Columnist Jeff German: Slogan deal boggles the mind

Monday, June 27, 2005 | 10:57 a.m.

What was the Las Vegas Convention and Visitors Authority thinking?

Plenty of questions have surfaced about its deal turning over the trademark rights to the potentially lucrative marketing slogan, "what happens here, stays here."

The beneficiary of this deal, as I reported Sunday, is R & R Partners, the high-powered advertising agency that created the phrase -- the same agency the LVCVA pays $66.5 million a year to promote Las Vegas.

The story we're getting from LVCVA President Rossi Ralenkotter and R & R Partners CEO Billy Vassiliadis is that the Nov. 9 agreement assigning R & R the trademark isn't about money. It is simply to allow R & R to pursue legal action against any business that tries to steal the prized phrase.

Sacramento lawyer Daniel Ballard, whose client, Dorothy Tovar, is being sued by R & R in federal court for trademark infringement, calls it an "assignment of convenience" for the LVCVA. R & R is trying to stop Tovar from selling a line of risque clothing under the phrase, "What Happens in Vegas, Stays in Vegas."

"The real deal here is that the LVCVA doesn't want to be the plaintiff in any of these suits," says Ballard, who has gotten some insight through depositions in the case into how the LVCVA conducts business. "They don't want to be the bad guy."

The LVCVA, after all, is in the job of attracting good publicity to the city, not bad publicity.

But in letting R & R do its dirty work, did the LVCVA literally give away the potentially millions of dollars it could have earned with the "what happens here, stays here" trademark?

Earlier this year the LVCVA filed a document with the Nevada secretary of state in which it formalized the Nov. 9, 2004, agreement to assign the "mark" to R & R. In that document the LVCVA said it was turning over the mark for $1 and "other good and valuable consideration."

Ballard says his review of the agreement found nothing on R & R's part to back up the "boiler-plate" pledge of "valuable consideration." To Ballard, who makes a living as a trademark lawyer, that renders the pledge meaningless in federal trademark law.

"There's no other consideration that flowed from R & R Partners other than that one dollar," he says.

Why, for example, isn't there a clause that ensures the LVCVA will get the damages R & R collects from any judgments? Why isn't there a clause that says the LVCVA is guaranteed a sizable portion of any merchandising fees R & R might collect?

And if R & R supposedly isn't interested in making money here, why didn't the LVCVA give "what happens here, stays here" to someone who was not only willing to protect it, but pay what it's worth?

Ballard said the R & R deal is invalid because the LVCVA didn't sell the trademark at fair market value. He also contends that the agency didn't follow good trademark and public policy law, as well as good accounting practices.

No attempt, he says, was even made to assess the mark's value.

Given how much money is at stake here, it's mind-boggling how casually the LVCVA has handled this transaction.

Most troubling of all is that the deal was done behind closed doors.

Ralenkotter says he believes he had authority to make the agreement himself without bringing it to the attention of the LVCVA's 13-member board of elected and civic leaders.

If that's true, then someone needs to rethink the LVCVA's administrative policies because this one is ridiculous.

Who knows what would have happened to this agreement if someone had asked a few questions in the light of day?

County Commissioner Tom Collins, one of the board's newest members, says he wants to know more about Ralenkotter's secret deal.

"It's got my interest," he says. "If the board has given him authority to do this, then there isn't a lot to do other than maybe rein him in."