Hard Rock Hotel Answer & Counterclaims

23299369

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK----------------------------------------------------------- XHARD ROCK CAFÉINTERNATIONAL (USA), INC.,Plaintiff,v.HARD ROCK HOTEL HOLDINGS, LLC,HARD ROCK HOTEL, INC., HRHH IP, LLC,MORGANS HOTEL GROUP CO., MORGANSHOTEL GROUP MANAGEMENT, LLC,DLJMB HRH VOTECO LLC, TURNERBROADCASTING SYSTEM, INC., BRADLACHMAN PRODUCTIONS, INC. and GENCOENTERTAINMENT, INC.,Defendants.:::::::::::::::::Case No. 10 CV 7244

ANSWER AND COUNTERCLAIMS OFDEFENDANTS HARD ROCK HOTELHOLDINGS, LLC, HARD ROCK HOTEL,INC. AND HRHH IP, LLC

----------------------------------------------------------- XDefendants Hard Rock Hotel Holdings, LLC (“Hard Rock Hotel Holdings”), HardRock Hotel, Inc. and HRHH IP, LLC (“HRHH IP”) (the “Hard Rock Defendants”)hereby submit this Answer and Counterclaims in response to the complaint of Hard RockCafé International (USA) Inc. (“the Café”).

Preliminary Statement

1. The Hard Rock Defendants have done nothing wrong and, in fact, arevictims of systematic legal and business harassment by the Café, which today’scountersuit seeks to remedy. The Hard Rock Defendants enjoy an exclusive, perpetualand royalty-free right to use the “Hard Rock” family of marks for hotel-casinos andcasinos west of the Mississippi and in certain international locations. These rights are

Case 1:10-cv-07244-WHP Document 25 Filed 11/12/10 Page 1 of 34

2clearly spelled out in a 1996 license agreement, which the Café is unhappy with butlegally bound by. Under that license, the Hard Rock Defendants operate the popularHard Rock Hotel and Casino Las Vegas; have developed Hard Rock Hotel-Casinos inTulsa and Albuquerque, through tribal sublicensees; and are actively pursuing otherhotel-casino and casino development opportunities in the territories where they enjoyexclusive rights. Per the license agreement, none of the revenue from these ventures goesto the Café or ever will.2. The Café has brought the present lawsuit – a meritless grab bag of claimsfor breach of license, trademark infringement, trademark dilution and unfair competition– in an attempt to terminate or rewrite the 1996 license agreement. The Café complainsabout a range of alleged trademark abuses that in many cases it has long known about,tolerated or even approved. Most notably, the Café claims to be shocked and disturbedby the popular reality television show “Rehab: Party at the Hard Rock Hotel,” filmed atthe Hard Rock Hotel and Casino Las Vegas – despite the fact that this show and thelively behavior it portrays have already been on the air for two years; depicts an eventsimilar to the “Detox” party held at one of the Café’s properties; and has broughtenormous positive publicity to the Hard Rock brand. Likewise, the Café purports to beupset about the Tulsa and Albuquerque ventures despite having offered public praiseabout both ventures. The meritless and untimely nature of the Café’s allegations confirmsthat this lawsuit is nothing more than an attempt to escape the disadvantageous 1996license agreement.

Case 1:10-cv-07244-WHP Document 25 Filed 11/12/10 Page 2 of 34

33. Frustrated at being contractually excluded from a lucrative business in alarge territory, the Café, in addition to filing the Complaint, has also resorted to improperbusiness tactics. The Café has actively pursued its own projects in the Hard RockDefendants’ exclusive territories in direct violation of the letter and spirit of the licenseagreement. The Cafe has interfered with the Hard Rock Defendants’ developmentprojects, including by making untrue and overreaching public statements to deterpotential partners from doing business with the Hard Rock Defendants. This misconductby the Café violates the license agreement and the law, and it must stop.

Answer

The Hard Rock Defendants answer as follows the Complaint filed by the Café.Any allegation not specifically admitted herein is denied.1. Paragraph 1 consists of legal conclusions to which no response is required.To the extent a response may be required, deny, except admit that certain of the HardRock Defendants operate or have authorized others to operate certain hotel-casinos inparts of the western half of the United States, including the Hard Rock Hotel and Casinoin Las Vegas, Nevada, and that Defendant HRHH IP is a licensee of the Café.2. Deny.3. Paragraph 3 consists of legal conclusions to which no response is required.To the extent a response may be required, deny.4. Deny having knowledge or information sufficient to form a belief as to thetruth of the allegations.

Case 1:10-cv-07244-WHP Document 25 Filed 11/12/10 Page 3 of 34