Northwest Airlines, NWA FCU Still at Bitter Odds on Logo, Trademark Ownership

MINNEAPOLIS – Nine months after Northwest Airlines filed a suit against NWA Federal Credit Union for what it claims are improper use of its logo and trademarks, the rift between the two has grown wider and more acrimonious. In a Jan. 19 letter to Northwest Airlines employees, President Doug Steenland wrote “the credit union asserts that it owns the rights to use various Northwest trademarks and that it is free to continue to use them even without Northwest’s permission.” “The past three years have brought about the most difficult environment ever experienced in our industry,” Steenland wrote. “To compete in this environment, we have renegotiated agreements with virtually all of our suppliers to reduce costs and/or increase revenues. As part of this overall restructuring program, we discussed renegotiating agreements with the credit union. There was no reason to give the credit union a free pass from this new reality.” Northwest has laid off nearly 17,000 employees in the past two years and has cut annual expenses by $1.3 billion, according to published reports. The airline had also sought an additional $950 million in pay cuts from union and salaried employees. NWA is the largest credit union in the state with 115,000 members and $1.3 billion in assets. Nearly 90% of the airline’s employees belong to the credit union. Among its cost-cutting changes to suppliers, Northwest Airlines said it had to increase facility lease payments; transfer credit union employees out of Northwest’s health and pension plans, discontinue NWA pass privileges for credit union employees, and charge “a reasonable fee for credit union use of the Northwest logo.” “While we have made progress in these areas, we have so far been unable to resolve a critically important disagreement over use of Northwest’s logos and trademarks. In fact, we have gotten farther apart on this issue over the past nine months,” Steenland wrote. In a Jan. 22 letter, NWA FCU President/CEO Paul Parish responded to Steenland reasserting the use of “a variety of Northwest logos, trademarks and aircraft images with the company’s knowledge” for nearly seven decades. Parish said the credit union has also had a trademark on the name NWA Federal Credit Union since 1988 and a federal trademark registration for the same name in 1997. “Since 1938, we’ve used a variety of Northwest logos, trademarks and aircraft images with the company’s knowledge, consent and encouragement,” Parish said. “Northwest gave this consent in the past because of the value it received from the relationship with the credit union.” On Dec. 31, 2003, Parish said Northwest Airlines terminated 300 Northwest employees working at the credit union. The following day, NWA FCU hired those employees and picked up the expenses for related benefit and pension programs. Parish said for more that 65 years Northwest employees have worked at the credit union and during that time, “Northwest has asked for and received reimbursement for all costs associated with employment, including all wages, benefits costs, and pension contributions.” “In addition to participating in the company’s qualified benefit plans, those working at the credit union enjoyed a personal and business pass privilege,” Parish said. “The business pass privilege allowed your credit union to better serve members in remote stations. Northwest now asserts the credit union connection was merely a vendor relationship.” In March 2003, Northwest Airlines threatened to evict NWA from its offices if royalty and licensing fees for logo and trademark use were not paid. The airline agreed last May to extend the July 5, 2003 subleases of several properties occupied by the credit union to March 21, 2004. At the time, NWA FCU paid the airline rent for seven offices, including four in Minneapolis and 23 ATMs at Northwest facilities across the nation. Parish said the royalty and licensing fees would cost $6 million annually – “equal to more than half our net income.” NCUA has backed the credit union’s decision on not paying the fees. Last May, NCUA Region Five Director Jane Walters wrote the credit union stating that based on information provided by NWA, “Northwest has no right requesting compensation to serve this field of membership, nor is (the credit union) authorized to pay for access to serve eligible members.” The credit union’s lease for its Detroit office and seven ATMs expired last July, and its lease for the six remaining offices and 16 remaining ATMs expires March 21, 2004. The credit union has since moved branches off Northwest Airline’s properties in Minneapolis/St. Paul and Detroit and two new offices are scheduled to open elsewhere in the first quarter of this year. Steenland said the credit union leased such facilities “at below market rates and enjoyed virtually exclusive access to our employees for banking services.” Parish said the credit union pays “market rates (rates set by Northwest Airlines)” for the space including renting nine square feet for each ATM location.” Steenland said the airline has offered to extend a one-year lease extension, from March 22, 2004 to March 21, 2005, for the credit union to continue to use NWA property at the “higher negotiated fees.” “While we would welcome a lease extension, we don’t believe it is in (the members) best interest to agree to a one-sided, one-year extension,” Parish wrote. “Northwest has repeatedly stated it wants a vendor-type, `arms-length’ relationship with the credit union.” Instead, the credit union has requested a multi-year, standard commercial lease for its offices and ATMs, Parish said. Parish said the airline has rejected several of its proposals to save the company money and claims all Northwest cost-cutting measures are geared towards creating “a new source of revenue by licensing access to employees and future use of Northwest images.” [email protected]