What Happens in Reno a Victory for Las Vegas

RENO, Nevada -- A California businesswoman can no longer use the phrase 'What happens in Vegas, stays in Vegas' when selling souvenir clothing, a Reno-based U.S. District Court judge has ruled.

Dorothy Tovar, 45, of Placerville, Calif., has engaged in a nearly four-year feud with the Las Vegas Convention and Visitors Authority.

The agency claimed Tovar's federally trademarked phrase infringed upon its widely known "What happens here, stays here" slogan.

Tovar disagreed, suggesting that her line of T-shirts and underwear helped popularize the city's branding efforts.

In a 20-page statement issued Aug. 9, federal Judge Larry Hicks ruled that Tovar's use "caused actual confusion" and therefore infringed upon the authority's trademark.

Hicks ordered the cancellation of Tovar's existing trademarks, and denied her the ability to register similar slogans in the future.

"For us being able to protect the strength of our brand, that was the strength of the decision by the judge," Rossi Ralenkotter, the authority's president and chief executive officer, said Tuesday.

Efforts to reach Tovar were unsuccessful.

The dispute proved costly for the authority, which uses portions of a visitor room tax to pay for ads touting the Las Vegas travel industry.

The authority spent approximately $497,000 in legal expenses associated with the Tovar case alone.

Outside attorneys also collected $321,000 for investigating Ralenkotter's controversial $1 sale of "What happens here, stays here" to R&R Partners, as well as helping craft new board policies to prevent similar situations from recurring.

Since its late December 2002 debut, "What happens here, stays here" has been the centerpiece of the authority's nationwide advertising campaign touting Las Vegas as an adult-oriented vacation getaway.

Approximately $115 million has been spent to market the popular slogan, which was created by the Las Vegas-based advertising firm R&R.

The campaign's success attracted several imitators, none more controversial than Tovar.

In September 2003, R&R Chief Executive Officer Billy Vassiliadis learned that local stores were selling clothing adorned with "What happens in Vegas, stays in Vegas."

Moving to protect his client's trademark, Vassiliadis asked R&R's attorneys to notify the manufacturer of those goods -- Tovar -- to cease and desist.

She refused to back off and instead registered her phrase with the Nevada secretary of state's office and the U.S. Patent and Trademark Office.

Court records show Tovar licenses "What happens in Vegas, stays in Vegas" to Adrenaline Sports, a company she co-owns.

R&R next approached the authority to outline its plan to sue, and that led to the controversial transfer of the "What happens here, stays here" trademark from the authority to R&R for $1.

A trademark and licensing agreement dated Nov. 9, 2003, includes clauses that outline R&R's ability to sue, on the authority's behalf, any third parties that may infringe upon the "What happens here, stays here" trademark.

The $1 sale agreement, which Ralenkotter and Vassiliadis executed without prior board approval, sparked a media-fueled controversy and unfounded speculation that R&R might somehow profit from the sale.

An investigation conducted by the San Francisco office of the law firm Morrison & Foerster later cleared Ralenkotter and Vassiliadis of any willful wrongdoing, though it recommended policy changes to ensure subsequent deals would first be reviewed by the authority's 14-member board.

R&R sued Tovar in March 2004; the authority became a co-plaintiff in July 2005.

Hicks last week ruled that the $1 sale to R&R was unnecessary, forcing the company to withdraw from the lawsuit against Tovar.

But he also ruled that the authority could continue to defend the trademark on its own.

At least two other companies are seeking federal patents for phrases similar to "What happens here, stays here."

In the future, Ralenkotter said the authority will examine such occurrences "on a case-by-case basis" considering factors such as a slogan's potential to confuse the public, damage Las Vegas' reputation or weaken the city's branding efforts.