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

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK
----------------------------------------------------------- X
HARD ROCK CAFÉ :
INTERNATIONAL (USA), INC., :
:
Plaintiff, : Case No. 10 CV 7244
:
v. : ANSWER AND COUNTERCLAIMS OF
: DEFENDANTS HARD ROCK HOTEL
HARD ROCK HOTEL HOLDINGS, LLC, : HOLDINGS, LLC, HARD ROCK HOTEL,
HARD ROCK HOTEL, INC., HRHH IP, LLC, : INC. AND HRHH IP, LLC
MORGANS HOTEL GROUP CO., MORGANS :
HOTEL GROUP MANAGEMENT, LLC, :
DLJMB HRH VOTECO LLC, TURNER :
BROADCASTING SYSTEM, INC., BRAD :
LACHMAN PRODUCTIONS, INC. and GENCO :
ENTERTAINMENT, INC., :
:
Defendants.
:
----------------------------------------------------------- X

Defendants Hard Rock Hotel Holdings, LLC (“Hard Rock Hotel Holdings”), Hard

Rock 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 Rock

Café International (USA) Inc. (“the Café”).

Preliminary Statement

1. The Hard Rock Defendants have done nothing wrong and, in fact, are

victims of systematic legal and business harassment by the Café, which today’s

countersuit seeks to remedy. The Hard Rock Defendants enjoy an exclusive, perpetual

and royalty-free right to use the “Hard Rock” family of marks for hotel-casinos and

casinos west of the Mississippi and in certain international locations. These rights are

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clearly spelled out in a 1996 license agreement, which the Café is unhappy with but

legally bound by. Under that license, the Hard Rock Defendants operate the popular

Hard Rock Hotel and Casino Las Vegas; have developed Hard Rock Hotel-Casinos in

Tulsa and Albuquerque, through tribal sublicensees; and are actively pursuing other

hotel-casino and casino development opportunities in the territories where they enjoy

exclusive rights. Per the license agreement, none of the revenue from these ventures goes

to the Café or ever will.

2. The Café has brought the present lawsuit – a meritless grab bag of claims

for breach of license, trademark infringement, trademark dilution and unfair competition

– in an attempt to terminate or rewrite the 1996 license agreement. The Café complains

about 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 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 Café’s properties; and has brought

enormous positive publicity to the Hard Rock brand. Likewise, the Café purports to be

upset about the Tulsa and Albuquerque ventures despite having offered public praise

about both ventures. The meritless and untimely nature of the Café’s allegations confirms

that this lawsuit is nothing more than an attempt to escape the disadvantageous 1996

license agreement.

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3. Frustrated at being contractually excluded from a lucrative business in a

large territory, the Café, in addition to filing the Complaint, has also resorted to improper

business tactics. The Café has actively pursued its own projects in the Hard Rock

Defendants’ exclusive territories in direct violation of the letter and spirit of the license

agreement. The Cafe has interfered with the Hard Rock Defendants’ development

projects, including by making untrue and overreaching public statements to deter

potential partners from doing business with the Hard Rock Defendants. This misconduct

by 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 Hard

Rock Defendants operate or have authorized others to operate certain hotel-casinos in

parts of the western half of the United States, including the Hard Rock Hotel and Casino

in 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 the

truth of the allegations.

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5. Admit, except deny that the zip code associated with Hard Rock Hotel

Holdings’ address is 89109. Aver that the correct zip code is 89169.

6. Admit, except deny that the zip code associated with Hard Rock Hotel,

Inc.’s address is 89109. The correct zip code is 89169.

7. Admit.

8. Aver that they are not required to respond to the allegations because the

allegations are directed to another defendant.

9. Aver that they are not required to respond to the allegations because the

allegations are directed to another defendant.

10. Aver that they are not required to respond to the allegations because the

allegations are directed to another defendant.

11. Aver that they are not required to respond to the allegations because the

allegations are directed to another defendant. To the extent that a response may be

required, deny knowledge or information sufficient to form a belief as to the truth of the

allegations.

12. Aver that they are not required to respond to the allegations because the

allegations are directed to another defendant. To the extent that a response may be

required, deny knowledge or information sufficient to form a belief as to the truth of the

allegations.

13. Aver that they are not required to respond to the allegations because the

allegations are directed to another defendant. To the extent that a response may be

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required, deny knowledge or information sufficient to form a belief as to the truth of the

allegations.

14. Paragraph 14 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny.

15. Paragraph 15 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny.

16. Paragraph 16 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny, except admit that New York is

the principal place of business of HRHH IP and that New York is the contractually

designated forum for the resolution of claims under the license agreement.

17. Deny having knowledge or information sufficient to form a belief as to the

truth of the allegations, except admit that the original Hard Rock Café was co-founded by

Peter Morton and Isaac Tigrett in 1971.

18. Deny having knowledge or information sufficient to form a belief as to the

truth of the allegations.

19. Deny having knowledge or information sufficient to form a belief as to the

truth of the allegations.

20. Deny having knowledge or information sufficient to form a belief as to the

truth of the allegations.

