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

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

June 10, 2016

STURGIS MOTORCYCLE RALLY, INC., Plaintiff,
v.
RUSHMORE PHOTO 85 GIFTS, INC.; JRE, INC., CAROL NIEMANN; PAUL A. NIEMANN; BRIAN M. NIEMANN, and WAL-MART STORES, INC., Defendants, AND RUSHMORE PHOTO 85 GIFTS, INC.; JRE, INC., CAROL NIEMANN; PAULA. NIEMANN; and BRIAN M. NIEMANN, Counterclaimants,
v.
STURGIS MOTORCYCLE RALLY, INC., Counterclaim Defendant.

          ORDER AUTHORIZING THE RPG DEFENDANTS TO MARKET CERTAIN SYMBOLS AND ARTWORK

          JEFFREY L. VIKEN CHIEF JUDGE.

         INTRODUCTION

         On May 13, 2016, during a hearing held on a number of matters, the defendants Rushmore Photo 85 Gifts, Inc., Carol Niemann, Paul A. Niemann, and Brian M. Niemann ("RPG Defendants") orally moved for authorization to market the symbols and artwork contained in Exhibit A and Exhibit D of Docket 308-1. The court entered an order requiring plaintiff to file its brief in response to the oral motion and requiring the RPG Defendants to file a reply brief. (Docket 344 at p. 3). Plaintiff opposes the RPG Defendants' motion (Docket 347). For the reasons stated below, the RPG Defendants' oral motion is granted.

         ANALYSIS

         On February 11, 2016, the court entered a preliminary injunction. (Docket 299). Relevant to the present oral motion, the preliminary injunction contained the following directive:

IT IS FURTHER ORDERED that defendants RUSHMORE PHOTO 85 GIFTS, INC., CAROL NIEMANN, PAUL A. NIEMANN, BRIAN M. NIEMAN and WAL-MART 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;[1]
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 85 RACES BLACK HILLS S. D., U.S. Reg. No. 1, 948, 097;
D. STURGIS MOTORCYCLE RALLY, a common law trademark;
E. STURGIS RALLY 85 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, SturgisCentral .com, SturgisMotorClassic.com, or SturgisRallyOnline.com.

Id. at pp. 8-10.

         SMRI's registered and common law trademarks are specifically limited to the motorcycle rally event held annually in Sturgis, South Dakota. See United States Patent and Trademark Office Registrations: No. 3, 923, 284; No. 2, 070, 955; No. 3, 825, 398; No. 3, 838, 171; No. 3, 911, 270; and No. 3, 923, 236. (Trial Exhibit 1 at pp. 2, 7-8 85 10-12). For this reason, the preliminary injunction contained a provision specifically excluding certain material from the conduct being enjoined:

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.

Id. at p. 11.

         "[T]he legal posture of this case places a heavier burden upon the [RPG Defendants] of avoiding a colorable imitation of or diluting [SMRI's] trade . . . marks than upon a party not already preliminarily enjoined from engaging in such activity." Howard Johnson Co. v. Khimani, 892 F.2d 1512, 1517 (11th Cir. 1990). "The effect of an injunction barring the use of plaintiff's trademark is also a bar to the use of any words in close imitation or resemblance to the mark." World's Finest Chocolate, Inc. v. World Candies, Inc., 409 F.Supp. 840, 845 (N.D. 111. 1976), aff'd, 559 F.2d 1226 (7th Cir. 1977. "It is well established that the protection of a trademark requires that a party once [found liable for] infringement or unfair competition should keep a safe distance from the margin line between compliance with the order and a violation." Id. at 844 (referencing Independent Nail & Packing Co. v. Stronghold Screw Products, Inc., 215 F.2d 434, 436 (7th Cir. 1954), and Broderick & Bascom Rope Co. v. Manoff, 41 F.2d 353, 354 (6th Cir. 1930)). "Like the original infringement itself, the safe distance rule is 'founded on a likelihood of confusion standard.' " John Allan Co. v. Craig Allen Co. L.L.C., 540 F.3d 1133, 1142 (10th Cir. 2008) (citing Taubman Co. v. Webfeats, 319 F.3d 770, 779 (6th Cir. 2003) (quotation omitted)). Where the defendants have been held responsible for "infringing the trade-mark rights of others, they should thereafter be required to keep a safe distance away from the dividing line between violation of, and compliance with, the injunction. They must do more than see how close they can come with safety to that which they are enjoined from doing." Eskay Drugs v. Smith, Kline & French Laboratories, 188 F.2d 430, 432 (5th Cir. 1951).

         The court "possesses broad discretion to vindicate the preliminary injunction by prohibiting subsequent modifications that do not move a 'safe distance' away from the trademark infringement." Sunbeam Products, Inc. v. W. Bend Co., 123 F.3d 246, 260 (5th Cir. 1997). See also Scandia Down Corp. v. Euroquilt, Inc., 772 F.2d 1423, 1432 (7th Cir. 1985) (The court "possesses substantial discretion to decide how close is too close . . . ."). "The court may require the [defendants] to choose a distinctively different mark rather than to hew so close to the line that the parties must interminably return to court to haggle about every mark." Id. "Having once determined that the plaintiff was ...


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