New lawsuit filed in ‘Tropicana’ trademark dispute

By Steve Green

Tuesday, Aug. 17, 2010 | 10:17 a.m.

The dispute over whether the Tropicana Las Vegas hotel-casino must pay royalties for using the "Tropicana" trademark is continuing, with investor Carl Icahn's Tropicana Entertainment Inc. filing a new lawsuit against the Las Vegas property over the issue last week.

The Las Vegas Tropicana formerly was part of Tropicana Entertainment LLC, which also had Tropicana-branded hotel-casinos in Atlantic City and Laughlin.

Tropicana Entertainment LLC filed for bankruptcy in May 2008 and the Las Vegas Tropicana last year was spun off to investors while Icahn purchased the main Tropicana Entertainment company.

Icahn's gaming company is based in Las Vegas and is now called Tropicana Entertainment Inc. A separate Icahn company owns the unfinished Fontainebleau casino resort in Las Vegas.

The 1,772-room Las Vegas Tropicana, now controlled by investors Onex Corp. and gaming executive Alex Yemenidjian, filed suit last year in Las Vegas against Icahn's Tropicana Entertainment, charging it should not have to pay a royalty for using the longtime Tropicana name for the property.

The suit, after bouncing between federal and state court in Las Vegas, was not resolved. Clark County District Court Judge Elizabeth Gonzalez this summer ruled that Tropicana Entertainment LLC's bankruptcy court in Delaware needed to decide factual issues about rights to the Tropicana Las Vegas name.

Icahn's Tropicana Entertainment last week filed suit in the Delaware bankruptcy court, asking that a judge there decide the issue.

Tropicana Entertainment charged in its Aug. 10 complaint that not only is Tropicana Las Vegas trying to use the Tropicana name for free, but that it's seeking control of Tropicana Entertainment's trademarks valued in 2007 at almost $200 million.

Tropicana Entertainment attorneys argue in the new lawsuit that the bankruptcy court early on in the bankruptcy case confirmed Tropicana Entertainment controlled the Tropicana trademarks.

The attorneys wrote in the lawsuit that this confirmation came in the form of approvals of debtor-in-possession loans and the use of lenders' cash collateral held by Tropicana Entertainment -- approvals "premised upon (Tropicana Entertainment's) ownership of the Tropicana trademarks."

The attorneys argued that Onex took the Las Vegas property out of bankruptcy by purchasing its $440 million mortgage loan at a discount "without any reliance on the Tropicana trademarks as security -- because all parties recognized that the (Tropicana Las Vegas) debtors had no interest ownership or otherwise in the Tropicana trademarks."

Tropicana Las Vegas has not yet responded to the new lawsuit.

Court records show that during the bankruptcy case, Tropicana Entertainment proposed that the Las Vegas Tropicana pay $10 million for the rights to use the Tropicana name over five years -- a proposal Onex balked at.

The Las Vegas Tropicana has always asserted it shouldn't have to pay anyone for using its own 52-year-old name.

"Tropicana Las Vegas is the successor to all goodwill and trademark rights accrued over a period of approximately 52 years by its predecessor entities," the Las Vegas property's attorneys argued in a state court filing this summer.

"At all times it was understood and agreed by Tropicana Las Vegas and each person or entity owning Tropicana Las Vegas that, despite changes in ownership, Tropicana Las Vegas would continue to have the right to the use of its own name," the court filing said.

But the Icahn Tropicana company charges in the new lawsuit: "For more than 30 years, the (Tropicana Entertainment and Tropicana Las Vegas) debtors represented to the world that the Tropicana trademarks were owned by (Tropicana Entertainment). Among other things, billions of dollars of acquisitions, sales and loans were made based upon those representations."