Sturgis Motorcycle Rally, Inc. v. Rushmore Photo & Gifts, Inc. et al

Filing 299

ORDER granting in part and denying in part 278 Motion for Permanent Injunction. Signed by Chief Judge Jeffrey L. Viken on 2/11/16. (SB)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
WESTERN DIVISION
STURGIS MOTORCYCLE RALLY, INC.,

CIV. 11-5052-JLV

Plaintiff,
vs.
RUSHMORE PHOTO & GIFTS, INC.;
JRE, INC., CAROL NIEMANN; PAUL A.
NIEMANN; BRIAN M. NIEMANN; and
WAL-MART STORES, INC.,

ORDER GRANTING
PRELIMINARY INJUNCTION

Defendants,
-ANDRUSHMORE PHOTO & GIFTS, INC.;
JRE, INC.; CAROL NIEMANN; PAUL A.
NIEMANN; and BRIAN M. NIEMANN,
Counterclaimants,
vs.
STURGIS MOTORCYCLE RALLY, INC.,
Counterclaim Defendant.
On December 31, 2015, plaintiff Sturgis Motorcycle Rally, Inc., (“SMRI”)
filed a motion for permanent injunction, destruction of infringing articles,
transfer of domain name and cancellation of defendants’ State Trademark
Registrations (collectively “motion for permanent injunction”). (Docket 278).
The motion followed the jury’s verdict in favor of SMRI on October 30, 2015.
(Docket 263). The court considered SMRI’s brief in support of the motion for
permanent injunction (Docket 279), defendants’ memorandum in opposition

(Docket 288) and plaintiff’s reply brief (Docket 291). Having considered the
evidence presented at the February 5, 2016, hearing and the parties’ additional
arguments, the court orally granted in part and denied in part plaintiff’s motion.
“A permanent injunction requires the moving party to show actual success
on the merits, rather than the fair chance of prevailing on the merits required for
a standard preliminary injunction.” Oglala Sioux Tribe v. C & W Enterprises,
Inc., 542 F.3d 224, 229 (8th Cir. 2008) (citing Planned Parenthood Minnesota,
North Dakota, South Dakota v. Rounds, 530 F.3d 724, 732 (8th Cir. 2008) (en
banc); Randolph v. Rodgers, 170 F.3d 850, 857 (8th Cir. 1999)). “If a court finds
actual success on the merits, it then considers the following factors in deciding
whether to grant a permanent injunction: (1) the threat of irreparable harm to
the moving party; (2) the balance of harms with any injury an injunction might
inflict on other parties; and (3) the public interest.” Oglala Sioux Tribe, 542
F.3d at 229 (citing Planned Parenthood Minnesota, North Dakota, South Dakota,
530 F.3d at 729 n. 3; Dataphase Systems, Inc. v. CL Systems, Inc., 640 F.2d 109,
113 (8th Cir. 1981) (en banc)). The court will not take up the motion for
permanent injunction at this time, but will set the matter for determination at
the time other post-trial motions are resolved. The entry of a permanent
injunction would render meaningless the defendants’ post-trial motions. The
parties may conduct discovery pertaining to plaintiff's motion for a permanent
injunction in the meantime.

