Editorial: Exposing a secret deal

Wednesday, June 29, 2005 | 8:47 a.m.

Las Vegas Sun columnist Jeff German disclosed Sunday that the Las Vegas Convention and Visitors Authority (LVCVA) has given away its trademark rights to the highly successful marketing slogan, "What happens here, stays here." The LVCVA relinquished its rights to the slogan, for the princely sum of $1, to none other than R & R Advertising, the ad agency that coined the phrase and which is already paid $66.5 million a year by the LVCVA to promote Las Vegas. In light of how internationally popular this slogan has become, the sweetheart deal easily could translate into millions of dollars for R & R Advertising if it merchandises the slogan on souvenirs and T-shirts. What is stupefying is why the LVCVA would give away the lucrative rights to a company on its payroll that already is handsomely compensated. The last thing R & R needs is charity from a taxpayer-fu nded entity.

The agreement between the LVCVA and R & R had been kept secret, and it wasn't approved by the LVCVA's governing board, made up of local elected officials, that oversees its operations. LVCVA President Rossi Ralenkotter says he believes he had the authority to enter into the agreement with R & R without notifying the board. Ralenkotter said the deal was important in order to prevent manufacturers of souvenir knock-offs from devaluing the slogan by infringing on the trademark. And, because R & R has legal expertise in defending intellectual property rights, Ralenkotter believed it was best to assign trademark rights to R & R.

Billy Vassiliadis, CEO of R & R, said the company doesn't have any intention to profit from the trademark. But if that is the case, why did R & R, on the day after the LVCVA assigned it the rights to the slogan, file an application with the Commissioner of Trademarks in Arlington, Va., saying that it "has a bona fide intention to use the mark in commerce on or in connection to goods and services"? The application specifically mentions that the slogan would be used for "souvenirs and clothing."

Sacramento lawyer Daniel Ballard is representing Dorothy Tovar, whom R & R is suing in federal court for trademark infringement. R & R wants to stop Tovar from distributing a line of risque clothing with the phrase, "What Happens in Vegas, Stays in Vegas." Ballard believes the LVCVA wanted to transfer the slogan's rights to R & R because the LVCVA doesn't want to receive bad publicity from filing lawsuits to stop the unlicensed use of the slogan. But, as German has asked, has the LVCVA in return given away possibly millions of dollars that it could have earned from the "What happens here, stays here" trademark?

At the very least, Ralenkotter was negligent in turning over the rights to the slogan to R & R for $1. This is a brewing scandal that no amount of stonewalling will be able to suppress. What is to be seen is whether the members of the LVCVA's board, which is supposed to discuss the issue at its next meeting on July 12, have the character to undertake a real investigation as to what happened. We also will have to wait and see whether local officials on the LVCVA's board have the guts to hold Ralenkotter and the politically connected Vassiliadias accountable for their actions.