Virgin Cruises Sued For $300 Million for Ripping Off Miami Businessman's Idea

A rendering of a Virgin Ultra Ship
A rendering of a Virgin Ultra Ship
From documents filed in the law suit

Colin Veitch spent 8 years as president and CEO of Miami-based Norwegian Cruise Lines. However, after stepping down in 2008, he had no intention of leaving the cruise industry behind. He hatched an ambitious plan to launch a new cruise line. Of course, launching a cruise line is no easy task. He needed brand-name recognition and financial backing.

British billionaire Richard Branson's Virgin Group had long been rumored of wanting to enter the cruise market. So after being connected by investors in 2011, Veitch and Branson struck a tentative agreement. Veitch had the vision and cruise experience; Virgin had the name recognition and ambition. It seemed like a perfect match. Veitch, however, now claims that Virgin Group ended up cutting him out of the agreement and stole his business plan. He's now suing the megaconglomerate for $300 million.

Veitch noted that there were significant barriers to entering the cruise-ship industry. For starters, you need to, you know, actually have cruise ships, which are not particularly inexpensive things. It also helps to have a trusted brand.

Veitch concluded that the best way to enter the market was to make a splash by introducing two new ultra ships. At Norwegian, he had initiated the plans for its ultra ship, Epic, which, up until this end of this year, spends its winters being stationed in Miami. Such ships are quite large and feature high-tech and unique on-board attractions and experiences. They also charge higher prices, and once on board, passengers tend to spend significantly more. They generate about 60 to 40 percent more profit than a regular cruise ship. A new line featuring only ultra ships would also not have to launch with the upkeep of older, less profitable, regular-sized ships.

An ultra ship's launch also tends to generate significant media attention, and passengers are more willing to sail on it due to its unique features, bypassing any brand loyalty.

In his lawsuit, Veitch claims that essentially Virgin would act as a branding partner and receive a large licensing fee for use of the name. Veitch would act as CEO and president of the new company and would receive 90 percent of the profits that weren't guaranteed to investors.

However, Veitch claims that as the plan moved forward, Virgin kept altering the agreement. He said he went from being a partner to being an "indentured servant."

Virgin, Veitch claims, eventually shut him out of the deal completely and moved forward with the plan as if it was their own. This past December, Virgin announced its plan to enter the cruise industry with two new $1 billion ships with Tom McAlpine, a former president of Disney Cruise Line, on board as CEO.

The point of contention is that Veitch and Virgin's original agreement stated that Virgin could not use any information presented by Veitch for three years. Virgin announcement came outside of that three year period, but Veitch claims that Virgin continued to work on the plan during that time. Veitch also claims that Virgin broke Florida's Deceptive and Unfair Practices Trade Act.

Veitch's lawsuit was filed in federal court in Miami today and seeks $300 million in damages.


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