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In support of its decision to grant a preliminary injunction, the court notes
the United States Supreme Court decision of eBay v. MercExchange, L.L.C., 547
U.S. 388 (2006), which held “the decision whether to grant or deny injunctive
relief rests within the equitable discretion of the district courts.” The Court
rejected the Federal Circuit’s application of a categorical rule that permanent
injunctive relief was available after patent infringement was established. Id. at
394. In doing so, the Supreme Court did not decide whether a permanent
injunction was proper but found that neither the district court nor the court of
appeals “correctly applied the traditional four-factor framework that governs the
award of injunctive relief . . . .” Id. The case was remanded for proper
application of the four-factor analysis. Id.
Under the Lanham Act, 15 U.S.C. § 1116(a), the court may issue an
injunction against unauthorized trademark use “according to the principles of
equity and upon such terms as the court may deem reasonable . . . .” According
to the Trademark Dilution Revision Act, 15 U.S.C. § l125(c)(l), the court must
issue an injunction in favor of a successful trademark dilution plaintiff
“regardless of the presence or absence of actual or likely confusion, of
competition, or of actual economic injury.”
In this case, the court applies the traditional four-factor framework from
eBay and relevant Lanham Act provisions to the facts decided by the jury
together with the evidence presented at the February 5, 2016 hearing. The
court finds each of the factors weighs strongly in favor of issuing injunctive relief.
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In addition to injunctive relief, pursuant to 15 U.S.C. § 1118, the court
may order the destruction of infringing articles and the means for making the
infringing articles. By the Anti-Cybersquatting Consumer Protection Act,
15 U.S.C. § l125(d)(l)(C), the court has authority to order the transfer of domain
names used in a manner contrary to the Lanham Act. Pursuant to SDCL
§ 37-6-20, the court may order the South Dakota Secretary of State to cancel
defendants’ state trademark registrations.
On October 30, 2015, after a ten-day jury trial, the jury returned a
unanimous verdict in SMRI’s favor on all counts: (1) registered trademark
infringement, (2) unregistered trademark infringement; (3) trademark dilution;
(4) deceptive trade practices; (5) violations of the Anti-Cybersquatting Consumer
Protection Act; (6) false advertising; and (7) unfair competition. (Docket 264).
The court entered judgment on those claims in favor of SMRI on December 2,
2015. (Docket 269). The court finds SMRI achieved actual success on the
merits. Oglala Sioux Tribe, 542 F.3d at 229.
In its verdict, the jury unanimously found in favor of SMRI on its claims of
infringement of the registered STURGIS®, STURGIS BIKE WEEK®, and
Composite Design marks and of the unregistered STURGIS MOTORCYCLE
RALLY™ and STURGIS RALLY & RACES™ marks (jointly referred to as “SMRI’s
Marks”). “Since a trademark represents intangible assets such as reputation
and goodwill, a showing of irreparable injury can be satisfied if it appears that
[the plaintiff] can demonstrate a likelihood of consumer confusion.” General
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Mills, Inc. v. Kellogg Co., 824 F.2d 622, 625 (8th Cir. 1987). “[I]n trademark
law, injury is presumed once a likelihood of confusion has been established.”
Community of Christ Copyright Corp. v. Devon Park Restoration Branch of Jesus
Christ’s Church, 634 F.3d 1005, 1012 (8th Cir. 201 l) (finding the district court
did not abuse its discretion in permanently enjoining the defendants from use of
plaintiff’s marks).
The jury also unanimously found in favor of SMRI on its claim of dilution of
the famous STURGIS® mark. The court’s instructions outlined the
requirements for deciding in favor of SMRI on its dilution claim:
INSTRUCTION NO. 30 TRADEMARK DILUTION CLAIM
SMRI claims the Defendants’ use of their Sturgis Designations is
likely to dilute the distinctiveness of SMRI’s “STURGIS” trademark.
Trademark dilution is the lessening of the capacity of a famous or
distinctive mark to identify and distinguish goods or services. The
purpose of the anti-dilution law is to protect against the blurring of a
trademark’s value, or the tarnishment of a trademark’s image.
To succeed on this claim, SMRI must prove by the greater
convincing weight of the evidence the following:
1. That SMRl’s “STURGIS” trademark is famous and distinctive,
either inherently or through acquired distinctiveness;
In considering whether SMRI’s trademark is “famous,” you may
consider the following factors:
1. The duration, extent, and geographic reach of
advertising and publicity of the mark, whether
advertised or publicized by SMRI or third parties;
2. The amount, volume, and geographic extent of sales of
goods or services offered under the mark;
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3. The extent of actual recognition of the mark; and
4. Whether the mark is registered.
2. That a defendant’s use of any of its Sturgis Designations began
after SMRl’s trademark became famous;
3. That a defendant’s use of any of its Sturgis Designations is
likely to cause dilution by blurring or tarnishment of SMRl’s
“STURGIS” trademark;
Blurring occurs when a defendant uses an identical or
nearly identical version of SMRI’s trademark to identify the
defendant’s goods or services, creating the possibility that
SMRI’s mark will lose its ability to serve as a unique
identifier of SMRI’s product. This can occur even though
there is no confusion as to source, sponsorship, affiliation,
or connection.
Tarnishment is using a mark that is identical or nearly
identical to a famous mark of SMRI in such a way that
harms the reputation of SMRI's mark by degrading the
public’s positive associations with the mark.
SMRI is not required to prove dilution both by blurring and
by tarnishment.
To prevail on its dilution claim SMRI need not prove actual
or likely confusion.
and
4. That SMRI experienced damage as a result of a defendant’s
conduct.
You must consider this claim separately against each defendant.
If you find that SMRI proved this claim by the greater convincing
weight of the evidence against any defendant you must find for SMRI
against that defendant. If you find that SMRI did not prove this claim
by the greater convincing weight of the evidence against any defendant
you must find against SMRI on this claim.
(Docket 235 at pp. 48-49) (bold in title omitted).
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During the February 5, 2016 hearing, SMRI board members Jerry
Berkowitz and Rod Bradley and Robin Baldwin, the owner of Black Hills Rally &
Gold, a licensee of SMRI, all testified regarding defendants’1 continued
infringement of SMRI’s Marks and the harm caused to SMRI and the public.
Combined with the jury’s unanimous finding in favor of SMRI on its claim of
dilution, this testimony strengthens the conclusion that SMRI is “entitled to an
injunction . . . regardless of the presence or absence of actual or likely confusion,
of competition, or of actual economic injury.” 15 U.S.C. § l125(c).
Coupled with the evidence presented at trial, the testimony of SMRI board
members and a licensee of SMRI is a strong indication of the value in SMRI’s
Marks. The evidence at trial and the February 5, 2016, hearing illustrated the
negative effect defendants’ infringement of SMRI’s Marks has on SMRI’s
reputation. The court finds irreparable harm to SMRI by defendants’ continued
infringement. Oglala Sioux Tribe, 542 F.3d at 229.
By its motion, SMRI seeks only to enjoin the defendants from the use of
any reproduction, counterfeit, copy or colorable imitation of SMRI’s Marks.
SMRI is not seeking to enjoin the operation of defendants’ businesses, which
include many other lines of products beyond those pertaining to the sale of
infringing goods: namely, Wal-Mart’s general merchandise and retail store
business and the business of Rushmore Photo & Gifts, including but not limited

