Sun Sentinel Palm Beach Edition
Virgin sues Brightline for $251.3M
British billionaire Branson’s company files lawsuit against the South Florida-based railroad over marketing divorce
Brightline’s decision to offload Richard Branson’s Virgin Group as a marketing partner is now before a London court, with the British billionaire’s company seeking more than $250 million in damages from the South Florida-based railroad.
Amid considerable fanfare, the now idled high speed railroad entered into a royalty agreement with the flamboyant entrepreneur in 2018 as it ramped up passenger service among the downtowns of Fort Lauderdale, West Palm Beach and Miami.
Brightline’s name was changed to Virgin-Trains USA; its Miami station received swaths of bright red paint; and its trains’ interiors were to reflect the Virgin trademark and colors as well.
But Brightline halted service in late March 2020 after passenger traffic plunged aboard its high speed trains and the pandemic forced dramatic cutbacks in local commerce.
As last summer approached, Brightline ended its deal with Virgin, and the name of Branson’s internationally prominent company, which is based in the United Kingdom, faded into the background.
Despite the halt in service, Brightline continued building its 170-mile extension to Orlando, which is reportedly halfway complete. It has cut a deal with Boca Raton to build a station there, and has entered into a deal with Miami-Dade County to build a local commuter service, The rail line has set tentatively plans for resuming service toward the end of this year.
Now, Virgin Enterprises, the company that entered into the agreement, claims in its lawsuit filed in London that Brightline Holdings, the railroad’s parent, improperly terminated the companies’ marketing arrangement.
The lawsuit’s filing was first reported by Law360, the online legal news site.
In an August 2020 financial filing, Bright line said it ended the deal because the Virgin brand “ceased to constitute a brand of international high repute, largely because of matters related to the pandemic.” As the pandemic ravaged the economy, Branson’s airlines did suffer financial setbacks, and his new Virgin Voyages cruise line delayed its scheduled startup from Port Miami.
But in its lawsuit, Virgin asserts that Brightline’s “suggestion was, and is, completely false.”
Virgin Atlantic Airways has resumed serving Miami International Airport and the cruise line is booking voyages starting in July, according to the line’s website.
“The Virgin brand has, at all material times, remained a brand of international high repute,” the lawsuit says. “The defendant was not entitled to terminate the trademark license agreement.”
Late Monday, a Brightline spokesman did not have an immediate comment.
The suit alleges that under the terms of the licensing deal, the earliest Brightline could have left the agreement was 2023. although the company would have had to pay an exit fee.
Virgin claims it is entitled to royalties that should have been paid by Brightline through that year, plus an “early termination fee.” The grand total: $251.3 million.