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Arnold M. Knightly

Cosmopolitan: Building vs. brand

23 June 2008

LAS VEGAS, Nevada -- First it lost its financing. Now the Cosmopolitan project could lose its name.

The Hearst Corp., the multimedia empire behind Cosmopolitan magazine, filed a trademark infringement lawsuit in federal court claiming the Strip megaresort's use of the Cosmopolitan name is trying to enrich itself by using the Cosmopolitan magazine's good name in an attempt to confuse the public into thinking the development is associated with the publishing company.

"It could go either way," said Jason Firth, intellectual property attorney for local law firm Brownstein Hyatt Farber Schreck. "It's not a frivolous lawsuit."

Firth, who works with casino companies on trademark issues but is not involved with this case, said Hearst's Cosmopolitan magazine is a strong brand.

However, just how strong a connection can be made between the use of the name to market the Strip development and the magazine will be a key to Hearst's case, Firth said.

Hearst Communications, a Hearst Corp. subsidiary that filed the 20-page lawsuit in U.S. District Court for the Southern District of New York, said its use of the Cosmopolitan trademark dates back to 1956. The magazine has used the name since 1886.

The company said it has also produced a variety of goods and services using the name for books, Web sites, watches and other lifestyle accessories.

The use of the name by the Strip development, which started construction in September 2004, "is likely to cause confusion, deception and mistake by creating the false and misleading impression that the defendants' good and services have the endorsement or approval" of Hearst Communications, the lawsuit states.

The lawsuit adds that the unauthorized use of the Cosmopolitan name and its variations, including Cosmo, "demonstrates an intentional, willful and bad faith attempt to trade on the good will" of registered trademarks and "to cause confusion, deception and mistake in the minds of customers."

The lawsuit argues that allowing the resort to use the name would cause "great and irreparable injury" to Hearst Communications.

Hearst Communications also claims proprietary use of the names Cosmo and Cosmo Girl.

A Hearst Communications spokesman declined to comment beyond the lawsuit, which seeks more than $500,000 in damages and a share of the profits from the project.

Hearst also wants a court order preventing the U.S. Patent and Trademark Office from approving any of the resort's two dozen applications to use Cosmopolitan or Cosmo throughout the development.

The lawsuit comes as Wall Street investment house Deutsche Bank is foreclosing on the $3.9 billion project.

Deutsche Bank has been paying the monthly construction bills since March when original New York-based developer Bruce Eichner failed to find new financing.

The 3,000-room hotel-condominium, mixed-use development is scheduled to open in late 2009.

The bank has reportedly been talking with hotel operators, developers and private equity firms about taking over the project, but no deals have been completed.

Eichner's role in the project's future remains unknown.

Whether the lawsuit, which seeks preliminary and permanent restraint on using the Cosmopolitan name, will affect Deutsche Bank's ability to sell the project is also unknown.

The New York-based bank did not return a request for comment by press time.

Eichner, through the holding company 3700 Associates, began registering parts of the development under names such as The Cosmopolitan, The Cosmopolitan Beach Club, Cosmo Beach Club, Cosmopolitan Resort & Casino and The Residences At The Cosmopolitan Club and Casino.

A magazine being associated with a casino is not new to Las Vegas.

The Palms has a licensing agreement with Playboy Enterprises to operate the Playboy Club, a suite and to have the famous Playboy bunny logo on one of its towers.

Firth said the trademark world will follow the case closely because there is a lot of gray area legally.

"This is a really interesting case because you scratch your head and say, 'Wow, that raises some real interesting issues,'" Firth said.

Hearst's Corp.'s properties include 15 daily newspapers, magazines including Esquire and O, and 29 television stations.