21. Deny having knowledge or information sufficient to form a belief as to the

truth of the allegations.

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22. Deny having knowledge or information sufficient to form a belief as to the

truth of the allegations.

23. Deny having knowledge or information sufficient to form a belief as to the

truth of the allegations.

24. Deny having knowledge or information sufficient to form a belief as to the

truth of the allegations, except refer to Hard Rock Hotel Holdings’ 10-K for the fiscal

year ended December 31, 2009 for its contents.

25. Deny having knowledge or information sufficient to form a belief as to the

truth of the allegations.

26. Deny having knowledge or information sufficient to form a belief as to the

truth of the allegations.

27. Deny having knowledge or information sufficient to form a belief as to the

truth of the allegations.

28. Deny having knowledge or information sufficient to form a belief as to the

truth of the allegations, except admit that the Hard Rock Hotel and Casino in Las Vegas

opened in 1995, that a copy of the License Agreement is attached to the Complaint as

Exhibit 3 and refer to the License Agreement for its contents.

29. Deny having information or knowledge sufficient to form a belief as to the

truth of the allegations, except admit the allegations contained in the second sentence.

30. Admit.

31. Deny and refer to the License Agreement for its contents.

32. Deny and refer to the License Agreement for its contents.

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33. Deny and refer to the License Agreement for its contents.

34. Deny and refer to the License Agreement for its contents.

35. Deny and refer to the License Agreement for its contents.

36. Deny and refer to the License Agreement for its contents.

37. Deny and refer to the License Agreement for its contents.

38. Deny and refer to the License Agreement for its contents.

39. Deny and refer to the License Agreement for its contents.

40. Deny and refer to the License Agreement for its contents.

41. Deny having knowledge or information sufficient to form a belief as to the

truth of the allegations, except admit that a television program entitled “Rehab: Party at

the Hard Rock Hotel” began airing on the truTV cable channel in or about November

2008.

42. Deny having knowledge or information sufficient to form a belief as to the

truth of the allegations, except admit that the first two seasons of “Rehab: Party at the

Hard Rock Hotel” consisted of eighteen episodes that originally aired between November

2008 and November 2009.

43. Deny having knowledge or information sufficient to form a belief as to the

truth of the allegations, except admit that a third season of “Rehab: Party at the Hard

Rock Hotel” began airing on September 7, 2010 on truTV.

44. Deny, except admit that “Rehab” is a “reality” television program

concerning pool parties held on Sundays at the Hard Rock Hotel and Casino in Las

Vegas.

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45. Deny the allegations contained in the first sentence, except admit that

Morgans Hotel Group Co. and DLJMB HRH VoteCo LLC are two members of Hard

Rock Hotel Holdings. Hard Rock Defendants aver that they are not required to respond

to the allegations contained in the second and third sentences because the allegations are

directed to other defendants.

46. Paragraph 46 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny the allegations pertaining to the

Hard Rock Defendants and deny having knowledge or information sufficient to form a

belief as to the truth of the remaining allegations.

47. This paragraph is the subject of Hard Rock Defendants’ planned partial

motion to dismiss and to compel arbitration and stay proceedings, and accordingly will

not be answered at this time.

48. This paragraph is the subject of Hard Rock Defendants’ planned partial

motion to dismiss and to compel arbitration and stay proceedings, and accordingly will

not be answered at this time.

49. This paragraph is the subject of Hard Rock Defendants’ planned partial

motion to dismiss and to compel arbitration and stay proceedings, and accordingly will

not be answered at this time.

50. This paragraph is the subject of Hard Rock Defendants’ planned partial

motion to dismiss and to compel arbitration and stay proceedings, and accordingly will

not be answered at this time.

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51. This paragraph is the subject of Hard Rock Hotel Defendants’ planned

partial motion to dismiss and to compel arbitration and stay proceedings, and accordingly

will not be answered at this time.

52. Paragraph 52 consists of legal conclusions to which no response is

required. To the extent a response may be required, Hard Rock Hotel Holdings and

HRHH IP deny the allegations. Hard Rock Hotel, Inc. avers that it is not required to

respond to the allegations contained in Paragraph 52 because the allegations are directed

to other defendants; to the extent that a response may be required, Hard Rock Hotel, Inc.

denies having knowledge or information sufficient to form a belief as to the truth of the

allegations.

53. Paragraph 53 consists of legal conclusions to which no response is

required. To the extent a response may be required, Hard Rock Hotel Holdings and

HRHH IP deny. Hard Rock Hotel, Inc. avers that it is not required to respond to the

allegations contained in Paragraph 53 because the allegations are directed to other

defendants; to the extent that a response may be required, Hard Rock Hotel, Inc. denies

having knowledge or information sufficient to form a belief as to the truth of the

allegations.

54. This paragraph is the subject of Hard Rock Defendants’ planned partial

motion to dismiss and to compel arbitration and stay proceedings, and accordingly will

not be answered at this time.

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55. This paragraph is the subject of Hard Rock Defendants’ planned partial

motion to dismiss and to compel arbitration and stay proceedings, and accordingly will

not be answered at this time.

