Questions surround LVCVA’s slogan deal

Richard N. Velotta and Jeff German

Tuesday, June 28, 2005 | 11:13 a.m.

A Las Vegas advertising executive says the Las Vegas Convention and Visitors Authority's assignment of the "What happens here, stays here" slogan to R&R Partners, the organization's advertising agency, is "an unusual arrangement."

John Schadler, managing partner for the Schadler Kramer Group advertising agency, said the arrangement between the LVCVA and R&R is not standard practice in the industry.

"It certainly is a unique arrangement," Schadler said a day after Sun columnist Jeff German disclosed the deal in a Sunday column. "I honestly have never heard of a situation like this before. I've never heard of a company like Coca-Cola giving the rights of a tagline to an advertising agency. There's something more to this than we know."

But the principal players in the slogan transfer say there's nothing wrong with the deal and that their actions are in the best interests of the marketing of Las Vegas, not a sinister plot to let the LVCVA's agency of record profit from the highly successful ad campaign.

Another Las Vegas ad executive concurs and says R&R is doing what it has to do to protect the slogan's intellectual property.

"The convention authority is way too public an entity for those people to be playing games," said John Marz, a former marketing executive with Mandalay Resort Group and the senior vice president and chief marketing officer for Fontainebleau Resorts.

Marz, also a member of the Nevada Commission on Tourism, said the move was a necessary step for R&R to be able to protect the slogan from entrepreneurs attempting to profit from it.

With the value of the slogan increasing as it becomes more popular, LVCVA President and Chief Executive Rossi Ralenkotter determined that something had to be done to prevent manufacturers of souvenir knock-offs from devaluing the slogan and infringing on the mark.

Industry and legal experts began weighing in on the controversy after it was disclosed that Ralenkotter assigned the popular slogan and the LVCVA's "We work as hard as we play" convention business trademark to R&R for $1 after a Sacramento clothing manufacturer began using "What happens here, stays here" on a line of women's underwear and refused to comply with a cease-and-desist order.

Ralenkotter said Monday that clothier Dorothy Tovar "was reaching out to the media to muddy the waters from their standpoint."

The clothing company wasn't the first to try to use the slogan or a similar message for profit. Ralenkotter said LVCVA policies that have been in place for years gave him the authority to take action to protect its intellectual property. So, he decided to turn the matter over to R&R, which has legal experts that defend intellectual property all the time.

Several LVCVA board members called Ralenkotter directly for an explanation after the Sun column appeared and now the matter will be aired at the July board meeting for further details.

Las Vegas Mayor Oscar Goodman, who chairs the LVCVA board of directors, said the issue would be discussed by the board at the next LVCVA meeting, scheduled July 12.

"I have full confidence and trust in Rossi Ralenkotter," Goodman said, adding that the public discussion by the board is coming about "because questions have been raised."

He did not elaborate.

Henderson Mayor Jim Gibson, who chaired the the LVCVA's board at the time the agreement was signed, said he was never made aware of it.

"I knew nothing about it," he said. "I really don't understand this agreement. I don't know why we did it."

Gibson said he plans to talk to the lawyers who drew up the agreement to gain a better handle on what it means.

He also said this is the kind of transaction that, as a matter of policy, should come before the board.

Mary LaFrance, a UNLV Boyd Law School professor who reviewed a copy of the eight-page contract, said the agreement on its surface doesn't look that good for the LVCVA.

"There's no question they're giving up ownership of a trademark and getting very little in return," she said. "They're giving away valuable rights."

LaFrance also said the LVCVA was taking a "very substantial risk" that the agreement would hold up in court.

"There is a question about the validity of this assignment and whether it will be recognized by a court," she said. "It would make me nervous."

LaFrance said there's a good chance a judge might declare the agreement invalid because the LVCVA didn't transfer the rights to "what happens here, stays here" to a similar business.

R&R is in the business of providing creative services and placing advertisements, while the LVCVA is in the business of promoting Las Vegas, she said. Their services complement each other, but they aren't the same.

If the assignment of the mark is voided, it would mean neither R&R nor the LVCVA would have a right to it, LaFrance explained, and that would be the worst possible scenario for both agencies.

The slogan, she said, would be thrown into the public domain.

LaFrance said it looks to her that the contract was drawn so that R&R, as it has claimed, could go to court to stop those who infringe on the slogan.

"I think it might be prompted by some reluctance on the part of the LVCVA to pursue litigation against infringers," she said. "This could be expensive litigation and there's not likely to be a lot of damages recovered."

But LaFrance said R&R's incentive to take on the litigation could be in "exploiting" the mark itself.

Billy Vassiliadis, chief executive of R&R, has said that his company has no intent to profit from the slogan, but that applying for a trademark was a step that had to be taken for R&R to have standing in court in the case.

"The intent of this understanding has always been and will always be to protect what is a very valuable brand message," Vassilidis said Monday.

R&R sent the paperwork to file for a trademark Nov. 9, the same day the LVCVA assigned it the rights to the slogan, an advertising message that some have said is worth millions of dollars because of its frequent usage in pop culture. The application was filed the next day.

The application, filed to the Commissioner of Trademarks in Arlington, Va., says R&R "has a bona fide intention to use the mark in commerce on or in connection with goods and services: Trademark will be applied directly to the goods, to containers for the goods, or other means customary in the industry." The application specifically lists that the slogan would be used for "souvenirs and clothing."