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

908 F.3d 313

STURGIS MOTORCYCLE RALLY, INC., Plaintiff-Appellee

v.RUSHMORE PHOTO & GIFTS, INC. ; JRE, Inc.; Carol Niemann; Paul A. Niemann; Brian M. Niemann; Wal-Mart Stores, Inc., Defendants-Appellants

Sturgis Motorcycle Rally, Inc., Plaintiff-Appellant

v.Rushmore Photo & Gifts, Inc. ; JRE, Inc.; Carol Niemann; Paul A. Niemann; Brian M. Niemann; Wal-Mart Stores, Inc., Defendants-Appellees

Sturgis Motorcycle Rally, Inc., Plaintiff-Appellee

v.Rushmore Photo & Gifts, Inc. ; JRE, Inc.; Carol Niemann; Paul A. Niemann; Brian M. Niemann; Wal-Mart Stores, Inc., Defendants-Appellants

Sturgis Motorcycle Rally, Inc., Plaintiff-Appellant

v.Rushmore Photo & Gifts, Inc. ; JRE, Inc.; Carol Niemann; Paul A. Niemann; Brian M. Niemann; Wal-Mart Stores, Inc., Defendants-Appellees

No. 17-1762

No. 17-1869

No. 17-2712

No. 17-2731

United States Court of Appeals, Eighth Circuit.

Submitted: June 14, 2018

Filed: November 2, 2018

Counsel who presented argument on behalf of the appellant was Eric H. Chadwick, of Minneapolis, MN. The following attorney(s) appeared on the appellant brief; Brian L. Stender, of Minneapolis, MN.

Counsel who presented argument on behalf of the appellee was Jason M. Sneed, of Davidson, NC. The following attorney(s) appeared on the appellee brief; Courtney R. Clayborne, of Rapid City, SD., Michael C. Loos, of Rapid City, SD., Charles Marvin Landrum, III, of Roswell, GA., Megan E. Sorokes, of Davidson, NC.

Before WOLLMAN, ARNOLD, and KELLY, Circuit Judges.

ARNOLD, Circuit Judge.

Since 1938, a motorcycle rally has occurred almost every August in and around the City of Sturgis, South Dakota. It was the brainchild of Clarence "Pappy" Hoel, who in the late 1930s owned the local Indian motorcycle dealership and founded a local motorcycle club, the Jackpine Gypsies.

To this day, the Jackpine Gypsies host the motorcycle races around which the rally first began. By the late 1970s, the rally was attracting several thousand people each year to the Black Hills of South Dakota, and the rallygoers had started to attract independent vendors, who sold them rally-related souvenirs like t-shirts, pins, and other knickknacks. In 1986, Tom Monahan, a local artist and vendor, donated a composite mark for the rally to the Sturgis Area Chamber of Commerce, which had recently accepted a central role in promoting the rally: One of the rally's supporters had joined forces with the Chamber, turning it into the primary source of information for people interested in attending.

In 1987, the Chamber debuted a licensing program for the Monahan mark. The mark is in the shape of a circle horizontally bisected by two motorcycles and the word "Sturgis." The words "Black Hills Motor Classic" are written in an arc pressed against the upper bounds of the circle. Filling in the rest of the circle's upper half are ten stars, also in an arc, and the head of a bird of prey in profile, facing right. In its lower half, six buffalo walk along the circle's edge. Written above them, in a curve parallel to the circle's lower edge, are the words "Rally & Races Black Hills S.D." Finally, a couple feathers dangle from each end of the section that bisects the circle. The Chamber advertised that products displaying the mark could be called "officially licensed." The Chamber registered the mark federally in 1996 and, in the 2000s, acquired two word marks that some rally vendors had also registered federally: "Sturgis Bike Week" and "Take the Ride to Sturgis." These three marks are only some of the many words and designs that vendors have used to associate their goods and services with the rally, which has come to be known by many names, including just "Sturgis."

The Sturgis motorcycle rally is now the largest such rally in the world, bringing several hundred thousand people and many millions of dollars into the region each year. In 2010, the Chamber assigned its rally-related marks to Sturgis Motorcycle Rally, Inc. (SMRI), an entity it helped create that year. SMRI's sole purpose is to license its marks to others. It, as the Chamber did before it, advertises that the profits from its licensing program will go to support the City of Sturgis. The Chamber used that sales pitch for decades to convince vendors to buy a license to display the Monahan mark on their rally-related goods. Today, however, the licensing program seeks to control virtually all rally-related merchandise, asserting that if a vendor wants to sell an item using the geographic terms "Sturgis" or "Black Hills" in conjunction with the rally, he must first apply for and receive a license from SMRI that will cost him about eight percent of the wholesale price of each item sold.