56. Paragraph 56 consists of legal conclusions to which no response is

required. To the extent a response may be required, Hard Rock Hotel Holdings and

HRHH IP deny the allegations. Hard Rock Hotel, Inc. avers that it is not required to

respond to the allegations contained in Paragraph 56 because the allegations are directed

to other defendants; to the extent that a response may be required, Hard Rock Hotel, Inc.

denies having knowledge or information sufficient to form a belief as to the truth of the

allegations.

57. Paragraph 57 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny the allegations pertaining to the

Hard Rock Defendants, and deny having knowledge or information sufficient to form a

belief as to the truth of the remaining allegations.

58. Paragraph 58 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny the allegations pertaining to the

Hard Rock Defendants and deny having knowledge or information sufficient to form a

belief as to the truth of the remaining allegations.

59. Paragraph 59 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny.

60. Deny the allegations pertaining to the Hard Rock Defendants, except

admit that “HRH Tower” and “HRH Tower Spa Villas” are among the facilities currently

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at the Las Vegas property bearing the acronym “HRH.” Deny having knowledge or

information sufficient to form a belief as to the truth of the remaining allegations.

61. Deny the allegations pertaining to the Hard Rock Defendants, except

admit that the advertising and promotional materials attached to the Complaint as Exhibit

4 were disseminated by Hard Rock Defendants. Deny having knowledge or information

sufficient to form a belief as to the truth of the remaining allegations.

62. Deny the allegations pertaining to the Hard Rock Defendants, and deny

having knowledge or information sufficient to form a belief as to the truth of the

remaining allegations.

63. Deny and refer to the registrations and applications for their contents.

64. Paragraph 64 consists of legal conclusions to which no response is

required. To the extent a response may be required, Hard Rock Hotel Holdings and

HRHH IP deny the allegations. Hard Rock Hotel, Inc. avers that it is not required to

respond to the allegations contained in Paragraph 64 because the allegations are directed

to other defendants; to the extent that a response may be required, Hard Rock Hotel, Inc.

denies having knowledge or information sufficient to form a belief as to the truth of the

allegations.

65. Paragraph 65 consists of legal conclusions to which no response is

required. To the extent a response may be required, Hard Rock Hotel Holdings and

HRHH IP deny the allegations. Hard Rock Hotel, Inc. avers that it is not required to

respond to the allegations contained in Paragraph 65 because the allegations are directed

to other defendants; to the extent that a response may be required, Hard Rock Hotel, Inc.

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denies having knowledge or information sufficient to form a belief as to the truth of the

allegations.

66. Paragraph 66 consists of legal conclusions to which no response is

required. To the extent a response may be required, Hard Rock Hotel Holdings and

HRHH IP deny the allegations. Hard Rock Hotel, Inc. avers that it is not required to

respond to the allegations contained in Paragraph 66 because the allegations are directed

to other defendants; to the extent that a response may be required, Hard Rock Hotel, Inc.

denies having knowledge or information sufficient to form a belief as to the truth of the

allegations.

67. Paragraph 67 consists of legal conclusions to which no response is

required. To the extent a response may be required, Hard Rock Hotel Holdings and

HRHH IP deny the allegations. Hard Rock Hotel, Inc. avers that it is not required to

respond to the allegations contained in Paragraph 67 because the allegations are directed

to other defendants; to the extent that a response may be required, Hard Rock Hotel, Inc.

denies having knowledge or information sufficient to form a belief as to the truth of the

allegations.

68. Paragraph 68 consists of legal conclusions to which no response is

required. To the extent a response may be required, Hard Rock Hotel Holdings and

HRHH IP deny the allegations. Hard Rock Hotel, Inc. avers that it is not required to

respond to the allegations contained in Paragraph 68 because the allegations are directed

to other defendants; to the extent that a response may be required, Hard Rock Hotel, Inc.

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denies having knowledge or information sufficient to form a belief as to the truth of the

allegations.

69. Paragraph 69 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny the allegations pertaining to the

Hard Rock Defendants and deny having knowledge or information sufficient to form a

belief as to the truth of the remaining allegations.

70. Paragraph 70 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny the allegations pertaining to the

Hard Rock Defendants and deny having knowledge or information sufficient to form a

belief as to the truth of the remaining allegations.

71. Paragraph 71 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny.

72. Deny the allegations pertaining to the Hard Rock Defendants, except

admit that HRHH IP and Hard Rock Hotel Holdings sublicensed the Hard Rock Hotel

and Hard Rock Casino trademarks to Cherokee Nation Enterprises, LLC, which operates

a Hard Rock Hotel-Casino in Tulsa, Oklahoma. Deny having knowledge or information

sufficient to form a belief as to the truth of the remaining allegations.

73. This paragraph is the subject of Hard Rock Defendants’ planned partial

motion to dismiss and to compel arbitration and stay proceedings, and accordingly will

not be answered at this time.

