On Friday, November 2nd, the Court of Appeals for the Eighth Circuit issued a decision in Sturgis Motorcycle Rally, Inc. v. Rushmore Photo & Gifts, Inc., et. al. which reversed various parts of the district court’s decision in the trademark infringement case brought by Sturgis, which claimed to own trademarks covering merchandise related to a well-known motorcycle rally which has taken place in Sturgis, SD, going back to 1938. While the appellate court affirmed the district court’s denial as a matter of law to the defendants’ as to Sturgis’ claims of deceptive trade practices, false advertising and trademark infringement claims, the Eighth Circuit reversed the district court’s findings that various marks asserted by Sturgis were valid because it found that Sturgis didn’t provide the jury with sufficient proof regarding validity.
Sturgis had sued Rushmore, a souvenir provider operating in Rapid City, SD, in the District of South Dakota, alleging violations of the Lanham Act for Rushmore’s sale of products related to the Sturgis Motorcycle Rally. Sturgis operates a licensing program for vendors seeking to sell products at the rally using a rally logo developed in the 1980s or various other character marks using the geographic terms “Sturgis” or “Black Hills” at a rate of about eight percent of each item’s wholesale price. A jury verdict in the case awarded $912,500 in damages to Sturgis while the district court found that Sturgis was estopped from recovering damages by laches and acquiescence; the district court also entered a permanent injunction in favor of Sturgis.
At district court, the jury had found that the defendants had infringed on five trademarks, including three federally registered marks and two unregistered marks. The Eighth Circuit noted that the one certificate for registration which Sturgis had admitted as evidence said that the mark was registered under Section 2(f) of the Lanham Act, which indicated that that the mark was not inherently distinctive but had become distinctive based on substantial exclusive and continuous use of the mark. Because the cease and desist letter sent to Rushmore for alleged infringement was delivered in 2006 and the mark’s certificate indicates that the mark was registered in 2011, the Eighth Circuit panel found that Sturgis isn’t entitled to a presumption of validity on any of the asserted marks.
Next, the appellate court turned to the issue of whether the Sturgis marks had acquired secondary meaning. In support of validity, Sturgis argued that the marks identify a distinct source of rally-related goods and that Sturgis and its predecessors have been the continuous and substantially exclusive users of the mark in relation to the rally since 1987. Also, Sturgis argued that the Sturgis Area Chamber of Commerce, a predecessor-in-interest of the trademark rights, has hosted the rally since the 1940s and thus the mark is associated by consumers with the rally.
However, the appellate court found that none of the trial evidence supported either argument nor any other basis for finding the word “Sturgis” identifies the plaintiff as a source of rally-related goods and services, thus warranting reversal of the jury’s finding that the mark is valid. Many of the historical uses of the word “Sturgis” which the plaintiff cited to the court “cannot reasonably be viewed as uses of the word as its mark.” Sturgis entered evidence into the record regarding old advertisements and film documentaries using the asserted marks but there was no evidence that the marks had been licensed from the Chamber for those products.
Sturgis also directed the court to consider patches produced by a vendor for the motorcycle rally annually going back to 1986 as evidence that the word “Sturgis” identifies those patches as a source of rally-related products, but the earliest license of that mark by that vendor produced during examination was 2001. “Unless [Sturgis] believes that [the vendor’s] 2001 license retroactively turned all of his pre-2001 uses of the word ‘Sturgis’ into uses of it as [Sturgis’] mark, [Sturgis] should not have pointed us to McNenny’s patches from the 1980s and 1990s in support of its argument that the ‘Sturgis’ mark has acquired secondary meaning,” the Eighth Circuit’s opinion reads.
Further, the reasoning provided by that vendor for licensing the mark illustrated why the jury couldn’t have inferred from the evidence that the mark was valid. The court pointed to testimony from a pair of vendors who license the mark primarily because of the perceived value in the licensing program, the profits of which are given to the City of Sturgis. If those licensing the mark are doing so because they like giving back to the community and are selling consumers on that idea, the jury had no basis to infer that consumers associate the mark with a single source of rally-related goods and services.