Paul and Carol Niemann, along with their son Brian Niemann, own Rushmore Photo & Gifts, Inc., a souvenir provider in Rapid City, South Dakota, that for years sold a long line of goods related to the rally, including some that it used to advertise were "officially licensed" even though they were not. With the sole exception of some postcards it once created that displayed the Monahan mark, Rushmore has not asked the Chamber or SMRI for permission to sell its rally-related products, many of which display the word "Sturgis" or the name "Sturgis Motor Classic." In 2011, on receiving a federal registration for the word mark "Sturgis" when used on goods and services related to the rally, SMRI sued Rushmore, the Niemanns, JRE, Inc. (a dissolved South Dakota corporation that Paul and Carol Niemann had owned), and Wal-Mart Stores, Inc. (which had retailed some of Rushmore's rally-related products). In its amended complaint, SMRI alleged that the defendants, through their participation in the selling of Rushmore's unlicensed rally-related products, had violated several provisions of the Lanham Act, see 15 U.S.C. § 1051 et seq. , and related South Dakota statutes. The defendants, in their answer, filed several counterclaims against SMRI.

A jury rendered a verdict in favor of SMRI, awarding it $912,500 in damages. The district court largely denied the defendants' motion for judgment as a matter of law, but granted it as to JRE since JRE is a dissolved corporation without any assets. The district court also held that SMRI is estopped by laches and acquiescence from recovering damages from the defendants. The district court entered a permanent injunction against the remaining defendants and awarded SMRI some costs, but not fees. The defendants appeal from the judgment below, and SMRI cross-appeals from several of the district court's orders.

I

As an initial matter, SMRI maintains that we should vacate the district court's decision on the defendants' motion for judgment as a matter of law because their post-verdict renewal of it was defective. SMRI contends that it was defective because even though the defendants timely filed it, see Fed. R. Civ. P. 50(b), they did not submit a brief in support of it until after the trial transcript had been docketed, a process that took more than four months. SMRI appears to assume that a motion is defective under Federal Rule of Civil Procedure 7(b)(1)(B) if a supporting brief is not filed during its filing period. But that is not so. Rule 7(b)(1)(B) provides only that the motion must "state with particularity the grounds for seeking the order" requested. In their Rule 50(b) motion, the defendants set forth nine grounds for their request. We have held that a Rule 50(b) motion satisfies Rule 7's particularity requirement when the Rule 50(a) motion being renewed had satisfied it. See Hinz v. Neuroscience, Inc. , 538 F.3d 979, 984 (8th Cir. 2008). SMRI does not contend, however, that the defendants' Rule 50(a) motion did not provide it with sufficient notice of their arguments or a meaningful opportunity to respond, the twin purposes behind Rule 7(b)(1)(B). Id. at 983. Since it appears that the defendants' Rule 50(a) motion stated with particularity the grounds for relief that they renewed in their Rule 50(b) motion, we conclude that the district court properly considered the defendants' renewed motion.

SMRI argues that the district court also erred in holding that the defendants are not estopped from challenging the validity of its marks despite the fact that Rushmore once licensed the Monahan mark from the Chamber. Licensee estoppel is an equitable doctrine, see Restatement (Third) of Unfair Competition § 33 cmt. d (Am. Law. Inst. 1995), and we have apparently not addressed what standard of review applies here. The parties do not address the issue, either, but since we hold that the district court did not err, we leave the question of the standard of review for another day.

Licensee estoppel precludes only licensees of a mark from contesting it; "other parties, even those closely affiliated with the licensee, are not foreclosed." Fair Isaac Corp. v. Experian Info. Sols., Inc. , 650 F.3d 1139, 1150 (8th Cir. 2011). So, at most, the doctrine would apply to Rushmore, leaving the other defendants free to challenge SMRI's marks. Although "an alter ego of the licensee ... may also be estopped from challenging" the licensed mark, id. , SMRI does not argue that any of Rushmore's co-defendants are its alter ego. Rushmore, moreover, licensed only the Monahan mark from the Chamber. The license's preamble, to be sure, stated that the Chamber owned not only the Monahan mark, but "the protected language ‘Black Hills Motor Classic’, ‘Sturgis Rally & Races’ and ‘Black Hills Motorcycle Rally & Races.’ " SMRI contends that by signing that agreement Rushmore admitted that all of the Chamber's marks are valid. The rule of licensee estoppel, however, generally covers only the mark that the licensee has agreed "to use" since by agreeing to pay to use it "the licensee effectively recognizes [its] validity." See Idaho Potato Comm'n v. M&M Produce Farm & Sales , 335 F.3d 130, 135 (2d Cir. 2003). That assumption, however, is problematic because there are many reasons someone might seek to license a property the validity of which he doubts: It may,...