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74. This paragraph is the subject of Hard Rock Defendants’ planned partial

motion to dismiss and to compel arbitration and stay proceedings, and accordingly will

not be answered at this time.

75. Paragraph 75 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny the allegations pertaining to the

Hard Rock Defendants and deny having knowledge or information sufficient to form a

belief as to the truth of the remaining allegations.

76. Paragraph 76 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny the allegations pertaining to the

Hard Rock Defendants and deny having knowledge or information sufficient to form a

belief as to the truth of the remaining allegations.

77. Paragraph 77 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny the allegations pertaining to the

Hard Rock Defendants and deny having knowledge or information sufficient to form a

belief as to the truth of the remaining allegations.

78. Paragraph 78 consists of legal conclusions to which no response is

required. To the extent a response may be required, Hard Rock Hotel Holdings and

HRHH IP deny the allegations. Hard Rock Hotel, Inc. avers that it is not required to

respond to the allegations contained in Paragraph 78 because the allegations are directed

to other defendants; to the extent that a response may be required, Hard Rock Hotel, Inc.

denies having knowledge or information sufficient to form a belief as to the truth of the

allegations.

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79. Paragraph 79 consists of legal conclusions to which no response is

required. To the extent a response may be required, Hard Rock Hotel Holdings and

HRHH IP deny the allegations. Hard Rock Hotel, Inc. avers that it is not required to

respond to the allegations contained in Paragraph 79 because the allegations are directed

to other defendants; to the extent that a response may be required, Hard Rock Hotel, Inc.

denies having knowledge or information sufficient to form a belief as to the truth of the

allegations.

80. Paragraph 80 consists of legal conclusions to which no response is

required. To the extent a response may be required, Hard Rock Hotel Holdings and

HRHH IP deny the allegations. Hard Rock Hotel, Inc. avers that it is not required to

respond to the allegations contained in Paragraph 80 because the allegations are directed

to other defendants; to the extent that a response may be required, Hard Rock Hotel, Inc.

denies having knowledge or information sufficient to form a belief as to the truth of the

allegations.

81. Paragraph 81 consists of legal conclusions to which no response is

required. To the extent a response may be required, Hard Rock Hotel Holdings and

HRHH IP deny the allegations. Hard Rock Hotel, Inc. avers that it is not required to

respond to the allegations contained in Paragraph 81 because the allegations are directed

to other defendants; to the extent that a response may be required, Hard Rock Hotel, Inc.

denies having knowledge or information sufficient to form a belief as to the truth of the

allegations.

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82. Paragraph 82 consists of legal conclusions to which no response is

required. To the extent a response may be required, Hard Rock Hotel Holdings and

HRHH IP deny the allegations. Hard Rock Hotel, Inc. avers that it is not required to

respond to the allegations contained in Paragraph 82 because the allegations are directed

to other defendants; to the extent that a response may be required, Hard Rock Hotel, Inc.

denies having knowledge or information sufficient to form a belief as to the truth of the

allegations.

83. Paragraph 83 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny the allegations pertaining to the

Hard Rock Defendants and deny having knowledge or information sufficient to form a

belief as to the truth of the remaining allegations.

84. Paragraph 84 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny the allegations pertaining to the

Hard Rock Defendants and deny having knowledge or information sufficient to form a

belief as to the truth of the remaining allegations.

85. Paragraph 85 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny.

86. Deny the allegations pertaining to the Hard Rock Defendants, except

admit that HRHH IP and Hard Rock Hotel Holdings sublicensed the Hard Rock Hotel

and Hard Rock Casino trademarks to the Pueblo of Isleta, a federally recognized Indian

tribe, which operates a Hard Rock Hotel-Casino in Albuquerque, New Mexico. Deny

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having knowledge or information sufficient to form a belief as to the truth of the

remaining allegations.

87. This paragraph is the subject of Hard Rock Defendants’ planned partial

motion to dismiss and to compel arbitration and stay proceedings, and accordingly will

not be answered at this time.

88. This paragraph is the subject of Hard Rock Defendants’ planned partial

motion to dismiss and to compel arbitration and stay proceedings, and accordingly will

not be answered at this time.

89. Paragraph 89 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny the allegations pertaining to the

Hard Rock Defendants and deny having knowledge or information sufficient to form a

belief as to the truth of the remaining allegations.

90. Paragraph 90 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny the allegations pertaining to the

Hard Rock Defendants, except admit that Exhibit 8 depicts a mark used at the

Albuquerque property. Deny having knowledge or information sufficient to form a belief

as to the truth of the remaining allegations.

91. Paragraph 91 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny the allegations pertaining to the

Hard Rock Defendants and deny having knowledge or information sufficient to form a

belief as to the truth of the remaining allegations.

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92. Deny the allegations pertaining to the Hard Rock Defendants, except

admit that the Albuquerque property is operated by the Pueblo of Isleta Indian tribe,

which has a sponsorship arrangement with the Pavilion. Deny having knowledge or

information sufficient to form a belief as to the truth of the remaining allegations.

