Virgin Group wins London court battle over brand reputation

LONDON (Reuters) -British billionaire Richard Branson's Virgin Group on Thursday won a lawsuit against U.S. train operator Brightline over a cancelled branding deal, with a judge at London's High Court awarding $115 million in damages.

Virgin Group sued Brightline after the latter cancelled a deal to use the Virgin brand in 2020, just over 18 months after it was signed.

Brightline said it terminated the deal because the Virgin brand had been hit by negative press coverage of Branson's 2020 claim that UK-based airline Virgin Atlantic would need a bailout from the British government to survive the pandemic.

But Virgin argued its brand was not materially damaged by the group's handling of COVID-19, meaning Brightline could not cancel the deal without paying an exit fee of up to $200 million.

The company also sought unpaid royalties and Brightline's lawyers said in court filings for the trial in July that Virgin's lawsuit was valued at $250 million.

Judge Mark Pelling ruled in Virgin's favour on Thursday, saying in a written ruling that "Brightline has failed to prove that the (Virgin) brand had ceased to be a brand of international high repute" when it cancelled the deal.

A Virgin Group spokesperson said: "The Virgin brand has been a symbol of global innovation, exceptional customer experience and entrepreneurship for more than 50 years.

"Today's court judgment demonstrates the strength of our business and brand following Brightline's attempts to breach a long-term licensing agreement."

Another Virgin Group spokesperson said the company was awarded $115 million in Thursday's ruling, with another part of the lawsuit valued at up to $90 million due to be heard at a later date.

A Brightline spokesperson said in a statement: "We're disappointed in today's ruling ... and plan to appeal the decision."

At the trial in July, Brightline's lawyers cited internal Virgin emails describing Branson being based in the British Virgin Islands for tax purposes as "a reputation killer".

One external public relations adviser said "Richard needs to show he's not a ruthless, tax-evading billionaire", while Virgin Group CEO Josh Bayliss referred to Branson's tax residency in relation to the request for a bailout in an April 2020 email.

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"Richard cannot escape the criticism. The truth is he has paid as little tax as possible," Bayliss had said.

However, Virgin's lawyers said the group's reputation quickly recovered after Virgin Atlantic's request for government support and was unaffected in the United States.