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New Prospectus For Grand Canyon National Park Concessions Denies Xanterra Parks & Resorts Trademark Claims

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National Park Service officials, in trying yet again to attract a business to run concessions on the South Rim of Grand Canyon National Park, claim the agency owns trademarks to business names associated with popular South Rim lodges and that Xanterra Parks & Resorts should abandon its bid to secure those trademarks.

On Friday the agency issued its fourth prospectus for a 15-year-contract to manage lodging, food services, retail, transportation, mule rides, and other services on the South Rim, as well as operations at Phantom Ranch on the canyon floor. The latest offering trims the franchise fee the winning concessionaire would have to pay the Park Service slightly, from 10 percent of gross revenues to 8 percent, a move the agency attributed in part to a federal requirement to pay workers more than the Arizona state minimum wage and due to a requirement that the concessionaire fuel vehicles outside the park.

The draft contract also requires the winning bidder to replace the Maswick South lodging at a cost of nearly $12 million. Additionally, if a concessionaire other than Xanterra wins the contract, they would be required to pay Xanterra $59.4 million for capital improvements Xanterra made in the concessions.

And while Xanterra has sued the Park Service over the concessions contracts for the South Rim, and claimed a company couldn't turn a profit based on the pact's structure, the Park Service maintains that the terms it is seeking would be profitable for a concessionaire. To that point, the latest prospectus notes that while the South Rim concessions in 2013 generated estimated gross revenues of $66.4 million, Xanterra paid the Park Service $2.4 million in franchise fees. Net revenues were not shown in the tables, however.

Also within the concessions prospectus is a section that challenges Xanterra's attempts to trademark names for most businesses on the South Rim, including "Phantom Ranch," "Bright Angel Lodge," "Kachina Lodge," "Yavapai Lodge," "Maswick Lodge," "Red Horse Cabin," "Arizona Room," "Lookout Studio," "Buckey O'Neill Cabin," "Thunderbird Lodge," "Trailer Village,""Hopi House," "Hermit's Rest," and "Desert View Watchtower."

According to the prospectus, the Park Service on January 12 notified Xanterra by letter that it "considers the marks in use by Xanterra as property of the Service protected pursuant to common trademark law rights. The Service asserted it has exclusively and continuously controlled the marks, and in particular retains control of the nature and quality of provided goods and services through operation of concessions contracts with providers of goods and services such as Xanterra.

"The Service further claimed Xanterra's use of the claimed marks is solely by virtue of concessions contracts through which the Service ultimately controls the nature and quality of the provided goods and services."

The Park Service in that January 12 letter also asked the concessionaire to abandon its bid to obtain the trademarks. However, according to the U.S. Patent and Trademark Office, as of Friday some of the concessionaire's applications had been cleared for publication for public review.

Xanterra officials declined Friday to comment on the matter.

The trademark section of the prospectus further muddies the waters in the National Park System, for the Park Service appears to be approaching the matter differently in different parks.

The issue of trademarks and overall intellectual property held by concessionaires arose last year at Yosemite National Park, where Delaware North Co.'s ownership of trademarks to place names in the park came up as the Park Service was soliciting bids for a 15-year concessions contract that is to begin in 2016. DNC officials, hedging against the possibility that they might not win that contract, wrote the Park Service to outline their intellectual property assets, which included trademarked place names to lodges, and cited a $51 million valuation they had placed on that intellectual property. If they lost the next contract, they wanted to receive that amount in compensation from the winning company.

The Park Service initially balked at including the $51 million claim in the contract prospectus as part of DNC's possessory interest that it would have to be compensated for. But in an amendment to the prospectus for the new contract, the agency said the winning bidder, if not DNC, could rename buildings in the park. A bit later, the Park Service amended the prospectus to place a $3.5 million valuation on DNC's intellectual property claims.

(Despite the wide difference in valuations, the Park Service has not asked DNC to sit down to discuss the differences, according to DNC officials.)

Roughly a week-and-a-half after the Park Service wrote Xanterra about its position on trademarks at the Grand Canyon, the bidding window for the Yosemite concessions contract closed without similar wording concerning trademark ownership in the draft contract. The winning bidder is expected to be announced later this summer.

Officials in the Park Service's Washington, D.C., office on Friday could not say why the Yosemite prospectus had not been withdrawn and rewritten to include similar language claiming trademark ownership by the agency.

While Xanterra was facing the prospect of losing the South Rim concessions business this past December 31, the company successfully bid for a one-year temporary contract the Park Service offered so it could continue its efforts to successfully negotiate a new 15-year agreement with a company.

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