93. Paragraph 93 consists of legal conclusions to which no response is

required. To the extent a response may be required, Hard Rock Hotel Holdings and

HRHH IP deny the allegations. Hard Rock Hotel, Inc. avers that it is not required to

respond to the allegations contained in Paragraph 93 because the allegations are directed

to other defendants; to the extent that a response may be required, Hard Rock Hotel, Inc.

denies having knowledge or information sufficient to form a belief as to the truth of the

allegations.

94. Paragraph 94 consists of legal conclusions to which no response is

required. To the extent a response may be required, Hard Rock Hotel Holdings and

HRHH IP deny the allegations. Hard Rock Hotel, Inc. avers that it is not required to

respond to the allegations contained in Paragraph 94 because the allegations are directed

to other defendants; to the extent that a response may be required, Hard Rock Hotel, Inc.

denies having knowledge or information sufficient to form a belief as to the truth of the

allegations.

95. Paragraph 95 consists of legal conclusions to which no response is

required. To the extent a response may be required, Hard Rock Hotel Holdings and

HRHH IP deny the allegations. Hard Rock Hotel, Inc. avers that it is not required to

respond to the allegations contained in Paragraph 95 because the allegations are directed

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to other defendants; to the extent that a response may be required, Hard Rock Hotel, Inc.

denies having knowledge or information sufficient to form a belief as to the truth of the

allegations.

96. Paragraph 96 consists of legal conclusions to which no response is

required. To the extent a response may be required, Hard Rock Hotel Holdings and

HRHH IP deny the allegations. Hard Rock Hotel, Inc. avers that it is not required to

respond to the allegations contained in Paragraph 96 because the allegations are directed

to other defendants; to the extent that a response may be required, Hard Rock Hotel, Inc.

denies having knowledge or information sufficient to form a belief as to the truth of the

allegations.

97. Paragraph 97 consists of legal conclusions to which no response is

required. To the extent a response may be required, Hard Rock Hotel Holdings and

HRHH IP deny the allegations. Hard Rock Hotel, Inc. avers that it is not required to

respond to the allegations contained in Paragraph 97 because the allegations are directed

to other defendants; to the extent that a response may be required, Hard Rock Hotel, Inc.

denies having knowledge or information sufficient to form a belief as to the truth of the

allegations.

98. Paragraph 98 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny the allegations pertaining to the

Hard Rock Defendants and deny having knowledge or information sufficient to form a

belief as to the truth of the remaining allegations.

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99. Paragraph 99 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny the allegations pertaining to the

Hard Rock Defendants and deny having knowledge or information sufficient to form a

belief as to the truth of the remaining allegations.

100. Paragraph 100 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny.

101. Deny the allegations pertaining to the Hard Rock Defendants, except

admit that Hard Rock Hotel, Inc. has registered several Internet domain names in the

course of its business operations, and deny having knowledge or information sufficient to

form a belief as to the truth of the remaining allegations.

102. Deny the allegations pertaining to the Hard Rock Defendants, except

admit that cherokeehardrockhotel.com, hrhpokeronline.com and hardrockroyalty.com are

Internet domain names currently registered to Hard Rock Hotel, Inc. and that Hard Rock

Hotel, Inc. is the registrant for each of the Internet domain names listed in Exhibit 9.

Deny having knowledge or information sufficient to form a belief as to the truth of the

remaining allegations.

103. Paragraph 103 consists of legal conclusions to which no response is

required. To the extent a response may be required, deny the allegations pertaining to the

Hard Rock Defendants and deny having knowledge or information sufficient to form a

belief as to the truth of the remaining allegations.

104. Repeat and reallege the responses to the foregoing paragraphs.

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105. Deny, except admit that the Café as a successor is a party to the License

Agreement with HRHH IP as a successor.

106. Deny.

107. Deny.

108. Deny.

109. Repeat and reallege the responses to the foregoing paragraphs.

110. Deny.

111. Deny.

112. Repeat and reallege the responses to the foregoing paragraphs.

113. Deny.

114. Deny.

115. Deny.

116. Repeat and reallege the responses to the foregoing paragraphs.

117. Deny.

118. Deny.

119. Deny.

120. Repeat and reallege the responses to the foregoing paragraphs.

121. Deny.

122. Deny.

123. Deny.

124. Repeat and reallege the responses to the foregoing paragraphs.

125. Deny.

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126. Deny.

127. Deny.

128. Repeat and reallege the responses to the foregoing paragraphs.

129. Deny.

130. Deny.

131. Deny.

132. Repeat and reallege the responses to the foregoing paragraphs.

133. Deny.

134. Deny.

135. Deny.

Answer To Prayer For Relief

To the extent any response is required to Plaintiff’s Prayer for Relief, the Hard

Rock Defendants deny each and every allegation contained therein that is directed to

them. Hard Rock Defendants deny that Plaintiff is entitled to any of the relief requested

or to any other relief.

AFFIRMATIVE DEFENSES

First Affirmative Defense

The Complaint and each count thereof fails to state a claim upon which relief may

be granted.

