16 August 2011
Hotel Lawyer with what it all means: Family Suites Resorts v. Viacom International d/b/a MTV Networks — a suit over branding
I was recently interviewed by Jason Freed of HotelNewsNow (a division of Smith Travel Research) about three high profile lawsuits in the hospitality industry.
In the third and final lawsuit we discussed, Family Suites Resorts v. Viacom International d/b/a MTV Networks, we discussed the Family Suites lawsuit. Family suites operates a Nickelodeon-themed hotel, and claims its licensing rights were breached when Viacom entered into an agreement with Marriott to franchise the Nickelodeon brand.
According to the complaint, Family Suites Resorts spent $168 million on its Nickelodeon-themed property — money it would not have spent if guests could get the Nickelodeon hotel experience elsewhere. So what happened?
An industry built on intellectual property.
As Jason quotes me as saying in the article: “This is an industry that relies on intellectual property–that’s what brands are.” See, The 5 questions every owner should ask before selecting a hotel brand.
Hotel owners spend considerable time and resources selecting the best brand to operate their hotels. And owners and operators can spend considerable time and resources entering into licensing agreements that make their brand unique. See, Hospitality Lawyer on hotel brands — How far will the pendulum swing? What’s in a name? Just ask Starwood, Hilton . . . Coca-Cola or Procter & Gamble.
It is the license agreement, in this case, that makes the Family Suites Resorts hotel unique.
For a hotel owner or operator, locking down essential agreements like the hotel management agreement, the franchise agreement, and licensing agreement are critical to the success of a hotel. It takes experience and expertise to structure good agreements and often hotels don’t know their agreements are flawed until something goes wrong. (Then it is too late!)
It is likely that the license agreement between Family Suites Resorts and Viacom will spell out exactly how exclusive the Nickelodeon license is. Hotel owners and operators will be very interested to see how this case is resolved, as intellectual property rights, which should be spelled out in the licensing agreement are critical to profitability.
Click here to read my commentary on M Waikiki’s Edition litigation against Marriott and Ian Schrager.
Click here to read my commentary on Hotel Lawyer on the fiduciary, contractual and agency duties of hotel brokers – Host Hotels & Resorts LP v. Molinaro Koger litigation.
This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We’ve done more than $87 billion of hotel transactions and have developed innovative solutions to unlock value from hotels. Who’s your hotel lawyer?
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