Gibson: Slogan deal caught board off guard

Wednesday, June 29, 2005 | 11:03 a.m.

Henderson Mayor Jim Gibson said he and fellow Las Vegas Convention and Visitors Authority board members were not aware that a board action would allow its advertising agency to obtain rights to a potentially lucrative slogan.

The transfer of the popular advertising slogan "What happens here, stays here" from the LVCVA to advertising agency R&R Partners of Las Vegas occurred on Nov. 9, the same day the board gave LVCVA President Rossi Ralenkotter permission to "register, protect and assign all intellectual property."

An application from R&R Partners to trademark the slogan was then filed the next day with the U.S. Patent and Trademark Office in Virginia. As part of its application, R&R stated its intention to use the slogan to market "souvenirs and clothing." And in March, the LVCVA recorded the sale of the prized "mark" to R&R for $1 with the Nevada secretary of state's office.

Gibson, who was board chairman during the November meeting, said Tuesday that he did not believe the board understood that it was paving the way for the transfer of the "What happens here" slogan when it approved a list of 24 responsibilities for Ralenkotter to handle. The responsibility for assigning intellectual property was 23rd on the list.

The minutes of that board meeting don't reflect a discussion of the LVCVA's intellectual property or the slogan. And neither item is mentioned in the summary of the list of responsibilities the board approved.

Gibson expressed concern that Ralenkotter didn't bring the agreement with R&R to the board's attention.

"The transfer of a mark as significant as this ought to be a subject of discussion by the board," Gibson said. "I'm guessing there would have been some questions."

But Ralenkotter said Tuesday that there was nothing underhanded about the way the trademark was transferred to R&R, including the fact that the deal was signed the same day the board gave him responsibility for assigning intellectual property.

Ralenkotter said the speed with which the deal with R&R was made was in response to R&R's concerns that several businesses were illegally using the slogan. He said he saw no need to inform the board at the time about the deal.

"This is not the first time R&R has protected a 'mark' for us," Ralenkotter said without offering specifics. "This is something they have done for us for 25 years."

By giving Ralenkotter responsibility for assigning intellectual property, "all the board did was to solidify past practices," he said.

R&R has challenged various companies that have used similar slogans -- from a beer maker to Cheetah's strip club -- and is suing a clothing company that used "What Happens in Vegas, Stays in Vegas."

The clothing company's attorney has raised the issue of whether the transfer of the trademark was legal.

Ralenkotter said that the LVCVA, which pays R&R $66.5 million a year to promote Las Vegas tourism, retains rights to all profits that come from sales of the "What happens here" slogan, even though the ad agency devised the slogan.

The agreement the LVCVA made with R&R states that the ad agency has "all right, title and interest held by the LVCVA" in the mark and "the goodwill of the business connected with the use" of the slogan.

The ad agency also is entitled to "all rights to damages or profits ... arising out of past, present or future infringement of said Marks, or injury to said goodwill, together with the right to sue or recover the same in R&R's name."

Despite that language, Ralenkotter said R&R could promote the slogan to generate sales, but any profit made from the sales on souvenirs or anything else would have to be forwarded to the LVCVA.

"We still own the work product," Ralenkotter said. "If there is any profit from the use of that mark, it will come back to the LVCVA. If we terminated the contract with R&R Partners, the work product would belong to us."

Billy Vassiliadis, chief executive of R&R Partners, said this morning that his agency would not collect any profit from the sale of any merchandise connected with the slogan.

But he did not rule out the possibility that R&R could hire a merchandising company to produce and distribute coffee mugs, T-shirts or other items with the slogan, with profit going to that subcontractor.

He said the reason the agreement with the LVCVA refers to the assignment of profit to R&R is that that is typical "boiler plate" language used in trademark transfer agreements.

"Profit was never contemplated by us," Vassiliadis said. "This is boiler plate language that serves to verify who has standing to litigate and protect the mark."

He also said that his agency would not profit from any damages that are collected in relation to the illegal use of the slogan by others.

"If the mark was damaged, the damages would go to the community, which, in this case, is the LVCVA," Vassiliadis said.

Former board member Robert Forbuss, a Las Vegas businessman and political consultant who sat on the board during the November meeting, said he was unaware that a deal had been made with R&R to transfer rights to the slogan that same day. But Forbuss later said he came to understand that the deal was made simply for legal purposes and not to transfer any profit to R&R.

"My understanding is that this was done to litigate our rights, that it had to do with legal arguments," Forbuss said.

Gibson, though, said he expects a thorough review of the transaction at the board's upcoming July 12 meeting.

"There are a lot of questions that will be asked, and I expect we're going to get the answers to those questions," Gibson said. "Right now I'm embarrassed that we don't know the answers."