Friday, July 01, 2005
Copyright © Las Vegas Review-Journal

$1 deal for Vegas slogan defended

Representatives of the Las Vegas Convention and Visitors Authority and its longtime advertising agency this week said November's $1 deal transferring ownership of the popular "What happens here, stays here" slogan from the authority to its creators at R&R Partners was anything but nefarious.

Instead, they dismissed the move as a minor legal maneuver to bolster a court case against a California woman who's selling products adorned with the similar "What happens in Vegas, stays in Vegas" phrase.

The deal was signed the same day the convention authority's 13-member board officially granted Rossi Ralenkotter new powers as the organization's president, including the responsibility to "register, protect and assign all intellectual property."

Some board members have questioned whether they should have been told of the sale in advance, and if R&R might profit at the authority's expense.

Las Vegas Mayor Oscar Goodman, who also is the authority's chairman, on Thursday promised a full inquiry into the matter.

"I'll be asking some very hard questions on July 12," Goodman said, citing the convention authority board's next scheduled meeting date. "There will be no whitewashing, no stonewalling."

Goodman repeatedly declined to discuss the issue further, saying he would wait to address his concerns in an open forum. He praised Ralenkotter, adding the two men discussed the deal this week, though Goodman wouldn't reveal the nature of the conversations other than to say he believed Ralenkotter's answers were "candid."

Henderson Mayor Jim Gibson, who was chairman of the authority last year, said Thursday the authority's attorneys recently advised board members to not discuss the issue further to avoid potential damage to an ongoing trademark infringement case.

However, Gibson said he was "surprised and not happy" when told of Ralenkotter's deal with R&R, and he looks forward to publicly discussing the matter at an upcoming board meeting.

Since its debut in January 2003, "What happens here, stays here" has been the centerpiece of the authority's nationwide advertising campaign touting Las Vegas as an adult-oriented vacation getaway.

Its budget for the fiscal year beginning today calls for more than $80 million in new advertising spending, ensuring the phrase will remain firmly in the public consciousness through at least summer 2006.

The ads' high profile has attracted imitators, including one who indirectly sparked the recent controversy.

R&R Chief Executive Officer Billy Vassiliadis said the cause of his agency's recent scrutiny surfaced more than two years ago, when he was told local stores were selling T-shirts and underwear adorned with "What happens in Vegas, stays in Vegas."

Moving to protect his client's trademark, Vassiliadis said, R&R's attorneys sent a letter to the manufacturer of those goods, Dorothy Tovar of Placerville, Calif.

"Ninety-nine out of a hundred times ... reputable companies will say, 'We'll stop using it.' " Vassiliadis said of Tovar. "But this lady did not want to stop using it."

Tovar registered her phrase with the Nevada secretary of state's office, as well as the U.S. Patent and Trademark Office. Court records show she licenses "What happens in Vegas, stays in Vegas" to Adrenaline Sports, a company she co-owns. Whether her phrase impedes the authority's similar trademark will be determined by the U.S. District Court in Nevada.

When Tovar refused to stop, R&R approached the authority to outline its plan to sue. Vassiliadis said that move led to the transfer of the "What happens here, stays here" trademark from the authority to R&R for $1.

A trademark and licensing agreement dated Nov. 9 includes clauses that outline R&R's ability to sue, on the authority's behalf, any third parties that may infringe upon the "What happens here, stays here" trademark, as well as a second trademarked phrase, "We work as hard as we play," which is used to promote the city's trade show and meetings industry.

Vassiliadis acknowledged documents filed with the federal trademark office mention potential clothing and souvenirs sales. But, he said, R&R has no plans to sell merchandise or products using the popular trademark. If those plans change, however, Vassiliadis said any merchandising contracts would be submitted to the convention authority board first.

"If there was going to be licensing, that money would accrue to the convention authority," Vassiliadis said.

Ralenkotter agreed, though he conceded no written stipulation exists that would force R&R to turn any royalties back to the authority.

