownership of certain intellectual property which I shall refer to as “the Marks”. The TMLA includes two defined terms of particular relevance:

Clause 3.1 provides:

“In consideration of the payment of the Airline Royalties to [the First Defendant] by [Alaska], [the First Defendant] grants to [Alaska] the right:

3.1.1

to use the Marks only in connection with and in the ordinary course of carrying on the Licensed Activities;

3.1.2

… to carry on the Licensed Activities only under [certain trading or business names];

…

3.1.3

to do and authorise the doing of all acts the doing of which is restricted by the copyright [in certain work] only in connection with and in the ordinary course of carrying on the Licensed Activities and in accordance with the terms of this Licence;

3.1.4

to grant sub-licences of the rights granted by this Licence to each of its wholly-owned subsidiaries …”

“Licensed Activities” are “the activities described in schedule 1 in connection with which [Alaska] and its subsidiaries are permitted to use the Marks pursuant to the grant of the Airline Rights under clause 3 below of this Licence”. Schedule 1 defines a series of activities including operating an airline, aviation and cargo business in certain defined territories (including the US) and incidental activities.

Clause 3.2 provides:

“[Alaska] shall be the exclusive licensee of the Marks in relation to the provision of the Licensed Activities by it and its wholly-owned subsidiaries to the exclusion of [the First Defendant] and all others ….”

Clause 3.3 provides that Virgin “shall not grant any further licenses to use the Marks in respect of the Licensed Activities.”

Clause 3.6 provides:

“Subject to clause 3.7, [Alaska] undertakes that, for as long as it provides the Licensed Activities it shall continue to do so using the Names and shall use all reasonable efforts to promote its conduct of the Licensed Activities under the Names”.

Clause 3.7 provided:

“Notwithstanding any other provision of this Licence nothing in this Licence shall prohibit [Alaska] at any time during the Term from electing to perform the Licensed Activities or any other activities, including, but not limited to, operating flights, code sharing arrangements with any other airlines or entities, or operating flights between any points regardless of where such flights originate or terminate, without the payment of royalties, so long as [Alaska] does not use the Names or Marks while undertaking such activities. Provided, however, that in the event [Alaska] ceases to use the Names or Marks in a material manner, which shall include but not be limited to where [Alaska] derives more than twenty percent of its operating revenues within the territories without using the Names or Marks, then [the First Defendant] will have the right to terminate the Licence after 45 days prior written notice”

The payment of Airline Royalties is addressed in clause 8. Clause 8.1 provides:

“In consideration of the Airline Rights granted pursuant to clause 3, [Alaska] agrees to pay [the First Defendant]:

(a)

with effect from the Effective Date and until December 31, 2015, a quarterly royalty which shall be 0.5% of Gross Sales in respect of each Quarter or part of a Quarter;

(b)

with effect from January 1, 2016 and until the Trigger Date, a quarterly royalty which shall be 0.7% of Gross Sales in respect of each Quarter or part of a Quarter; and

(c)

with effect from the Trigger Date and for the remainder of the Term, a quarterly royalty which shall be 0.5% of Gross Sales in respect of each Quarter or part of a Quarter.

In each case, subject to the requirement that the “[Alaska]” will in each financial year during the Term pay at least the annual Minimum Royalty in accordance with clause 8.6”;

(the “Trigger Date” being when Gross Sales for any period of four consecutive quarters exceed US$4.5 billion).

Clause 8.5 provides for the provision of quarterly statements of Gross Sales by Alaska within 10 days of the quarter’s end (clause 8.5.1), and for provision by Alaska of a financial statement for its financial year within one month of its end to be reconciled to the quarterly payments (“the Reconciliation Statement”), (clause 8.5.2). Under clause 8.4, amounts payable “under this clause 8” were to accompany “the quarterly statement to be provided … in accordance with clause 8.5.1”.

Clause 8.6 provides:

“For the avoidance of doubt, [Alaska’s] obligation in respect of payment of royalties due to [the First Defendant] in each financial year of [Alaska] is to pay the greater of (a) a royalty based on a percentage of [Alaska’s] Gross Sales in the relevant period, at the rates set out in clauses [8.1] and [8.3] above, and (b) the Minimum Royalty payment applicable for that period. Where the Reconciliation Statement reveals an underpayment of any amount due to [Virgin], the amount of such underpayment shall be paid in full by [Alaska] within 20 days following receipt of a relevant invoice from [the First Defendant]. Where the Reconciliation Statement reveals an overpayment of any amount due to [the First Defendant], the amount of such overpayment shall be set off against royalties due for the following Quarter.”

The MR is US$7,978,200 or pro-rata for each financial year, to be adjusted annually by reference to USCPI.

Clause 8.9.1 provides:

“All sums payable to [the First Defendant] under or in connection with this Licence shall be paid in full without any set-off or counterclaim whatsoever and free and clear of all deductions or withholdings whatsoever, save only as may be required by law.”

Finally, clause 9 provides:

“9.1

The rights granted to [Alaska] by this Licence are personal to [Alaska] and [Alaska] shall not delegate or assign those rights except that, provided it has given prior notice to [the First Defendant], [Alaska] may delegate or assign:

9.1.1

subject to clause 9.4, to wholly-owned subsidiaries of [Alaska];

9.1.2

to third parties, but only as part of a transfer of all or substantially all of the business of [Alaska] forming part of the Activities; or

9.1.3

by way of security.

9.2

[Alaska] may, with prior notice to [the First Defendant], mortgage or charge the rights granted to [Alaska] by this Licence”.