Trademark dispute over Tropicana hotel-casino name escalates

By Steve Green

Tuesday, Oct. 12, 2010 | 11:54 a.m.

The trademark lawsuit over the name of the Tropicana Las Vegas hotel-casino is getting more contentious, with attorneys asking a court to impose sanctions against the Tropicana's foe in the litigation.

The dispute erupted last year when the 1,772-room Las Vegas property was spun out of the Tropicana Entertainment LLC bankruptcy. The Las Vegas property wanted to use its name free of charge -- but the former parent company demanded a licensing fee, saying it controls the Tropicana trademarks and uses the Tropicana name at casinos it owns in Laughlin and Atlantic City.

A lawsuit between the parties bounced between state and federal courts in Las Vegas before investor Carl Icahn's Las Vegas-based Tropicana Entertainment Inc. -- the new name of the former parent company -- and related companies took the dispute to the Tropicana Entertainment LLC bankruptcy court in Delaware by filing a new complaint there in August.

The Icahn companies charged in the lawsuit that the bankruptcy court confirmed early on in the bankruptcy case that Tropicana Entertainment controlled the Tropicana trademarks.

But Tropicana Las Vegas attorneys responded in September, saying in a motion to dismiss that Clark County District Court Judge Elizabeth Gonzalez had found in favor of Tropicana Las Vegas on several key issues in the state civil court litigation.

Tropicana Las Vegas said her rulings established the Las Vegas property "has full rights to the Tropicana name," though they acknowledged Gonzalez had denied to close the case on summary judgment motions because of a disputed issue of fact.

That disputed issue of fact involves a complex issue over a 1980 trade name agreement and how that agreement related to the various corporate entities that controlled the Las Vegas Tropicana until its parent Tropicana Entertainment LLC filed for bankruptcy in 2008.

Rather than have the state court resolve that factual issue, the Icahn-controlled Tropicana Entertainment filed the Delaware Bankruptcy Court lawsuit in August.

Icahn's Tropicana Entertainment parties filed that suit because they were not pleased with Gonzalez's ruling in the state court case, Tropicana Las Vegas argued in its Sept. 8 reply.

"They first sought reconsideration from the Nevada court, resulting in even more briefing on the issues and even more work by the Nevada court to address the (Tropicana Entertainment) claims and arguments," Tropicana Las Vegas attorneys argued. "Then the very same day that their motion for reconsideration was denied, the (Tropicana Entertainment parties) filed their complaint with this (bankruptcy) court."

"The complaint is a bald collateral attack on the Nevada court's ruling. In it, (Tropicana Entertainment parties) make dozens of factual allegations that directly contradict the fully-litigated findings and conclusions of the Nevada court," wrote Tropicana Las Vegas attorneys with the law firms Young Conaway Stargatt & Taylor LLP in Wilmington, Del.; and Hennigan, Bennett & Dorman LLP in Los Angeles.

The Tropicana Las Vegas attorneys went on to charge that during the Tropicana Entertainment bankruptcy case, Tropicana Entertainment officials had "actively concealed" key historical documents that establish the rights to the Tropicana Las Vegas name.

They said Gonzalez found "ultimate ownership of the trade name 'Tropicana' was intended to run with ownership of the land" for the property, which opened in 1957 at Tropicana Avenue and Las Vegas Boulevard.

The Tropicana Las Vegas attorneys last week followed up their motion for dismissal with another motion asking the bankruptcy court to impose sanctions on the Icahn plaintiffs and their attorneys for filing the August lawsuit in bankruptcy court.

"The (bankruptcy court) complaint represents an egregious example of forum shopping and abusive pleading, as the plaintiffs waited to initiate suit until they already had lost multiple times in respect of the relief they now seek," Tropicana Las Vegas attorneys charged in the filing. "The complaint is nothing more than a transparent attempt to transfer the underlying claims to what the plaintiffs hope is a friendlier forum. To make matters worse, the complaint clearly is intended to intimidate the Nevada court from concluding the Nevada action."

However, attorneys for both sides have agreed to get along on one issue: On Monday they filed court papers agreeing to delay action on the motion for sanctions until the bankruptcy court rules on Tropicana Las Vegas's motion to dismiss the bankruptcy lawsuit.

The Tropicana Las Vegas litigation strategy appears to be aimed at sending the case back to Gonzalez in the Nevada state court.

In the meantime, as the litigation continues, the Tropicana Las Vegas continues to use its longtime name without paying royalties -- despite suggestions by Tropicana Entertainment during the main bankruptcy case that the Las Vegas property pay $10 million over five years for use of the name.