That concerns Pat Razzano, a New York attorney, who said the authority would have "no control, no rights" over R&R's incidental use of the trademark unless such rights were protected in writing.

However, should R&R move to sell "What happens here, stays here"-themed products through a third party, sources said, the authority would sever its lucrative deal with the company within the 90-day window allowed in their 1999 contract.

"In 25 years that we've been doing this business, we've never once merchandised for the LVCVA," Vassiliadis said. "How stupid would I be to put Nevada's most lucrative advertising contract at risk to sell tchotchkes? I've had (business decisions) questioned before, but not the fact that I would steal money."

Several board members have since called Ralenkotter to question why the trademark was sold to R&R without their knowledge or approval, but Ralenkotter said he had only adhered to past practices that called for the authority president to protect the organization's intellectual property.

Prior to November, the authority had never sold trademarks back to R&R, Ralenkotter said, because it never had to sue to protect a trademark.

"There was no secret deal," said Ralenkotter, who suspects the recent outcry was stirred by Tovar's attorneys in an attempt to cloud the authority and R&R's legal defense.

"It was simply to protect the most-successful advertising campaign in the history of the travel industry," he said.

Efforts to reach the other seven who were board members in November were unsuccessful Thursday. Four of those on the board when the deal occurred have since resigned.

Despite any outcry, Vassiliadis also says the trademark sale was done solely to improve the two parties' shared legal interests against Tovar.

"Our attorneys got with (the convention authority) and said, 'For R&R to be able to litigate, we need to have the rights to the mark transferred to us,' and we began litigation," Vassiliadis said. "There was no contemplation, none, and there has not been to date, of selling that mark for commercial purposes. The only thing we've contemplated doing with that mark is using it in our marketing."

Both Ralenkotter and Vassiliadis said it made sense for R&R to press the case against Tovar because the company has more experience defending intellectual property rights.

"Our corporate attorney does this all the time. This is what we do for a living," Vassiliadis said.

The convention authority has since hired the San Francisco office of the law firm Morrison & Foerster to assist in the case against Tovar, although it was unclear Thursday what role the firm will play in the case.

When asked if R&R might just sell the trademark back to avoid further scrutiny, Vassiliadis said, "This case is ongoing and, at this time, we don't have the option to change the legal agreement."

Attorney Steven Weinberg has represented major corporations in trademark and copyright litigation for more than 22 years, including his current role as a shareholder with the international law firm Greenberg Traurig.

Speaking Thursday from Phoenix, he said the authority's $1 deal with R&R is "OK" given their shared legal interests against Tovar.

"If R&R wants to sue in its own name rather than in the name of the authority, it would have to own the mark because trademark law requires that the owner be the one that sues," Weinberg said. "They created this (deal) simply because R&R wanted to sue. When you do something like this, there's always going to be some glitch somewhere. Fortunately, there's no real glitch here because R&R is the agent of the authority."

Still, Weinberg added, "I don't know why the authority is not part of the lawsuit."

The latter question was echoed by Razzano, a partner with the law firm Fitzpatrick, Cella, Harper & Scinto.

"The convention authority could have simply hired lawyers that handle those types of cases," said Razzano, who has for 34 years worked on trademark-related cases, including overseeing intellectual property portfolios of several major corporations.

"They could have hired (R&R's) attorneys without selling the (trademark). Those attorneys could have represented the convention authority."

Razzano called the $1 transfer "unusual" if the move is solely for a court action.

Ralenkotter began a 10-day vacation Thursday and was unavailable for further comment. Vassiliadis also left town late Wednesday, sources at R&R said Thursday.

In February 2004, convention authority attorney Luke Puschnig told the Review-Journal his efforts to secure some phrases similar to "What happens here, stays here" were unsuccessful. That loophole allowed businesses such as Las Vegas' Cheetah's strip club and Sportsbook.com, an online casino, to play off of that theme using billboards still on display in Southern Nevada.

Review-Journal reporter J.M. Kalil contributed to this story.