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

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
WESTERN DIVISION
STURGIS MOTORCYCLE RALLY,
INC.,
Plaintiff and
Counterclaim Defendant,
vs.
RUSHMORE PHOTO & GIFTS,
INC.; JRE, INC.; CAROL
NIEMANN; PAUL A. NIEMANN;
BRIAN M. NIEMANN; and
WAL-MART STORES, INC.,
Defendants and
Counterclaim Plaintiffs.
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CIV. 11-5052-JLV
ORDER OVERRULING
OBJECTIONS AND
ADOPTING SECOND
REPORT AND
RECOMMENDATION
INTRODUCTION
On November 13, 2013, defendants filed a second motion for summary
judgment seeking dismissal of all of plaintiff’s claims in the first amended
complaint. (Docket 114). The court referred the motion to Magistrate Judge
John E. Simko for a report and recommendation pursuant to 28 U.S.C. § 636.
(Docket 117). On May 29, 2014, Magistrate Judge Simko filed a report
recommending the court deny defendants’ second motion for summary
judgment. (Docket 127). The parties timely filed objections. (Dockets 128 &
129). The parties also filed responses to the opposing party’s objections.1
(Dockets 130 & 131).
Fed. R. Civ. P. 72(b)(2) allows a party to respond to an opposing party’s1
objections.
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The court reviews de novo those portions of the report and
recommendation which are the subject of objections. Thompson v. Nix, 897
F.2d 356, 357-58 (8th Cir. 1990); 28 U.S.C. § 636(b)(1). The court may
then “accept, reject, or modify, in whole or in part, the findings or
recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1).
For the reasons stated below, the parties’ objections are overruled. The
court adopts the report and recommendation of the magistrate judge.
DISCUSSION
DEFENDANTS’ OBJECTIONS
Defendants object to the May 29, 2014, report and recommendation of
Magistrate Judge Simko (“R&R #2”) and ask the court to “grant summary
judgment on the basis that STURGIS is invalid for lack of secondary meaning
because there are no genuine issues relating to any material fact.” (Docket 128
at p. 1). Defendants’ objections are summarized as:
1. Widespread use of STURGIS by Rushmore and hundreds of2
others rebuts the presumption of secondary meaning of the § 2(f)
registration;
2. Sturgis Motorcycle Rally, Inc. (“SMRI”) never had “long and
exclusive use” for STURGIS so as to have acquired secondary
meaning;
“Rushmore” is commonly used to refer to defendants Rushmore Photo &2
Gifts, Inc., Carol Niemann, Paul A. Niemann, and Brian M. Niemann.
2
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3. Extensive evidence of use by Rushmore and others distinguishes
this case from the Lovely Skin holding; and3
4. The issues of fact identified by the magistrate judge are neither
accurate nor complete.
(Docket 128 at pp. 4, 9, 10 & 11). Each objection will be separately addressed.
1. WIDESPREAD USE OF STURGIS BY RUSHMORE AND HUNDREDS OF
OTHERS REBUTS THE PRESUMPTION OF SECONDARY MEANING OF
THE § 2(F) REGISTRATION
Defendants argue the court “supported by a 12-page fact appendix, has4
once already held that STURGIS ‘was commonly used by hundreds of others
during the time plaintiff represented its exclusive use of STURGIS.’ ” Id. at p. 1
(citing Docket 107 at pp. 8-9). Defendants assert “[t]his ‘common use’ of
STURGIS by ‘hundreds of others’ is the very basis for finding that SMRI’s use
was not ‘substantially exclusive’ and it defeats any argument that use by
others was de minimis. And yet, [R&R #2] cites de minimis use as the basis to
deny Defendant[s’] motion. This is clear error.” Id. Defendants submit the
court’s earlier finding rebuts the presumption of secondary meaning claimed in
the 2(f) registration of February 22, 2011. Defendants ask the court to reverse
the decision of the magistrate judge “in not finding that Defendants had
rebutted the presumption of secondary meaning as of the effective registration
Lovely Skin, Inc. v. Ishtar Skin Care Products, LLC, 745 F.3d 877 (8th3
Cir. 2014).