For of the remainder of this order “defendants” refers to Rushmore Photo
& Gifts, Inc., Carol Niemann, Paul A. Niemann, Brian M. Niemann and Wal-Mart
Stores, Inc., but not JRE, Inc.
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to its SOUTH DAKOTA, MOUNT RUSHMORE, and DEADWOOD product lines.
SMRI has shown that the irreparable harm to SMRI and its STURGIS marks
greatly outweighs any harm to defendants by enjoining the sale and marketing of
products using infringing marks. Id.
The court finds defendants’ conduct created a likelihood of confusing the
public, and the public has a right not to be confused by infringing goods.
Community of Christ Copyright Corp. v. Devon Park Restoration Branch of Jesus
Christ’s Church, 683 F. Supp. 2d 1006, 1018 (W.D. Mo. 2010). By not actively
removing its infringing goods from the market place, defendants’ post-trial
conduct continues to mislead the public. The court finds the public interest
weighs strongly in favor of eliminating the likelihood of confusion. SMRI is
entitled to injunctive relief pursuant to 15 U.S.C. § 1125(c)(1).
Based on the above findings and pursuant to Fed. R. Civ. P. 65, it is
ORDERED that plaintiff’s motion (Docket 278) is granted in part and
denied in part.
IT IS FURTHER ORDERED that plaintiff’s motion for a permanent
injunction is denied.
IT IS FURTHER ORDERED that a preliminary injunction shall immediately
issue and remain in effect until further order of the court.
IT IS FURTHER ORDERED that defendants RUSHMORE PHOTO & GIFTS,
INC., CAROL NIEMANN, PAUL A. NIEMANN, BRIAN M. NIEMAN and WAL-MART

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STORES, INC., (“the enjoined defendants”) are hereby immediately restrained
and enjoined from engaging in the following activities:
1. Using the following trademarks and composite design trademark:
A.

