Retailers that bought Sturgis motorcycle rally-related products from Rushmore Photo & Gifts may soon be getting a call and a visit from the company to pick up unsold items.
On Friday, U.S. Chief District Judge Jeffrey Viken ordered a preliminary injunction in the case brought by Sturgis Motorcycle Rally Inc., known as SMRi, against both local merchant Rushmore Photo & Gifts and the world's largest retailer, Wal-Mart, for improperly using the trademark "Sturgis" on merchandise they sold.
Under the injunction, Rushmore Photo & Gifts has to collect from merchants the unlicensed merchandise it has produced. The injunction will not be in immediate effect, as Viken has asked both sides in the dispute to submit recommended injunction language by 5 p.m. Monday.
The injunction stemmed from a late October decision by an eight-person federal jury that found both Rushmore Photo & Gifts and Wal-Mart infringed on SMRi's trademarks by selling unlicensed items labeled with words and phrases owned by SMRi.
SMRi is a nonprofit that owns the trademark to many words and phrases referring to the rally. Companies pay a license fee to SMRi to produce and sell items with those trademarks.
Since the ruling in October, Rushmore Photo & Gifts products continue to be stocked and sold by local retailers, SMRi's attorney Jason Sneed told Viken during the hearing Friday.
Sneed himself found both men's and women's T-shirts and a hooded sweatshirt bearing the logo of “Sturgis Motor Classic” — the mark used by Rushmore Photo & Gifts for its rally-related products — at the Stumer Road Wal-Mart in Rapid City on Thursday. Sneed presented the items as evidence at the hearing.
For that reason, and at least two other examples of continued sales, Viken ordered the injunction.
"The ongoing sale of goods by Wal-Mart would indicate the continued confusion about the trademarks," Viken said in announcing his ruling. "The harm to SMRi is real and ongoing."
He directed Rushmore Photo & Gifts, through its attorney Aaron Davis, to begin impounding goods from retailers and issue a report to the court within 10 days of when the injunction goes into effect. At Davis' request, Rushmore Photo would be given an additional 20 days to continue the process.
"They would need some time to contact those people before SMRi fires off 50 cease-and-desist letters," Davis said.
Another example of sales of Rushmore Photo products sold after the verdict was presented by SMRi licensee Jerry Berkowitz. He said he met with local Sturgis businesswoman Robin Baldwin, owner of Black Hills Rally & Gold, who told him that 2016 Sturgis products purchased from Rushmore Photo & Gifts were being sold at the Sturgis Motorcycle Museum.
Berkowitz went to the gift shop at the museum in mid-January, purchased two shirts and five postcards and presented them as evidence at the hearing Friday.
"Robin mentioned there may be some infringement going on at the museum," Berkowitz said.
Baldwin did testify that the goods had been delivered and invoiced on Oct. 6, prior to the trial and the verdict.
Brian Niemann, who owns Rushmore Photo & Gifts along with his parents, Paul and Carol Niemann, testified that it's not really the policy of their company to go out and collect products they have sold to retailers. Sneed asked Brian Niemann specifically if they had been telling retailers not to worry about pulling products off the shelf until all post-trial motions and appeals had been exhausted.
"We told them what happened in the trial," Niemann said.
He also said that merchandise that already had been ordered from distributors, which may be categorized as rally-related, had been packed up on pallets. The company also cleaned up its rally-related websites and deleted references to any products considered to be infringing on the SMRi trademarks, Neimann said.