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

United States District Court, D. South Dakota, Western Division

February 11, 2016

STURGIS MOTORCYCLE RALLY, INC., Plaintiff,
v.
RUSHMORE PHOTO & GIFTS, INC.; JRE, INC., CAROL NIEMANN; PAUL A. NIEMANN; BRIAN M. NIEMANN; and WAL-MART STORES, INC., Defendants, RUSHMORE PHOTO & GIFTS, INC.; JRE, INC.; CAROL NIEMANN; PAUL A. NIEMANN; and BRIAN M. NIEMANN, Counterclaimants,
v.
STURGIS MOTORCYCLE RALLY, INC., Counterclaim Defendant.

ORDER GRANTING PRELIMINARY INJUNCTION

JEFFREY L. VIKEN, Chief Judge.

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.

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. § 1125(c)(1), 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.

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. § 1125(d)(1)(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 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. 2011) (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 ...

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