An Easy Settlement?
October 20, 2010
EasyJet has now settled a two-year long dispute with its investor and founder Stelios Haji-Ioannou over the use of the EASY’ brand name. EasyJet has finally managed to sort out a deal with Sir Stellios to end the long-running dispute. This enables easyJet to continue using their brand name for their airline and other services for the next 50 years. The agreement will pay Sir Stelios 0.25% of the company’s revenues every year. This will give him a guaranteed 3.9 million for the first year alone.
Both parties seem happy with the outcome of this long running dispute. Stelios stated, “I am content this is a fair deal for both sides… Let’s hope this is a win-win for all concerned.” The chief executive for easyJet, Carolyn McCall expressed easyJet’s satisfaction with the outcome: “This is a sensible resolution of a difficult dispute that provides a fair, clear, workable outcome that is an improvement for both sides. We see this as a new chapter in working with easyGroup and a big step forward.”
Original licence and dispute
The dispute concerned the scope and terms of easyJet’s licence to use the brand. When easyJet was initially put on the stock market a decade ago the company transferred the trade mark to the easyGroup who granted easyJet a licence to use the name in perpetuity in return for nominal royalty payments of £1 a year. Essentially the plethora of ‘easy’ trade marks are owned by EasyGroup who registers the agreed licences against their marks.
However the scope of the original licence was disputed when easyGroup argued that easyJet were earning more than the cap of 25% of their revenue from ancillary activities, such as charges for flight baggage. The case was brought to the High Court to clarify what profits easyJet were able to make from non-airline business and this has led to considerable legal costs for easyJet with £4m spent in the past two years.
New licence – generating revenue
The upshot of this new licence agreement is to give easyJet the right to generate revenues from non airline business and enter co-branding agreements. It also gives easyJet more independence from easyGroup as Stelios has given up the right to appoint himself as chairman of the company.
It will be interesting to see how this licence affects other EASY brand licences as the original licence between easyGroup and easyJet is regarded as the “blueprint” for all other easy brand licences (according to page 9 of the easy brand manual). So assuming the new licence agreed becomes the ‘blueprint’ now, then it may not be inconceivable to see a review of the licences between the 15 other businesses and easyGroup taking place.
