A British judge has concluded that a Miami-based train operator should pay Virgin Enterprises Limited $115 million in damages to resolve a dispute over an alleged breach of a licensing agreement.
Judge Mark Pelling of London’s High Court of Justice handed down the decision against train operator Brightline Holdings on Oct. 12. Brightline had entered into a licensing agreement in 2018 that allowed the company to use Richard Branson’s Virgin brand on its train operations on the East Coast.
The licensing agreement contained a clause that permitted Brightline to pull out of the agreement in the event the Virgin brand stopped being a “brand of international high repute” or its trademarks no longer were of “high-quality status and synonymous with the purpose and brand values,” according to Pelling’s opinion.
Brightline gave notice in 2020 that it intended to terminate the agreement, arguing that its continued use of the trademarks “would have repelled customers, investors and employees from the defendant’s rail business, rather than attracting them to it,” according to the High Court decision.
Virgin, however, contends the conditions outlined in the clause in question, 12.2(a), were at no time fulfilled and that Brightline was simply using the clause to exit the agreement at a time when the company’s business activities were being harmed by the COVID-19 pandemic.
“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,” Pelling said.
The court examined oral testimony from witnesses called by both Brightline and Virgin, written testimony and statistical data on the status of the Virgin brand. Overall, the judge found Virgin’s experts more reliable, according to Pelling's decision, which described market research showing changes in the awareness and familiarity different populations have with the brand..
“I do not consider the movements that this material reveals are sufficiently material to demonstrate that the Masterbrand had ceased to be of international high repute,” he said. “At best it shows a modest drop in familiarity in one market.”
A spokesperson for Brightline told the Florida Record in an email that it would continue to pursue its legal options.
“We’re disappointed in (the Oct. 12) ruling, made in a UK court, and plan to appeal the decision,” the spokesperson said.
Brightline’s decision to pull out of the licensing agreement came in the wake of Virgin Atlantic airline filing for Chapter 11 bankruptcy protection in the United States and Virgin’s loss of a train franchise in the United Kingdom.
“The Virgin brand has been a symbol of global innovation, exceptional customer experience and entrepreneurship for more than 50 years,” Virgin said in a statement to the Associated Press. “(The Oct. 12) court judgment demonstrates the strength of our business and brand.”
Brightline’s Florida train operations now provide service in Miami, Aventura, Fort Lauderdale, Boca Raton, West Palm Beach and Orlando. The company also plans to provide its services in congested regions where city pairs are too close for commercial airline flights but too distant to efficiently reach by car. The company said that among its immediate plans is to provide service between Southern California and Las Vegas.