The Sturgis trademark case is a step closer to resolution after a federal judge recommended rejecting motions for dismissal and defined what he sees as the essential issue in the dispute.
After six months of study, United States District Magistrate Judge John Simko of Sioux Falls filed his report and recommendation last week in the dispute between Sturgis Motorcycle Rally Incorporated, or SMRi, and Rushmore Photo & Gifts, a Rapid City wholesaler.
U.S. Chief District Judge Jeffrey Viken referred the case to him after both parties filed motions for a summary judgment that could have led to a dismissal of the case. Wal-Mart Stores, Inc., has joined Rushmore Photo & Gifts in challenging the validity of the Sturgis trademark after it was named as a defendant by SMRi.
Simko recommended that Viken deny all of SMRi’s motions for summary judgment to block the defendants' challenge and a request for a delay in the case.
Viken should also deny Rushmore Photo & Gifts' request for a finding in its favor and that a jury needs to decide the case, Simko wrote.
The Sioux Falls judge also stated his position on how to determine if the trademark can be legally enforced.
"If Sturgis means the source of products, then Sturgis is registrable because it identifies the source of products. If Sturgis means the event itself, then, Sturgis is not registrable because it does not identify the source of a product," Simko said in the document filed March 6 in U.S. District Court.
Sturgis Motorcycle Rally, Inc., initiated the federal lawsuit in 2011 after it was allowed to register Sturgis, Sturgis Motorcycle Rally, Sturgis Rally & Races, Take the Ride to Sturgis and Sturgis Bike Week as patented trademarks. The organization claims that Rushmore Photo & Gifts and Wal-Mart have infringed on its trademarks by selling items that say "Sturgis" without getting the permission of SMRi.
Both sides in the case said the judge’s recommendations were positive.
SMRi contends that Simko's recommendation does not deny or even recommend denying the right for SMRi to continue to use the legal Sturgis trademarks it has been entrusted to protect.
This follows two other rulings that were in favor of SMRi, including a judgement against an entity that billed itself as the "Little Sturgis Rally," SMRi board member Ross Lamphere said Monday in a news release.
"Without the Sturgis motorcycle rally there could be no 'Little Sturgis Rally.' Without SMRi, organizers of that event would have profited from the work our local community members have done over decades, would have done so at no cost, and would have been under no obligation to make any contribution to the community of Sturgis and its people," Lamphere said.
In another case, just before the 2011 Sturgis motorcycle rally, a motion for injunctive relief was filed by Rushmore Photo & Gifts against SMRi that attempted to derail the group's legal right to defend its federal trademarks.
The organization was successful in having that injunction denied, which benefited the entire community of Sturgis, according to Dean Kinney, chairman of the SMRi board.
"SMRi, through our volunteer board, is charged with promoting and protecting the Sturgis motorcycle rally, while providing a charitable return for the greater Sturgis area. Part of that responsibility is to protect the intellectual property of Sturgis Motorcycle Rally, Inc. from unauthorized use, infringement and counterfeit goods and services," Kinney said in a news release.
Brian Niemann of Rushmore Photo & Gifts said Simko's recommendations make it clear that the trademark is not valid.
"The trademark is invalid. Basically the only thing that's going to jury trial is whether or not there was fraud committed on the USPTP" Patent and Trademark Office, Niemann said. "The thing that is very nice, I guess, is that the judge basically saw what they have done."
In a lengthy review of the case, Simko focused his recommendations on three issues:
- Licensee estoppel — a legal doctrine that protects the holder, or licensor, of a trademark from legal challenges by its licensees. In this case, SMRi claims that Rushmore Photo & Gifts is a licensee because of a decades old licensing agreement with the Sturgis Chamber of Commerce. Not so according to Simko because the 21-year-old agreement expired before SMRi registered Sturgis.
- Fraud on the Patent and Trademark Office that may or may not have been committed by the Chamber of Commerce when it declared in 2001 that it was the exclusive user of the Sturgis mark and that the buying public identified the Sturgis mark with the source of the Chamber's rally products. Simko says a jury will have to decide if the Patent and Trademark Office was deliberately deceived.
- Does the Sturgis mark have a distinct secondary meaning, and if so, is that identity related to SMRi's products or the motorcycle rally held each August in the Black Hills? "How a particular word has been used and how it has been understood by the public is a question of fact," Simko writes. "The correct categorization of a given term is also a factual issue. Contrary to the representation plaintiff Sturgis (SMRI) made to the PTO about its exclusive use of Sturgis, the term was commonly used by hundreds of others during the time plaintiff represented its exclusive use of Sturgis," Simko writes in his report.
Viken has the option of accepting or rejecting all of Simko’s recommendations. Both parties have 14 days to craft their reactions to the judge’s comments.
"There's a lot left on the table by this recommendation," SMRi's attorney, Jason Sneed of Davidson, N.C., told the Journal.
Sneed intends to file SMRi's objections to Simko's recommendations within the allotted time but he declined to say what those objections will be.