Chamber Settles Trademark Lawsuit : Hollywood: A company that makes souvenirs charged that the Chamber of Commerce unfairly profits from the marketing of the sidewalk Walk of Fame.

The Hollywood Chamber of Commerce has quietly negotiated an out-of-court settlement with a souvenir maker that contested the chamber’s right to the trademarks for the Hollywood Boulevard Walk of Fame and the potential millions of dollars earned from marketing it.

The souvenir maker, On the Road Corp. of Tarzana, charged the chamber in a federal lawsuit with unfairly profiting from the world-famous Walk of Fame and its terrazzo-and-brass stars, saying they were in the public domain.

And if the famous star-studded thoroughfare could be trademarked for commercial licensing purposes, the complaint argued, it should not be awarded to the privately run chamber.

“If anybody owns the rights to the Walk of Fame, it is the city of Los Angeles, not the chamber,” stated Roy J. Mankovitz, a trademark and patent attorney representing On the Road.

The suit also claimed the chamber had fraudulently obtained the trademarks by misrepresenting itself as the originator of the concept, and later used those trademarks to run a monopoly.

The chamber argued that it is fully within its rights to be the exclusive licenser of Walk of Fame merchandise.

Both Mankovitz and Chamber President Larry Kaplan declined to comment on the specifics of the settlement, except to say it was reached within the past month.

“It is not a big deal, really,” said Kaplan. “This stuff happens all the time when you are enforcing (trademarks) against infringers.”

Mankovitz, however, said Kaplan was downplaying the significance of the lawsuit and the issues it has raised.

By settling out of court, Mankovitz said, the chamber has left itself open to further court action over the root cause of the controversy: whether the nonprofit chamber and its dues-paying member businesses have the right to seek significant profit from commercial ventures that bank on the popularity of the Walk of Fame, the stars of which are sunk into public sidewalks.

Mankovitz said that for the chamber “to risk losing the rights to the (trade)marks would have devastated their licensing program,” and that, under the terms of the settlement, On the Road retains the right to bring the issue back to court.

Kaplan disagreed, saying that under the terms of the settlement, On the Road agreed to become a licensee that will pay the chamber a sum for the right to sell officially sanctioned Walk of Fame merchandise, which, according to Kaplan, is a tacit admission that the chamber was in the right. Kaplan said the amount of the sum was confidential.

The idea for the Walk of Fame is generally credited to Harry Sugarman, a chamber member now deceased, who was president of the Hollywood Improvement Assn. Under his direction, an assessment district was formed, and more than $1 million was raised from area merchants.

But Mankovitz contended that the Walk of Fame was conceived by Los Angeles city officials, and then paid for by merchants and located on public property--all indications that the walk is in the public domain or is property of the city.

“That is not true,” Kaplan said. “The Hollywood Chamber of Commerce designed the Walk of Fame and brought the idea to the city. We devised it and we nurtured it over the years.”

The merchandising of the Walk of Fame and the logo of the Hollywood sign, perched on the side of Mt. Lee, is big business. And the Chamber of Commerce takes its licensing role very seriously.

Kaplan said the chamber retains a trademark specialist who routinely--and successfully--challenges merchandisers who try to market Walk of Fame and Hollywood sign logo products without getting the chamber’s permission.

Several times a year, in fact, the chamber sends employees to check out the products in souvenir shops in Hollywood and elsewhere.

It then sends out enforcement letters to the merchandisers and distributors who sell items without permission “every week,” Kaplan said, demanding that they enter into a licensing agreement. Usually, the chamber receives a royalty of between 5% and 10% of the wholesale cost of the item, he said.

In all, about 30 licensees, ranging in size from individual artisans to Universal Studios’ Florida theme park, pay the chamber annual licensing fees for the right to sell Walk of Fame replicas, plaques, street signs, T-shirts and key chains, or to set up their own replicas of the famous walk, Kaplan said.

Most merchandisers either comply with the chamber’s licensing arrangements or stop selling their unsanctioned wares.

Kaplan said current license agreements with Walk of Fame and Hollywood logo merchandisers are worth in the “hundreds of thousands of dollars” a year to the chamber, up from less than $100,000 annually in 1988.

And now the chamber has enlisted the aid of agents to expand to markets worldwide, and has held trademarks in Hong Kong and Japan for the past year.

Kaplan said profits from the merchandising efforts would be used for the benefit of the chamber’s 1,500 or so members, and to help the overall Hollywood community through such things as community cleanup programs and contributions to local charities and social services.

“Membership dues is a limited source of income,” Kaplan said. “This way we can really go and do the things the community and our members want us to do.”

The licensing battle with On the Road is not the first for the chamber.

The chamber was locked for years in a legal battle with communities in 11 states over its bid to gain exclusive use of the word Hollywood for commercial purposes. Chamber officials hoped to raise revenue to clean and maintain the stars on the Walk of Fame.

Last summer, Hollywood communities from Florida to New Mexico met at a summit in Hollywood, Fla., and denounced the chamber, saying it did not have the exclusive right to make a profit from the Hollywood name. At least three local neighborhood groups, angered over the chamber’s management of the landmark Hollywood sign, joined the group.

The chamber in March backed off its proposal, Kaplan said, not on trademark issues but because legal fees would have been higher than profits. Also, he said, “it was a very broad application . . . and attracted a lot of opposition.”

The chamber’s new merchandising efforts were met with skepticism by some community activists, who said the chamber is already neglecting one of its primary duties--keeping the Walk of Fame clean and in good shape.

“We’ve been asking what right do they (the chamber) have to even control the Walk--they are now making as much as $3,000 a pop each time they do one of these stars, and we never see where the money goes,” said Robert Nudelman, chairman of the Project Area Committee, an elected citizens’ advisory group that has long been a critic of the chamber.