The (Las Vegas) Hard Rock defendants have done nothing wrong and, in fact, are victims of systematic legal and business harassment by the cafe, which today’s countersuit seeks to remedy," last week's counterclaim says.
The dispute erupted September 21 when the owner of the Hard Rock brand sued the Las Vegas hotel-casino in U.S. District Court in New York, charging the reality TV show "Rehab: Party at the Hard Rock Hotel" was harming the worldwide Hard Rock brand. That show often features alcohol and sex-fueled conduct by party attendees and infighting among the Hard Rock staff.
The owners of the 1,500-room Las Vegas hotel-casino fired back last week, denying the allegations that the Hard Rock brand had been tarnished.
"The Cafe complains about a range of alleged trademark abuses that in many cases it has long known about, tolerated or even approved. Most notably, the Cafe claims to be shocked and disturbed by the popular reality television show 'Rehab: Party at the Hard Rock Hotel,' filmed at the Hard Rock Hotel and Casino Las Vegas – despite the fact that this show and the lively behavior it portrays have already been on the air for two years; depicts an event similar to the 'Detox' party held at one of the Cafe's properties (Biloxi, Mississippi); and has brought enormous positive publicity to the Hard Rock brand," attorneys for the Las Vegas property said in their filing.
The Las Vegas property owners are Hard Rock Hotel Holdings Hard Rock Hotel and HRHH IP. Ultimately, the majority investor in the Las Vegas property is international banking giant Credit Suisse Group AG's DLJ Merchant Banking Partners unit. A minority investor, and the manager of the property, is Morgans Hotel Group of New York.
Hard Rock Cafe International is owned by Florida's Seminole tribe through its Seminole Hard Rock Entertainment. The Seminoles, with extensive casino operations, have rights to develop Hard Rock casinos east of the Mississippi River.
Under a 1996 licensing agreement with Hard Rock co-founder Peter Morton, the HRHH IP company has the exclusive, royalty-free and perpetual rights to use the Hard Rock Hotel and Hard Rock Casino trademarks in operating hotel-casinos and casinos in Illinois and states west of the Mississippi River, attorneys for the Las Vegas Hard Rock said in last week's counterclaim.
Their licensed "Morton Territories" also include Australia, Brazil, Israel, Venezuela and Vancouver, British Columbia, the Las Vegas property said in the counterclaim.
The attorneys for the Las Vegas property charged that in recent years, the Hard Rock Cafe had interfered with its agreements to sublicense the Hard Rock name to two tribes:
- Cherokee Nation Enterprises for a Hard Rock hotel-casino in Catoosa, Okla., in the Tulsa area, which reopened with renovations as the Hard Rock in the summer of 2009.
- Pueblo of Isleta for a renovated and newly branded Hard Rock hotel-casino in Albuquerque, that opened in the summer of 2010.
The owners of the Las Vegas property say they fear continued interference with their development plans in various states and are seeking an injunction blocking Hard Rock Cafe from further alleged interference. "In breach of its obligations under the license agreement, the cafe has pursued a campaign of engaging in hotel-casino business development in the (Las Vegas) Hard Rock defendants’ exclusive territories and interfering with the Hard Rock defendants’ sublicensees and potential sublicensees," the attorneys charged in their counterclaim.
"For example, as certain of the (Las Vegas) Hard Rock defendants were developing their Tulsa project, the Cafe engaged in discussions with potential partners in Tulsa, within the Morton Territories, to open or brand a competing hotel/casino or similar venture that would have been associated with the Hard Rock trademarks," the attorneys charged.
"The Cafe also sought to interfere with the Hard Rock defendants’ development efforts in New Mexico by seeking to engage one or more potential licensees to open a Hard Rock Cafe and/or a Hard Rock Live! music venue in conjunction with the potential licensees’ hotel-casino and to place associated signage promoting the venues in and around the property," their counterclaim charged.
Attorneys for the Las Vegas property went on to charge that "the Cafe also has communicated directly with the actual and/or potential business partners of the (Las Vegas) Hard Rock defendants to suggest that these partners not do business with the (Las Vegas) Hard Rock defendants and that they do business with the Cafe instead, to falsely assert that the (Las Vegas) Hard Rock defendants lack legal authority over the Hard Rock trademarks, and/or to otherwise obstruct the (Las Vegas) Hard Rock defendants’ legitimate, authorized and exclusive business development efforts in the Morton Territories."
For instance, they said, Jim Allen, Seminole Gaming's CEO, recently told Global Gaming Business Magazine that the Las Vegas property owners "cannot do a transaction without (Hard Rock Cafe's) approval." Attorneys for the Las Vegas property called that claim "untrue."
The counterclaim charges breach of contract, breach of the convenant of good faith and fair dealing and tortious interference with business relations. It seeks unspecified compensatory and punitive damages as well as legal fees. Attorneys for the Seminoles and the Hard Rock Cafe have not yet responded to the counterclaim.