Virgin suing Brightline for $251 million in royalties over brand-name cancellation
Richard Branson’s Virgin group is suing Miami-based Brightline for royalties it says it is owed from the express rail company’s decision to terminate their branding relationship in 2020 — less than two years into what was supposed to have been a multi-decade arrangement.
Virgin has told a United Kingdom court it is owed $251.3 million stemming from Brightline’s decision to pull out “on the basis of a cynical and spurious allegation that the Virgin brand had ceased to constitute a brand of international high repute,” the Financial Times reported. Brightline said it does not comment on litigation.
In November 2018, Brightline announced it would be changing its name to Virgin Trains USA and would file to go public. Just four months later, the company said it was shelving the IPO in favor of tapping private debt markets, but gave no indication of problems with Virgin. In April 2019, Richard Branson flew to Miami to inaugurate the name change and open Virgin MiamiCentral station downtown.
But that same month, Virgin signaled it would have to give up its U.K. rail unit after the government disqualified it from service for failing to meet pension requirements.
And as the pandemic bore down in 2020, both companies faced struggles. Regular Brightline service has now been shuttered — and 250-strong staff laid off — since March of last year. It officially terminated its relationship with Virgin in July; in August, Virgin Atlantic warned it was running out of money.
The FT reported Brightline terminated its agreement to license the Virgin trademark because the Virgin brand was “no longer of high-quality status” and that continuing to use it “would be materially damaging to Brightline’s reputation.”
Brightline’s finances have been buoyed by its parent company, Fortress Investment Group, and by continuing to borrow.
This story was originally published March 9, 2021 at 7:32 PM.