STURGIS, U.S. Reg. No. 3,923,282;

B.

STURGIS BIKE WEEK, U.S. Reg. Nos. 2,070,955; 3,825,398;
3,838,171; 3,911,270; and 3,923,236;

C.

BLACK HILLS MOTOR CLASSIC STURGIS RALLY & RACES
BLACK HILLS S.D., U.S. Reg. No. 1,948,097;

D.

STURGIS MOTORCYCLE RALLY, a common law trademark;

E.

STURGIS RALLY & RACES, a common law trademark;

or any colorable imitations of these marks in any advertisement,
promotion, offer for sale, or sale of any goods bearing one or more of
the marks;
2. Using in commerce any reproduction, counterfeit, copy or colorable
imitation of SMRI’s Marks, including but not limited to the infringing
designations “Officially Licensed Sturgis,” “Authentic Sturgis,”
“Legendary Sturgis,” “Licensed Sturgis,” “Official Sturgis,” “Sturgis
Central,” “Sturgis Motor Classic,” and “Sturgis Rally” (collectively
referred to as “Defendants’ Sturgis Designations”), without SMRI’s
consent in a manner likely to cause confusion, mistake, or deception
as to the source, origin, sponsorship or approval of the defendant’s
product;
3. Diluting SMRI’s famous STURGIS® mark by blurring or
tarnishment;
4. Acting, using, or employing any deceptive act or practice, fraud,
false pretense, false promise or misrepresentation or concealed,
suppressed or omitted material facts in connection with the sale or
advertisement of any merchandise;
5. Registering, trafficking in, or using any domain name that is
identical to, confusingly similar to, or likely to dilute SMRI’s Marks,
including but not limited to AuthenticSturgis.com,
Legendary-Sturgis.com, LicensedSturgis.com, OfficialSturgis.com,
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SturgisCentral.com, SturgisMotorClassic.com, or
SturgisRallyOnline.com.
IT IS FURTHER ORDERED that, pursuant to 15 U.S.C. § 1118, the
enjoined defendants shall impound all products together with all labels, signs,
prints, packages, wrappers, receptacles, and advertisements bearing SMRI’s
Marks, Defendants’ Sturgis Designations, or any reproduction, counterfeit, copy,
or colorable imitation thereof, and all plates, molds, matrices, and other means
of making the same. Within ten (10) days following the issuance of this
preliminary injunction the enjoined defendants shall file in CM/ECF sworn
declarations detailing the enjoined defendants’ progress, including identifying
the amount and sources of products retrieved, the description of each item, the
location of impoundment and the extent to which impound is ongoing. The
enjoined defendants shall file supplemental reports every ten (10) days until the
court is reasonably satisfied the impoundment process is complete.
IT IS FURTHER ORDERED that, pursuant to 15 U.S.C. § l125(d)(l)(C), the
enjoined defendants shall not cancel, transfer or otherwise make changes to the
aforementioned domain name registrations, except in taking such actions as
necessary to effect the transfer of those domain names to SMRI.
IT IS FURTHER ORDERED that for a thirty (30) day period following entry
of this preliminary injunction SMRI shall not send any cease & desist letter,
instigate litigation or take other trademark enforcement action against any of the
defendants’ non-party retailers.

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IT IS FURTHER ORDERED that use of the name Sturgis or other phrases
which contain the name Sturgis in the distribution, marketing and sale of
non-rally-related Sturgis, South Dakota, products is not enjoined or prohibited
by this preliminary injunction.
IT IS FURTHER ORDERED that SMRI is not required to post security for
purposes of this preliminary injunction.
IT IS FURTHER ORDERED that the enjoined defendants shall immediately
notify all of their officers, agents, employees and all persons and entities in active
concert and participation with them of this preliminary injunction.
IT IS FURTHER ORDERED that this preliminary injunction is binding
upon defendants’ officers, agents, servants, employees, attorneys, and upon
those persons in active concert or participation with them who receive actual
notice of this preliminary injunction.
Dated February 11, 2016.
BY THE COURT:
/s/ Jeffrey L. Viken
JEFFREY L. VIKEN
CHIEF JUDGE

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