A court case that tested the reputation of the masterbrand of Virgin Enterprises has ruled in favor of the company after a licensing agreement over the use of the name by train operator Brightline Holdings.
Virgin Group sued for $251 million in royalties after it pulled out of a deal in which Brightline intended to rebrand as part of a planned service in Florida and another route from Las Vegas to Southern California as Virgin Trains USA.
Virgin Group lends its name to numerous industry licensees such as Virgin Media, Virgin Mobile, Virgin Money, Virgin Atlantic, Virgin Galactic and Virgin Hotels. That would have extended to the train operator until it backed out of a 20-year deal announced in November 2018.
The reason put forward by Brightline for the change of heart was that Virgin was no longer as robust and international brand as it had been before the pandemic when the deal was first agreed.
In response, Virgin sued for the agreed value of the agreement within the U.K. High Court and having won the case, the outcome award was a sum of $115 million.
This saw a rare case of a major brand forced to prove its value and that it had not been weakened.
In reporting the introduction of the legal proceedings, Adweek learned that internal brand research was conducted on three occasions during 2020 to monitor the health of Virgin’s brand equity across a range of geographies, believed to include America and Australia.
The company asses its brand health using a sample of consumers, with one survey usually being conducted each year at least. Online forums and focus groups within certain markets and online/social media discussion tracking are also conducted on an ongoing basis.
In delivering his ruling, Judge Pelling KC said that Brightline had failed to prove that Virgin was no longer the international brand “of high repute” that it once was or that it would have caused “material damage” had the rebrand proceeded.
“Although it was suggested by Brightline that its standing with consumers was damaged by its continued association with Virgin, there is no evidence that is so,” Judge Pelling stated in his ruling.
A Brightline spokesperson commented: “We’re disappointed in today’s ruling, made in a UK court, and plan to appeal the decision.”
Meanwhile, a Virgin Group spokesperson said: “Today’s court judgement demonstrates the strength of our business and brand following Brightline’s attempts to breach a long-term licensing agreement. We continue to work with the most dynamic partners across the world to bring ideas to life and change business for good.”
