American Airlines and Expedia agreed to settle a trademark and breach of contract lawsuit over the online travel agency’s Add-On Advantage discount hotel program.

The airline filed the federal lawsuit in Texas in October, alleging that the Expedia Add-On Advantage logo infringed on American’s long-held AAdvantage loyalty program logos and marks, and that Expedia had breached agreements with the airline in the process. Expedia denied American’s claims of infringement and contract violations when it answered the airline’s lawsuit in November.

A federal court in Fort Worth, Texas ordered that the case be dismissed December 17 after the two parties jointly filed a motion requesting that the court do so.

The details of the settlement, confirmed by the court’s dismissal, have not been publicized. The basic mechanics and functionality of the Expedia Add-On Advantage program appear to remain in place.

American Airlines Group spokesman Matt Miller said Monday: “On October 16, 2018, American Airlines filed a complaint against Expedia in the United States District Court for the Northern District of Texas, American Airlines, Inc. v. Expedia Inc., Civil Action No. 4:18-cv-00850 alleging that Expedia’s “Add-On Advantage” mark infringed American’s AAdvantage trademarks. American and Expedia have agreed to amicably settle this litigation, and we are excited to continue to partner closely to meet the needs of our mutual customers.”

Expedia is still advertising the Add-On Advantage program, which enables customers to get hotel discounts of up to 57 percent, according to the company, up until the day of their trip after making flight or car rental bookings. Expedia officially launched the program, which enables hotels to offer discounts to consumers without publicizing them to the general public, in June.

In fact, according to TV analytics firm iSpot.tv, Expedia spent an estimated $2 million on Add-On Advantage U.S. national TV ads in English over the last two weeks, as well as $200,000 in a Spanish version of the TV commercial. Expedia was still featuring a video about the program on its Facebook page Monday, and promoted the discount program on Expedia.com hotel pages.

“The Add On Advantage logos and marks are confusingly similar to American’s own AADVANTAGE marks, such as the exemplary version below, on their face and in the context of the travel and discount services that American has offered until its AAdvantage program since the early 1980s,” the airline’s lawsuit claimed.

Above is an American AAdvantage logo. Below is one of the Expedia Add-On Advantage logos, which American argued could easily be confused with its AAdvantage logos. An exacerbating factor from American’s standpoint was that the airline participated in Expedia Add-On Advantage, and it led to confusion when Expedia customers would choose to insert their AAdvantage numbers to earn miles.

American and Expedia have resolved their issues over the dispute, although it’s unclear how they settled the matter.

Contract Terms

In terms of Expedia’s supposed breach of contracts, according to American’s lawsuit, Expedia allegedly violated American’s addenda to its Airlines Reporting Corp. and International Air Transport Association agreements, otherwise known as Governing Travel Agency Agreements. These agreements allowed Expedia to use American’s AAdvantage marks in a limited way as long as it doesn’t cause confusion and harm to the airline’s intellectual property.

According to the lawsuit, Expedia had agreed under the American contract addenda that:

“In the event of a breach or threatened breach of any of the provisions of these instructions or the Agreement, American will, to the extent permitted under applicable law, be entitled to seek injunctive relief in any court of competent jurisdiction restraining [Expedia] from breaching the terms hereof without requirement of a bond or notice and [Expedia] agrees not to object or defend against such action on the basis that monetary damages would provide an adequate remedy.”

American and Expedia also signed an Agency Program Agreement on August 1, 2014 where Expedia agreed “that it will not purchase, use, or register any domain names, keywords or search terms that are identical or confusingly similar to or contain any of the American Marks, which include the ADVANTAGE Marks,” according to the lawsuit.

It’s unclear how the two parties resolved the trademark and breach of contract tiff. As part of the settlement, though, the court issued a report to the U.S. Trademark Office informing it of the dismissal.

American’s complaint and the judgment is embedded below:

Download (PDF, 796KB)