Local tourism leaders clearly fumbled when handing off ownership of this city's most-successful tourism advertising campaign.

But none of the key players did so in an effort to fix Las Vegas' increasingly lucrative marketing game, a team of attorneys told members of the Las Vegas Convention and Visitors Authority's board Tuesday.

Asked to sort through the effects of a 17-month-old trademark dispute, San Francisco-based representatives of the international law firm Morrison & Foerster said authority President Rossi Ralenkotter acted "in good faith" when he last fall sold the "What happens here, stays here" trademark to its creator, Las Vegas-based advertising powerhouse R&R Partners, for just $1.

Attorney Zane Gresham's investigation supported Ralenkotter's frequent claims that the deal -- which was not approved by the authority's then-13-member board -- was just a legal maneuver to bolster R&R's trademark infringement case against Dorothy Tovar, a California businesswoman who sells T-shirts that say "What happens in Vegas, stays in Vegas" phrase.

Still, Gresham recommended that the authority's current 14-member board take steps to prevent similar deals, including creating policies to maintain ownership of authority trademarks, and ceasing its reliance on outside parties to protect its intellectual property.

The board should also establish policies to determine which trademarks warrant the expenses associated with federal protection, Gresham said, adding it should also buy back the popular "What happens here, stays here" trademark from R&R once the U.S. District Court case against Tovar is resolved, and ensure it has exclusive rights to the phrase's use in the interim.

The $1 sale, Gresham said, was the product of an agency whose management policies over the past 50 years did not always keep pace with its overall growth.

"The authority really wasn't prepared, by experience or by policies and practices, to deal with the phenomenon of the 'What happens here, stays here' mark," said Gresham, who was accompanied by three fellow Morrison & Foerster attorneys, as well as John Frankovich, a Reno-based attorney from the McDonald Carano Wilson law firm.

Morrison & Foerster's investigation, which included extensive document reviews as well as interviews with 13 key personnel, was prompted by media attention that followed a June 24 Las Vegas Sun column by Jeff German, whose recent writings suggested the $1 sale was a "behind closed doors" deal to divert potential merchandising revenue from the publicly owned authority to R&R, a private company controlled by Billy Vassiliadis and a few partners.

Ralenkotter and Vassiliadis dismissed such allegations, claiming the trademark was transferred solely to bolster R&R's case against Tovar, which the authority did not officially join until July 25 when Reno-based U.S. District Court Judge Larry Hicks approved R&R's May 27 request to make it a co-plaintiff. Prior to that, R&R's attorneys took on Tovar on the authority's behalf.

Morrison & Foerster's investigation supported Ralenkotter and Vassiliadis. "It's our conclusion, based on all of the evidence that we've seen, that the purpose of that (sale) was solely to facilitate the protection of the trademark," said Douglas Hendricks, a partner with Morrison & Foerster. "We did not find any evidence whatsoever of any attempt by anyone to profit from this. We did not find any evidence that anyone had profited from this.

"And at this time, there isn't any evidence that this was done with a hope of future personal gain by either R&R personnel or authority personnel."

Hendricks added the investigation also found no issues with the authority's 25-year relationship with R&R.

Gresham said the authority evolved from a small organization tasked with staging community fairs into one of the world's largest convention bureaus.

"The LVCVA had no formal written policies for handling its trademarks or protecting its intellectual property," Gresham said. "Decisions were made on a case-by-case basis."

Las Vegas Mayor Oscar Goodman, a veteran attorney who also chairs the authority board, said Tuesday he will lead a four-person committee tasked with creating policies associated with the authority's intellectual property going forward. Other members are Henderson Mayor Jim Gibson, who's also a lawyer; and Tom Jenkin and Chuck Bowling, executives with Harrah's Entertainment and MGM Mirage, respectively.

Their recommendations will be presented when the board reconvenes Sept. 13.

Ralenkotter said the report "speaks for itself." He added the board could buy back the "What happens here, stays here" trademark once the Tovar case is complete, though he would not commit to such a step Tuesday.

Vassiliadis, R&R's chief executive officer, spent Tuesday in San Diego. Reached there, he thanked Goodman and Gibson for helping resolve the issue quickly.

"I've got people saying, 'Congratulations,' to me today, but it's hard for me to be euphoric," Vassiliadis said. "I hate to think that we had to hire a firm out of California, spending a whole lot of money, to get someone to say I'm an honest guy who didn't try to steal any money."

Exactly how much the authority will pay Morrison & Foerster for its investigation has not been determined, an authority spokeswoman said Tuesday. But legal counsel Luke Puschnig said last month both Gresham and Hendricks charge $575 per hour.

Gresham described his firm's investigation as "substantial," particularly given the brief period in which it was produced. That claim was evidenced by a telephone-book-size report Goodman displayed Tuesday.