Sinful Slogan Sparks Sincerest Form of Flattery -- and a Suit

LAS VEGAS —  The five-word slogan turned out to be a marketing masterpiece, a mantra that marked the unceremonious end of Las Vegas’ family-friendly era and the full-scale resurrection of Sin City: “What Happens Here Stays Here.”

But keeping those words in Las Vegas has become a contentious matter.

A potentially high-stakes lawsuit is unfolding in federal court in Reno over trademark rights to the famous phrase.

And in Las Vegas, the slogan has managed to spark a political dispute as well.

The Las Vegas Convention and Visitors Authority, which says it spent $85 million in the last three years to link Las Vegas with the slogan, wants licensing rights to the phrase and its many variants.

The authority is seeking a cease-and-desist order against a California-based clothier that sells racy underwear, as well as baseball caps and sweatpants, reading “What Happens in Vegas Stays in Vegas!” in local hotels and gift stores.

The clothing company, acting without permission from the tourism authority, managed to get federal trademark approval for the phrase earlier this year.

The manufacturer, Pure Pleasure of Placerville, plans to sell clothes carrying variations on the phrase -- such as “What Happens on Spring Break Stays on Spring Break!”

Las Vegas wants to put a stop to it. But with licensing rights worth potentially millions of dollars on the line, the clothing company is fighting back in court, arguing that Las Vegas is hardly the first place in the world where people have promised to look the other way.

There’s that old saying among traveling salesmen: “What happens on the road stays on the road.”

And the one from Alcoholics Anonymous meetings: “What you see here, what you hear here, whom you see here, stays here.”

The clothing company’s lawyers also cite a sign in a now-defunct Cambridge, Mass., tavern that declared, “What Happens Here, Stays Here.” That was nearly 10 years before Las Vegas launched its ad campaign.

Finally, there are all the variations on the phrase used in Las Vegas itself, such as the pitch used by one major resort-casino: “What Happens at the Palms Never Happened.”

As zany as the legal arguments may be, the case is a powerful indication of just how valuable the phrase has become since Las Vegas launched the campaign in late 2002.

It is widely seen as a chief reason Las Vegas hit an all-time record of 37.4 million visitors last year, and is projected to reach 38.2 million in 2005.

“It’s only a few years old, but it’s basically considered one of the most effective slogans for tourism ever,” said Daniel R. Fesenmaier, a professor at Temple University’s School of Tourism and Hospitality Management, who evaluates the effectiveness of tourism advertising.

“The beauty of it is that it’s a definitive statement of what Vegas is all about, but it also leaves something to the individual’s imagination as to what exactly it means,” Fesenmaier said.

When Las Vegas’ effort in the 1990s to market itself as family-friendly produced less than a bonanza, the new slogan became “a very effective way of announcing to the world, ‘Hey, we’re Vegas, and let’s go back to who we really are,’ ” Fesenmaier said.

The pitch repositioned Las Vegas as a place where people can go to cast aside their inhibitions, not to mention their money.

Other successful, and longer-running, tourism slogans include “I Love New York” (with a heart) and “Virginia Is for Lovers.” Among the less successful were “Houston -- It’s Hot!” and “Wander Indiana.”

“For two or three years, people would come into Indiana and ask, ‘Which way is it to Wander?’ ” Fesenmaier said of the mid-1980s campaign. “A lot of people thought it was a place. It just didn’t work out all that well,” he said.

Many regard Las Vegas’ campaign as a stroke of genius.

Even the clothing company’s lawyer, Daniel Ballard, said the “What Happens Here” ads are “absolutely fabulous.”

But Ballard said in a telephone interview from Sacramento that the success of the television campaign was insufficient grounds to justify stopping his client from using its version of the phrase.

No one seems to know the origin of “What Happens Here Stays Here,” and that question probably won’t be answered in court.

The phrase may well be centuries old, and no doubt has its parallels in dozens of languages.

But can it be trademarked?

Absolutely, say officials for the tourism authority and R&R; Partners, the Las Vegas advertising agency that came up with the campaign.

Just as slogans popularized by Nike (“Just Do It”) and Burger King (“Have It Your Way”) are “service marks,” the technical term for a federally trademarked phrase or slogan, Las Vegas deserves to hold rights to “What Happens Here Stays Here,” lawyers for the ad firm and the tourism authority say.

But Pure Pleasure, which started the clothing line a few months after the tourism authority began its campaign, said it got to the trademark office first.

Pure Pleasure’s owner, Dorothy Tovar, applied for a clothing trademark in February 2003 for “What Happens in Vegas Stays in Vegas” and received approval last March from the U.S. Patent and Trademark Office.

The lawsuit in Reno seeks to reverse that approval.

Even as the lawsuit continues before U.S. District Judge Larry Hicks, with a trial expected to start this fall, a separate but related political controversy erupted in Las Vegas over the slogan rights.

The Las Vegas Sun newspaper reported that the tourism authority gave the ad agency commercial rights to the phrase for $1.

The authority’s president, Rossi Ralenkotter, says the deal was legal, but some angry board members say they had no idea the authority had given up rights to the phrase.

Mayor Oscar B. Goodman ordered an investigation of what some portrayed as a back-room deal. Ralenkotter and R&R;’s chief, Billy Vassiliadis, said the deal simply provided a means for the agency to stop the slogan from being used without permission.

In an effort at damage control, the authority hired Morrison & Foerster, a San Francisco law firm specializing in trademarks, to look into the deal.

In a report presented Aug. 9 at the authority’s monthly meeting, the firm said, “There appears to have been no misconduct, but the actions taken were not consistent with best practices in other organizations.”

The report urges a renegotiation of the deal as well as the authority’s overall relationship with the ad agency, “in order to eliminate any concerns about R&R;’s ability to profit from ownership of the mark.”

A four-member committee, headed by Goodman, is due to report to the board on such changes at a meeting this month.

Some trademark experts said Las Vegas authorities, once they sort out that issue, could have a valid claim in court -- even if the phrase was used in other contexts before it became associated with Las Vegas.

If the plaintiffs can show that their advertising campaign succeeded in getting people to associate “What Happens Here Stays Here” with Las Vegas, they could succeed in establishing trademark rights to the phrase.

“If they can show that with all this advertising, all this effort, they’ve established a clear link in people’s minds, that’s important,” said Jerome Gilson, a Chicago-based attorney specializing in trademark and unfair-competition law.

“And I’d venture to say that if they hired a reputable survey company, and went out on the streets and asked a thousand people, ‘What does this phrase suggest to you?’ a big percentage would identify with Las Vegas,” Gilson said.

“I mean, it’s very catchy. Unless you’re from Mars, when you hear it you think of Las Vegas.”