Last Friday, an eight person federal jury in Rapid City, South Dakota ordered retailer Walmart and a Rapid City souvenir shop called Rushmore Photo and Gifts to pay the nonprofit Sturgis Motorcycle Rally corporation $790,000 in damages for trademark infringement.
The suit, which was filed in June 2011, has featured extensive lawyering, a countersuit and a nine day trial. Sturgis Motorcycle Rally Inc. has asked federal district judge Jeffrey Viken to make the defendants pay for all the lawyers.
Sturgis Motorcycle Rally, Inc. is the official sponsor of the Sturgis Rally and it has trademarked “Sturgis,” “Sturgis Motorcycle Rally,” “Sturgis Rally & Races,” “Take The Ride To Sturgis” and “Sturgis Bike Week.” The corporation has also trademarked the official Sturgis rally logotype or picture mark. The oldest of these trademarks dates to 1997 and the most recent was registered in 2011, just before the suit was filed, The rally began in 1938. An estimated 739,000 people attended this year.
The nonprofit corporation licenses the right to use those trademarks and the resulting revenue provides a significant part of the annual budget of the city of Sturgis, South Dakota, In its complaint, the corporation said it had used the royalties generated from the sale of licensed goods and sponsorships “to the betterment of the Sturgis community, such as by making contributions to over 90 different causes and organizations, including the Meade County summer school program, Salvation Army’s food cupboard, Sturgis Arts Council, Sturgis Jaycees, Sturgis Little League, Sturgis Police Department D.A.R.E. program, Sturgis Volunteer Fire Department, Black Hills Area Habitat for Humanity, Crisis Intervention Shelter, special projects of the City of Sturgis, and Girl Scouts of the USA.”
The defendants sold t-shirts and various souvenirs and trinkets that featured images of motorcycles, the word mark “Sturgis” and other non-trademarked slogans like “motor classic” and “ride with pride.” They have been arguing for the last four years that Sturgis Motorcycle Rally Inc. had obtained the trademarks fraudulently.
They also argued that the corporation could not trademark the name of a city and that was what the case boiled down to.
The issue has come up before. In 2006, Abercrombie & Fitch threatened to sue merchants in Hollister, California for putting their city’s name on shirts and pants. Occasionally since 1947 Hollister, like Sturgis, has also sponsored large motorcycle rallies. Abercrombie & Fitch claimed it had simply dreamed up the word Hollister and trademarked it as a brand of clothing. Abercrombie & Fitch sent Hollister merchants cease and desist orders but they never actually brought suit against any of them because until now nobody had ever successfully trademarked the name of a city.
At the time, Hollister City Attorney Stephanie Atigh said what most lawyers thought. “There is no way you can trademark Hollister, California. It’s a geographical place.”
Mark Lemley, an intellectual property expert at Stanford University agreed. “If all you are doing is identifying your city’s name on your shirt, you are not engaged in trademark use,” he said. And Abercrombie & Fitch’s lawyers agreed.
But the jury in South Dakota just disagreed. They said the geographical place name “Sturgis” could be trademarked if it appeared on a shirt with a motorcycle on it.
If the verdict holds up, there may be a rush to trademark “Daytona,” “Laughlin” and “Laconia.”
The defendants have not yet given notice of appeal.