Alaska Airlines Inc. v Virgin Aviation TM Ltd

Hearing date: 16 September 2025

Draft to parties: 19 September 2025

Approved Judgment

This judgment was handed down remotely at 10.30am on 03 October 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

This is the hearing of:

i) the Defendants' (“ Virgin”'s) application for summary judgment on its counterclaim; and

ii) the Claimant's (“ Alaska”'s) application for permission to amend its Particulars of Claim.

The background to the dispute and the procedural history can be relatively briefly summarised, because it has been set out in prior court decisions to which I refer below. This summary takes the position largely from those judgments:

i) In 2005 and 2007, Virgin America Inc. (“ Virgin America”) and Virgin entered into trade mark licensing agreements which set out the terms on which Virgin America was permitted to operate an airline in the US under the Virgin brand, and exclude others from doing so.

ii) The 2005 license agreement had led to regulatory concerns on the part of the US Department of Transport as to Virgin America's “nationality”, which concerns in turn led to the 2007 revision to the licence introducing clause 3.7.

iii) In 2014, Virgin America decided to launch an IPO. Issues raised by the IPO led Virgin America and Virgin to enter into a re-stated licensing agreement (“ the TMLA”) on 19 November 2014. Provision for the payment of a “Minimum Royalty” (“ the MR”) was introduced at this time.

iv) On 20 July 2018, Virgin American merged with Alaska and ceased to exist, Alaska succeeding to the TMLA.

v) In 2019, Alaska ceased to use the Virgin brand, and issues arose as to whether it remained obliged to pay royalties to Virgin under the TMLA.

vi) That issue was resolved in Virgin's favour by a decision of this court ( [2023] EWHC 322 (Comm), a decision of Mr Christopher Hancock KC) which was upheld by the Court of Appeal ( [2024] EWCA Civ 622).

In 2022, Alaska identified a further reason why it said it was not obliged to pay royalties under the TMLA, namely that Virgin had breached clauses 3.2 and/or 3.3 of the TMLA by operating a customer loyalty scheme which allows customers to use loyalty points for domestic flights with Delta Air Lines. I will refer to the obligations allegedly breached as “ the Exclusivity Obligation”. Alaska commenced these proceedings to establish a breach of the Exclusivity Obligation and that the breach had the effect of bringing the TMLA to an end through termination at law in September 2022. Virgin has counterclaimed for allegedly outstanding MR.

For present purposes, it is sufficient to note the following:

i) While Virgin disputes that there was any breach of the Exclusivity Obligation (renunciatory, repudiatory or otherwise) or that it had the effect of bringing the TMLA to an end, it accepts that these questions give rise to triable issues for summary judgment and permission to amend purposes.

ii) Virgin claims that Alaska has no defence to its claim for the MR under the TMLA in relation to the period up to the date of its alleged termination, relying on a “no set-off” clause in clause 8.9.1 of the TMLA.

iii) For its part, Alaska contends that the MR was payable exclusively for the Exclusivity Obligation, such that the basis for Virgin's entitlement to the MR has fallen away given the assumed breach of the Exclusivity Obligation. Alaska contends that Virgin cannot obtain summary judgment for the MR because it has an arguable claim to immediately recover any amount paid back in restitution.

iv) Alaska argues that it was a condition precedent to its obligation to pay the MR that Virgin had not granted any “further licences in breach of clause 3.3 in that financial year” (which I understand to mean both the initial grant of any further licence in a financial year and the continuation of any such further licence during that financial year, regardless of when it was granted).

v) In the alternative, Alaska argues that it was an implied term of the TMLA that “in the event that Virgin had granted a further licence in a given financial year in breach of clause 3.3 then the Minimum Royalty would not be payable in respect of that financial year” (as to which I hold the same understanding).

The amendments proposed by Alaska seek to add a plea of repudiatory breach of the TMLA to the existing plea of a renunciatory breach, to abandon a previously pleaded case of a contractual termination by Virgin in January 2022, and to advance the arguments by reference to failure of basis, condition precedent and implied term referred to above.

On that basis, the issues which potentially arise for determination are:

i) Was the MR a severable payment due solely in respect of the Exclusivity Obligation (such that the assumed breach of the Exclusivity Obligation would give rise to a total failure of consideration)?

ii) If so, and independently of the condition precedent and implied term arguments, does clause 8.9.1 of the TMLA have the effect that Alaska cannot rely upon its alleged right of recovery in restitution as a defence to the claim?

iii) Is compliance with the Exclusivity Obligation in the relevant financial year a condition precedent to Alaska's obligation to pay the MR in respect of that financial year?

iv) Is it an implied term of the TMLA that no MR is payable in respect of any financial year in which there is a breach of the Exclusivity Obligation?

The principles applicable to the granting of summary judgment and obtaining permission to amend are well-known and are not substantially in dispute between the parties. Of particular relevance is the principle that “it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it” ( Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch), [15(vii)]).

I am satisfied that all of the material relevant to the determination of the issues of construction and law raised by these applications are before the court. Indeed I have the benefit of the exploration of the background to the TMLA in the decisions of Mr Hancock KC and the Court of Appeal in the prior proceedings. I was not persuaded that there was any realistic prospect of relevant factual or expert material being available at trial which might affect the issues which I have been asked to decide (no relevant factual matrix was pleaded nor introduced in witness evidence). It follows that I was similarly not persuaded that there was any realistic prospect that the evidence being adduced at trial on the issues of the meaning of the exclusivity obligations or the consequences of breach would be relevant to the different issues raised by this application.

Mr Toledano KC confirmed that if the court was not persuaded that Virgin was entitled to a monetary judgment, Virgin was not asking for the court to reach final conclusions on construction (which might necessitate a free-standing appeal at this stage). That addresses the concerns discussed by Constable J in Resource Recovery Solutions v Derbyshire County Council [2023] EWHC 708 (TCC), [30] on which Ms Fatima KC placed reliance.

The TMLA in more detail

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:

i) “Airline Rights” defined as “the rights granted by [the First Defendant] to [Alaska] pursuant to clause 3 of this agreement”; and

ii) “Airline Royalties” defined as “the royalty payments payable by [Alaska] in consideration for the grant of the Airline Rights, as more particularly described in clause 8.1.”

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 ….”