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Second Affirmative Defense

Hard Rock Defendants have at all times acted in good faith and without any intent

to trade on any goodwill of Plaintiff or any third party.

Third Affirmative Defense

The claims contained in the Complaint are barred in whole or in part by the

doctrines of waiver, equitable estoppel, acquiescence, unclean hands and laches.

Fourth Affirmative Defense

The claims contained in the Complaint are barred in whole or in part because

Plaintiff fails or has failed to mitigate, minimize and/or avoid any purported damages.

Fifth Affirmative Defense

Plaintiff has suffered no damages.

Sixth Affirmative Defense

The alleged acts of the Hard Rock Defendants did not cause any confusion or

mistake, nor likely confusion or mistake, and did not dilute or tarnish Plaintiff’s alleged

trademarks.

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Counterclaims

Nature Of The Action

1. The Café’s misconduct has given rise to counterclaims for breach of

contract, breach of the covenant of good faith and fair dealing, and tortious interference

with business relations. The Hard Rock Defendants are complying with their obligations,

and pursuing their legitimate economic opportunities, pursuant to the License Agreement.

Yet, the Café is systematically trying to deprive the Hard Rock Defendants of the benefits

of the License Agreement, not only through meritless litigation, but through

impermissible efforts to develop business ventures in the Hard Rock Defendants’

exclusive territory, and false and overreaching statements designed to deter potential

partners from doing business with the Hard Rock Defendants.

2. The Café’s wrongful efforts are designed to misappropriate for the Café

the benefits of the good name, goodwill and stellar reputation of the Hard Rock

Defendants, and to convey to potential business partners the false impression that the

Hard Rock Defendants do not, on their own, have the right to sublicense the Hard Rock

marks for use in development projects. The Hard Rock Defendants have lived up to their

end of the bargain under the parties’ license agreement; now the Café must live up to its

end.

3. Unless the Café’s misconduct is stopped, the Hard Rock Defendants’

goodwill, standing and reputation among key industry players (including hotel-casino

owners and operators) will be further damaged. Accordingly, the Hard Rock Defendants

bring this action seeking permanent injunctive relief to prevent the Café from causing any

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more harm through its unlawful conduct, as well as damages to compensate the Hard

Rock Defendants for the harm the Café already has caused.

Jurisdiction And Venue

4. This Court has jurisdiction over the subject matter of this action pursuant

to 28 U.S.C. § 1332. The amount in controversy exceeds the sum or value of $75,000.

5. Personal jurisdiction over the Café is appropriate under New York Civil

Practice Law and Rules § 302. On information and belief, the Café owns, operates and/or

franchises several Hard Rock Café locations in New York State. Moreover, New York is

the contractually designated forum for the resolution of claims.

Facts

The 1996 License Agreement

6. Under the License Agreement, HRHH IP enjoys the exclusive, royalty-

free and perpetual right to use and exploit the HARD ROCK HOTEL and HARD ROCK

CASINO trademarks in connection with hotel-casino operations and casino operations in

certain specified territories - in relevant part, “[t]he State of Illinois and all states and

possessions of the United States which are located west of the Mississippi River.”

Certain international locations, including Australia, Brazil, Israel, Venezuela and

Vancouver, British Columbia, are also included in the licensed territories. These licensed

territories are known collectively as the “Morton Territories,” after Peter Morton, the

original licensee to whom HRHH IP is a successor.

7. The License Agreement also provides that HRHH IP has “the right to

sublicense or franchise any or all of the rights and licenses granted” under the License

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Agreement. The License Agreement states that “[a]ny sublicense or franchise granted

hereunder shall contain provisions whereby the sublicensee or franchisee agrees to

assume, observe and perform all of the obligations of [HRHH IP] and be bound by all of

the restrictions under [the License] Agreement and [HRHH IP] shall provide a copy of

such sublicense or franchise to [the Café].”

8. Nothing in the License Agreement requires HRHH IP to seek approval

from the Café when developing a hotel-casino or when sublicensing trademarks. The

License Agreement also does not provide for any veto right by the Café over proposed

developments or sublicense agreements by the Hard Rock Defendants. Nothing in the

License Agreement provides for any sharing of revenues with the Café.

9. In addition, the License Agreement allows the Café “to develop, maintain

and update a World Wide Web page for the Hard Rock Café Restaurants, and other Hard

Rock Facilities [which is defined to include Hard Rock Hotel/Casinos, Hard Rock

Casinos and Hard Rock Café restaurants] as they may develop except that [HRHH IP]

may develop, maintain and update a Web page for the Hard Rock Hotel/Casinos or

Casinos in the Morton Territories” (emphasis added). The License Agreement goes on

to provide that “[i]n connection with their respective Web sites, both parties agree to

include links to the other party’s Web pages.”

Business Operations Of the Hard Rock Defendants

10. Under the License Agreement, Hard Rock Hotel Holdings operates the

Las Vegas Hard Rock Hotel and Casino, a premier destination entertainment resort with a

rock music theme. Since it began operations in 1995, the Hard Rock Hotel and Casino in

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Las Vegas has developed a strong following among its target customer base (i.e.

consumers), who seek a vibrant, energetic entertainment and gaming experience with the

services and amenities associated with a boutique luxury resort hotel. The Hard Rock

Defendants have explored and continue to explore opportunities to develop other casinos

and hotel-casinos in the Morton Territories.

