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Appeals court rules in Sturgis trademark dispute

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Sturgis Motorcycle Rally (copy)

Bikes ride along Main Street in downtown Sturgis during the 78th annual Sturgis Motorcycle Rally in 2018.

The two sides in a contentious and complicated legal fight over Sturgis motorcycle rally-related trademarks disagreed Friday about the impact of a new ruling by a federal appeals court.

The law firm of Patterson Thuente IP, in Minneapolis, issued a news release saying that the U.S. Court of Appeals for the 8th Circuit found that a federally registered trademark owned by Sturgis Motorcycle Rally Inc. (SMRI) is invalid.

“This is a major victory for Rushmore Photo & Gifts, the Niemann family of Rapid City, SD, and Wal-mart Stores, Inc., the defendants in this seven-year dispute over the Sturgis mark,” the news release said.

Yet the appeals court also remanded several issues to the district court for additional proceedings. And the law firm of SNEED PLC, in Davidson, N.C., issued its own news release saying the appeals court ruling contains "positive and challenging outcomes for both sides."

The SNEED PLC release on behalf of SMRI acknowledged that the appeals court reversed an earlier jury verdict regarding the validity of an SMRI trademark, but the release said the appeals court upheld the jury's findings that two other SMRI marks were infringed and that the defendants had committed false advertising and unfair competition.

"SMRI will be considering next steps in its long-running fight to protect and enhance the Sturgis Motorcycle Rally and the Rally trademarks in the coming days," the SNEED PLC news release said, "and will continue to fight to protect its rights in the STURGIS trademarks."

According to a summary in the appeals court’s 44-page written opinion, events in the case date to at least 1986, when Tom Monahan, an artist and vendor, donated a composite mark for the rally to the Sturgis Area Chamber of Commerce.

In 1987, the Chamber debuted a licensing program for the mark. The Chamber registered the mark federally in 1996 and, in the 2000s, acquired word marks.

In 2010, the Chamber assigned its rally-related marks to SMRI, an entity the Chamber helped create. Currently, the appeals court decision said, SMRI asserts that if a vendor wants to sell an item using the geographic terms "Sturgis" or "Black Hills" in conjunction with the rally, the vendor must first apply for and receive a license from SMRI that will cost about 8 percent of the wholesale price of each item sold.

Paul and Carol Niemann, along with their son, Brian Niemann, own Rushmore Photo & Gifts, Inc., a souvenir provider in Rapid City that for years sold a line of goods related to the rally, including some that it advertised as "officially licensed" even though they were not. With the sole exception of some postcards it once created that displayed the Monahan mark, Rushmore has not asked the Chamber or SMRI for permission to sell rally-related products, many of which display the word "Sturgis" or the name "Sturgis Motor Classic."

In 2011, on receiving a federal registration for the word mark "Sturgis" when used on goods and services related to the rally, SMRI sued Rushmore, the Niemanns, JRE Inc. (a dissolved South Dakota corporation that Paul and Carol Niemann had owned), and Wal-Mart Stores Inc. (which had retailed some of Rushmore's rally-related products). In its amended complaint, SMRI alleged that the defendants, through their participation in the selling of Rushmore's unlicensed rally-related products, had violated federal and state laws.

In 2015, a jury rendered a verdict in favor of SMRI, awarding it $912,500 in damages. But that award was later vacated by a judge.

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