Trademark attorneys: Slogan deal lopsided

Friday, July 1, 2005 | 11:13 a.m.

Two trademark attorneys said Thursday that advertising agency R&R Partners of Las Vegas clearly can profit from an agreement that gives it the rights to the popular and potentially lucrative marketing slogan "What happens here, stays here."

Las Vegas attorney John Lambertsen, who looked at the eight-page trademark assignment R&R received in private on Nov. 9 from the Las Vegas Convention and Visitors Authority, said the agreement was akin to "Philip Morris giving up the Marlboro Man."

And Helen Hill Minsker, an adjunct professor at the Georgetown University Law Center in Washington, called the agreement "one-sided" in favor of R&R because the LVCVA didn't get much in return.

Phone messages seeking comment from LVCVA President Rossi Ralenkotter were not returned. The LVCVA board is expected to discuss the agreement at its July 12 meeting.

The agreement says nothing about compensation for the assignment of the trademark, but a secretary of state document filed March 2 shows $1 was paid for the assignment of the slogan.

R&R Chief Executive Billy Vassiliadis has said that his company, which serves as the tourism authority's advertising and marketing agency, has no intention of profiting from the agreement. And Ralenkotter has said that any profit derived from the slogan would go back to the tourism authority.

Both men, the only signatories on the agreement, have also insisted that the trademark assignment was merely intended to allow R&R to defend the slogan against potential misuse from other individuals and businesses. R&R is engaged in a federal lawsuit in which it has accused a California clothier of trademark infringement by profiting from the slogan, "What happens in Vegas stays in Vegas."

LVCVA's contract with R&R, which pays the ad agency $66.5 million this year, states that the tourism authority maintains ownership over R&R's work product on behalf of the authority.

But Minsker, a partner in a Washington law firm who lectures internationally on trademark law, and Lambertsen, who has 27 years of experience in trademark and patent law, said that the trademark assignment has the effect of carving the "What happens here" slogan out of the work product realm, giving R&R full ownership.

"It does look that way because the agency does have the right to get profits," Minsker said. "This sure looks like a one-sided agreement because it doesn't give the LVCVA any compensation. It raises questions as to what the LVCVA is getting out of this."

Minsker said that if anything, the LVCVA could be required to defend lawsuits related to the slogan based on the wording of the agreement's indemnity clause.

"The language is ambiguous on that front," Minsker said. "What I don't understand is why the LVCVA gave up so much power and didn't get anything in return if R&R is not in it for the profits. It's a curious agreement from that standpoint."

Lambertsen said the agreement is "structured a little weirdly" and that it reads as though both parties didn't think it through as much as they could have.

But he said it made sense to assign all potential profits to R&R "because if they gave too much back to the LVCVA, somebody could say that they (R&R) have less standing to bring a lawsuit."

"Part of the reason for doing this is that the LVCVA is not set up for enforcement," Lambertsen said. "They're just a public entity so they probably don't pay attention to things like the private sector does."

Lambertsen and Minsker both said there was nothing unusual about the fact that R&R filed its trademark application with the U.S. Patent and Trademark Office in Virginia on Nov. 10, a day after the ad agency signed the agreement with the LVCVA. They said the timing of that filing made sense given R&R's ongoing litigation.

As for R&R's intent to use the slogan on souvenirs and clothing, as stated on the application, Lambertsen said that the agency stands in jeopardy of losing its trademark if those items aren't manufactured. The patent and trademark office typically requires the applicant to produce a sample product before the application is approved, he said.

"The application has to list at least one classification of goods or services," Lambertsen said.

Minsker said it typically takes about six months for the patent and trademark office to review an application. She said an applicant often can have four to five years from the time of application to prove that the trademark is being used for goods or services.

"But to be able to enforce the trademark they will have to produce the goods or services," she said. "You have to use it on goods that are specified on your application."

Since R&R had also applied in March 2004 for a service mark from the patent and trademark office to use the "What happens here" slogan in advertising and public relations, Lambertsen said the subsequent trademark application listing souvenirs and clothing can be viewed as a way for R&R to strengthen its ability to defend the slogan in court.

One former LVCVA board member who is livid over the agreement between the tourism authority and R&R is Marilyn Gubler, who served a four-year term in the 1990s representing the motel industry.

Gubler, who now manages her family's real estate business, said the board during her tenure would have been made aware of the agreement. That was not the case this time, even though the board had given Ralenkotter authority to assign intellectual property the same day the agreement was inked with R&R.

"I was particularly shocked that the board was not consulted at all," Gubler said. "The convention authority has its own in-house counsel and when I was on the board we managed to hire outside counsel when necessary. So why wouldn't the convention authority handle this in house?"

Gubler also said she doesn't understand all the fuss over protection of the "What happens here" slogan.

"We should allow anyone to use that slogan," she said. "It's great marketing, so why should we stop anyone from using that slogan?"