Up and down Sturgis streets this week, vendors are displaying banners proclaiming that official Sturgis products are sold under their tents and in their stores.

Frank Hess of Daytona, Fla., has sold T-shirts at the rally off and on for 15 years.

Each of the 108,000 T-shirts Hess brought to the rally carries an official product tag from Sturgis Motorcycle Rally, Inc. (SMRi), the not-for-profit development group that holds several rally-related trademarks.

Each tag costs $1. And an employee must attach the tags, he said.

Hess said the licensing is wrong.

“The money is not staying in South Dakota,” he said.

The licensing fee did not go directly to SMRi. Instead, the money went to Connecticut-based Good Sports, owned by Jerry Birkowitz, an SMRi board member.

“There’s nothing about this that’s for the community,” Hess said. “The money should go to the city and the residents.”

Trademarking and defending those trademarks is important to the future of the rally and for Sturgis residents, according to SMRi chairman Dean Kinney.

Kinney called a news conference Tuesday to explain his group’s position on the trademark battle that started in 2001 with the Sturgis Chamber of Commerce and continues today.

The news conference was held for a select few. Two challengers to SMRi’s ownership of the trademarks Sturgis and Black Hills, Brian Niemann and Kent Mortimer, were refused entrance despite presenting media passes issued by the city of Sturgis.

Kinney claims the licensing program that controls the number of licensees, but not the number of retailers permitted to sell licensed products, is necessary.

“The idea is to have a limited number of licensees that are providing a large variety of products to the marketplace,” Kinney said. The system ensures quality control and it makes it possible to audit the licensees to guarantee that the proper fees are being collected, he said.

“It also provides for customer-friendly distribution channels so retailers that want to carry official product can find it easy to handle,” Kinney said.

Not every vendor is happy about paying for the orange and black and holographic tags that are as prevalent as black leather, but they have no choice, said Mortimer, the California-based owner of Renegade Classics.

Among the registered trademarks held by SMRi are “Sturgis” and “Black Hills” when used in connection with the annual motorcycle rally.

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Mortimer is heavily involved with Concerned Citizens for Sturgis, a group formed last year when SMRi started enforcing its trademark rights on products sold at the rally. There are many people who support Concerned Citizens who have chosen to stay anonymous because they fear retaliation, he said, but they are financially supporting a challenge to the trademarks.

“We’re paying our legal fees with donations,” Mortimer said.

Weeks before the 2011 rally, SMRi filed a federal lawsuit against Niemann’s Rushmore Photo & Gifts with the intention of forcing the Rapid City company to pay a licensing fee or stop selling rally-related merchandise bearing the name Sturgis.

Niemann is marketing products this year carrying his own black and brown tags and his Sturgis Motor Classic trademark. Printed patches on many products boldly announce that SMC is “not affiliated with, sponsored or endorse by SMRI."

Niemann’s rally business took a 50 percent hit last year when many customers refused to buy his products. Taking a stand has been a huge benefit to business.

“We’re up 20 percent from last year,” Niemann said.

Other customers have simply decided not to buy anything Sturgis related this year, he said.

Aside from Rushmore Photo & Gifts, there is one other notable exception to merchandise offered at the rally: The banners are noticeably missing at any Black Hills Harley-Davidson location. Harley-Davidson has a confidential contract with Sturgis Motorcycle Rally, Inc., SMRi chairman Kinney said.

Contact Andrea Cook at 394-8423 or andrea.cook@rapidcityjournal.com

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