Currently under construction on the Las Vegas Strip, the property is being sued by the publishers of Cosmopolitan magazine for trademark infringement.

Cosmopolitan Resort & Casino.

The $3 billion Cosmopolitan Resort & Casino, currently under construction on the Las Vegas Strip, is being sued by Hearst Corporation, publishers of Cosmopolitan magazine, for trademark infringement.

The $500,000 lawsuit claims that the use of the Cosmopolitan name “demonstrates an intentional, willful and bad-faith intent to trade on the good will of [Hearst Communications Incorporated’s] registered marks and to cause confusion, deception and mistake in the minds of customers and potential customers to the great and irreparable injury of HCI.”

The defendants in the lawsuit - Cosmo Senior Borrower LLC and 3700 Associates – had yet to respond to the lawsuit as of presstime.

The trademark infringement suit is the latest setback for the star-crossed property. Just two years ago, the 2,998-room resort was touted as one of the “must-see” properties being built as part of the next wave of expansion planned for the Las Vegas market. Since then, however, tightened credit markets and an economy in recession have proven to be formidable roadblocks in the Cosmopolitan’s - and several other Las Vegas projects’ - progress.

The original developer of the project, New York-based businessman Ian Bruce Eichner,  defaulted on a $760 million loan with the financial firm Deutsche Bank. At the beginning of this year, Deutsche Bank said it would foreclose on the property, but has reportedly been paying the project’s monthly construction bill since March.

Strapped with significant debt, but nearly 85 percent complete, Cosmopolitan has been the subject of increasing speculation as to who its ultimate owner-operator will be, and several hotel and development companies are rumored to be negotiating to purchase the project.

So who might be the eventual suitor? Gaming industry observers and analysts note that MGM Mirage may have both the best motive and resources to emerge as the Cosmopolitan’s new owner. The 8-acre project site sits between two of MGM Mirage’s biggest ventures, the Bellagio and CityCenter, the $8 billion development that, when complete in late 2009, will include multiple hotels, entertainment venues, amenities, retail, gaming space and apartments and condominiums.

MGM Mirage hasn’t expressed outward interest. President and COO Jim Murren has not outright dismissed the idea of taking over the Cosmopolitan, but told the Las Vegas Business Press it would have to make significant sense for his company from a financial perspective.

“It’s not something we’re looking at,” Murren said. “We hope somebody can find a way of fixing this because it doesn't help the Strip, Las Vegas or us to have a half-finished project sitting there.”

Another possibility could lie with some form of joint venture between Marathon Asset Management, a New York-based hedge fund that loaned roughly $125 million to Eichner, and Hyatt Hotels, which had signed on to be the project’s hotel operator.

Still other interested parties include Starwood Hotels and real estate developer Related Cos. There is also speculation that other established casino companies without a Las Vegas Strip presence, such as Pinnacle Entertainment or Penn National Gaming, may become involved in talks.