11. On or about November 11, 2008, certain of the Hard Rock Defendants

executed a sublicense agreement with Cherokee Nation Enterprises, LLC (“CNE”). The

Hard Rock Defendants agreed to license certain intellectual property, including the

HARD ROCK HOTEL and HARD ROCK CASINO trademarks, to CNE in connection

with a Hard Rock Hotel-Casino that CNE operates in Catoosa, Oklahoma. CNE’s

Catoosa, Oklahoma hotel/casino reopened as the renovated and newly branded Hard

Rock Hotel and Casino Tulsa in the summer of 2009.

12. On or about October 13, 2009, certain of the Hard Rock Defendants

executed a sublicense agreement with the Pueblo of Isleta Indian tribe (“Isleta”), pursuant

to which the Hard Rock Defendants agreed to license certain intellectual property,

including the HARD ROCK HOTEL and HARD ROCK CASINO trademarks, to the

Isleta in connection with a Hard Rock Hotel-Casino that the Isleta operates in

Albuquerque, New Mexico. The renovated and newly branded Hard Rock Hotel and

Casino Albuquerque opened in the summer of 2010 under the operation of the Isleta.

13. In accordance with their rights, the Hard Rock Defendants constantly

pursue other hotel-casino and casino development opportunities within their licensed

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territories, including through frequent conversations with Native American tribes and

other potential partners in the development or operation of hotel-casinos.

The Café’s Wrongful Business Dealings

14. In breach of its obligations under the License Agreement, the Café has

pursued a campaign of engaging in hotel-casino business development in the Hard Rock

Defendants’ exclusive territories and interfering with the Hard Rock Defendants’

sublicensees and potential sublicensees. The Café also has breached its duty of good faith

and fair dealing, including its obligation not to take actions that frustrate or limit the Hard

Rock Defendants’ exercise and enjoyment of their rights under the License Agreement.

15. For example, on information and belief, as certain of the Hard Rock

Defendants were developing their Tulsa project, the Café 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.

16. As a further example, on information and belief, the Café 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 Café 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. This too would

have been within the Morton Territories. The Café’s plans to place Hard Rock Cafés

and/or Hard Rock Live! venues in hotel-casinos reflected a scheme to effectively brand

these hotel-casinos as Hard Rock Hotel-Casinos in violation of the exclusive license

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granted to Hard Rock Defendants to use the Hard Rock marks for hotel-casinos in the

Morton Territories.

17. In addition to the aforementioned efforts, on information and belief, the

Café has also contacted numerous other hotel-casino operators in the Morton Territories

to propose opening Hard Rock Cafés or other Hard Rock-branded venues at or near their

properties, and otherwise explored such potential development projects, in violation of

the letter and spirit of the License Agreement.

18. On information and belief, the Café also has communicated directly with

the actual and/or potential business partners of the Hard Rock Defendants to suggest that

these partners not do business with the Hard Rock Defendants and that they do business

with the Café instead, to falsely assert that the Hard Rock Defendants lack legal authority

over the Hard Rock marks, and/or to otherwise obstruct the Hard Rock Defendants’

legitimate, authorized and exclusive business development efforts in the Morton

Territories.

19. The Café’s efforts to develop projects in the Morton Territories are in

violation of Article 2(a) of the License Agreement, reflect a concerted strategy to deprive

the Hard Rock Defendants of the benefits of the license in violation of the Café’s

obligation of good faith and fair dealing, and interfere with the Hard Rock Defendants’

own development efforts.

20. In addition to its efforts to develop projects in the Morton Territories, the

Café has violated its obligations under the License Agreement with respect to Worldwide

Web Site development and maintenance. On or about October 19, 2009, just days after

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certain of the Hard Rock Defendants and the Isleta executed a sublicense agreement for

the Hard Rock Hotel-Casino in Albuquerque, the Café registered for itself the Internet

domain name “hardrockcasinoalbuquerque.com.” The registration of this Internet

domain name by the Café violates the License Agreement, which grants HRHH IP, not

the Café, the right to “develop, maintain and update a Web page for the Hard Rock

Hotel/Casinos or Casinos in the Morton Territories.”

21. The Café has also failed to include the Hard Rock Hotel-Casinos in Tulsa

and Albuquerque on their pull-down lists of all Hard Rock Hotel/Casinos contained on

two websites it maintains, “hardrock.com,” available at http://www.hardrock.com/, and

“hardrockhotels.com,” available at http://www.hardrockhotels.com, in violation of its

obligations under the License Agreement. The Café’s failure to include these properties

on the prominent listings on its websites further conveys to potential business partners the

false impression that the Hard Rock Defendants did not, on their own, have the right to

sublicense the Hard Rock marks for use in the Tulsa and Albuquerque development

projects.

The Café’s False Statements Regarding Its Ability to Block

The Hard Rock Defendants’ Sublicense Deals

22. Jim Allen, a senior executive of the Café, recently gave an interview to

Global Gaming Business Magazine, a leading monthly gaming trade magazine that

focuses on the international casino gaming industry, in which he made untrue and

overreaching statements designed to deter potential partners from doing business with the

Hard Rock Defendants. The audio of this interview is available at

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http://ggbnews.com/issue/vol-8-no-35-september-13-2010/article/global-gaming-

business-podcast-jim-allen-chairman-hard-rock-international. In the interview, Mr. Allen

falsely stated that the Hard Rock Defendants “cannot do a transaction without [the

Café’s] approval. So anything in that particular territory, they still need to submit back

to [the Café] for approval to eventually pursue utilizing the Hard Rock brand”

(emphasis added).

23. Additionally, in an article entitled “Hard Sell” published by Global

Gaming Business Magazine in its September 2010 edition based on this interview, Mr.

Allen was quoted as saying that the Hard Rock Defendants “cannot do a transaction in

[the Café’s] territory without submitting it to [the Café] for approval.” A copy of this

article is attached hereto as Exhibit A.

24. On information and belief, false statements of the kind made to Global

Gaming Business Magazine have also been made by Mr. Allen or other agents of the

Café in multiple other contexts, including to potential development partners or

sublicensees of the Hard Rock Defendants.

25. These statements are utterly untrue and have no basis whatsoever in the

License Agreement. These false statements were directed to and were heard by potential

sublicensees, lenders and other business partners of the Hard Rock Defendants, and were

damaging to the Hard Rock Defendants’ relationship with and reputation among these

persons and entities.

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FIRST COUNTERCLAIM

Breach of Contract

26. The Hard Rock Defendants repeat and reallege each and every allegation

set forth above.

27. The Café has intentionally and materially breached the License Agreement

as described herein, thereby causing damage.

28. As a result of the Café’s intentional and material breaches, the Hard Rock

Defendants are entitled to entry of permanent injunctive relief against future breaches by

the Café or third parties in privity with the Café, an award of damages in an amount to be

determined at trial, pre-judgment and post-judgment interest, and such other and further

relief as this Court may deem just and proper.

SECOND COUNTERCLAIM

Breach of Contract – Covenant of Good Faith and Fair Dealing

29. The Hard Rock Defendants repeat and reallege each and every allegation

set forth above.

30. The Café has intentionally and materially breached the covenant of good

faith and fair dealing implied in the License Agreement by destroying or injuring the

Hard Rock Defendants’ right to receive the fruits of the License Agreement as described

herein.

31. As a result of the Café’s intentional and material breaches, the Hard Rock

Defendants are entitled to entry of permanent injunctive relief against future breaches by

the Café or third parties in privity with the Café, an award of damages in an amount to be

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determined at trial, pre-judgment and post-judgment interest, and such other and further

relief as this Court may deem just and proper.

THIRD COUNTERCLAIM

Tortious Interference with Business Relations

32. The Hard Rock Defendants repeat and reallege each and every allegation

set forth above.

33. The Café has engaged in behavior that has significantly interfered and

continues to interfere with business relationships that the Hard Rock Defendants possess

or are attempting to develop with sublicensees and prospective sublicensees in the

Morton Territories.

34. Such acts are dishonest, unfair and improper means of competition, and

are intentionally aimed at disrupting the Hard Rock Defendants’ business relationships.

35. The Hard Rock Defendants have suffered damages as a result of the

Café’s intentional interference with its business relationships and prospective

relationships.

36. As a result of the Café’s intentional and wrongful interference, the Hard

Rock Defendants are entitled to an award of damages in an amount to be determined at

trial, pre-judgment and post-judgment interest, and such other and further relief as this

Court may deem just and proper.

PRAYER FOR RELIEF

WHEREFORE, the Hard Rock Defendants respectfully pray that this Court enter

judgment on their behalf and against the Café and award as follows:

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(a) A declaration that the Café has breached the License Agreement, and the

covenant of good faith and fair dealing contained within it;

(b) An Order enjoining the Café from engaging in any further acts in

contravention of the License Agreement or interfering with the Hard Rock Defendants’

actual or prospective business relationships;

(c) Compensatory damages, in an amount to be determined at trial;

(d) Punitive damages, in an amount to be determined at trial;

(e) The Hard Rock Defendants’ costs and disbursements in this action; and

(f) Such other relief as this Court may deem just and proper.

Dated: New York, New York

November 12, 2010

DEBEVOISE & PLIMPTON LLP

By: /s/ Jeremy Feigelson____________

Bruce P. Keller
bpkeller@debevoise.com
Jeremy Feigelson
jfeigels@debevoise.com
Julie M. Calderon Rizzo
jmcalder@debevoise.com

919 Third Avenue

New York, New York 10022
(212) 909-6000

Attorneys for Hard Rock Hotel Holdings,

LLC, Hard Rock Hotel, Inc., and HRHH IP,
LLC

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