(Docket 107-1).4
3
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date, as the Court’s previous findings and the extensive evidence in the record
conclusively establishes widespread common use of STURGIS by others before
SMRI gained registration.” (Docket 128 at p. 5) (emphasis in orginal).
By the earlier order (Docket 113), the court adopted that portion of the
first report and recommendation (“R&R #1”) which concluded:
Fraud on the [Patent and Trademark Office (“PTO”)] presents a fact
question to be decided by a jury. Contrary to the presentation
Plaintiff Sturgis made to the PTO about its exclusive use of STURGIS,
the term was commonly used by hundred of others during the time
plaintiff represented its exclusive use of STURGIS. But there is a fact
question for a jury to decide—was it the intention of Plaintiff Sturgis
to defraud the PTO?
There is a fact question to identify into which category of
distinctiveness STURGIS falls. There is also a fact question whether
STURGIS has acquired distinctiveness as a result of secondary
meaning, and if so, whether the distinctiveness identifies plaintiff
Sturgis as the source of products or whether the secondary meaning
of STURGIS is the event itself.
(Docket 107 at pp. 8-9) (italics in original). In R&R #2, the magistrate judge
expanded upon and clarified these factual issues. “[T]rademarks which are
merely descriptive cannot be registered unless the mark has become distinctive
of those particular goods in commerce.” (Docket 127 at p. 6) (referencing
Lovely Skin, 745 F.3d at 882). “[T]he chief inquiry is whether in the
consumer’s mind the mark has become associated with a particular source.”
Id. (citing Lovely Skin, 745 F.3d at 882). This is the focus of the first set of
factual issues identified in R&R #1. Id.
4
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The second set of questions posed in R&R #1 “address[] Rushmore’s
claim that SMRI did not have ‘substantially exclusive’ use of STURGIS for five
years before the date on which SMRI claimed distinctiveness.” Id. at p. 7. R&R
#2 acknowledges:
[Rushmore] and hundreds of vendors have used STURGIS when
SMRI represented to the PTO that SMRI had “substantially exclusive”
use of STURGIS goes a long way toward satisfying Rushmore’s
burden to establish a prima facie case of no secondary meaning, but
not all the way. . . . Rushmore must prove to the jury that
Rushmore’s and other vendors’ uses of STURGIS were substantial
enough so that SMRI did not have “substantially exclusive” use of
STURGIS and STURGIS had in fact not acquired a distinctive
meaning when SMRI represented to the PTO that STURGIS had
acquired a distinctive meaning because SMRI had been using it
“substantially exclusively.”
(Docket 127 at p. 8). In other words, SMRI’s declaration of “substantially
exclusive” use of STURGIS as alleged in the 2(f) registration in 2011 may
ultimately be disproved by Rushmore’s evidence, but that challenge remains a
jury question. Whether the claim of substantially exclusive use in the 2011
registration was true, or false and made with the intent to defraud and mislead
the PTO, remains a jury question. This is the conclusion reached in denying
defendants’ first motion for summary judgment. “[D]efendants’ evidence does
not rise to the standard of clear and convincing evidence required to make5
“Whether the submission . . . to the Patent and Trademark Office was5
‘greatly exaggerated,’ ‘disingenuous,’ not reflective of a lack of ‘uncompromising
candor,’ or false with the intent to mislead the Patent and Trademark Office
must be established by ‘clear and convincing’ evidence.” (Docket 113 at p. 46)
(citing Orient Express Trading Co., Ltd. v. Federated Department Stores, Inc.,
842 F.2d 650, 653 (2d Cir. 1988)).
5
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such a determination during the summary judgment analysis.” (Docket 113 at
p. 46).
Fact issues remain which compel the court to deny defendants’ second
motion for summary judgment. Defendants’ first objection is overruled.
2. SMRI NEVER HAD “LONG AND EXCLUSIVE USE” FOR STURGIS SO
AS TO HAVE ACQUIRED SECONDARY MEANING
Defendants argue the magistrate judge erred because the “record
establishes that SMRI never had ‘long and exclusive use’ such that the relevant
consumer’s [sic] would associate STURGIS denoting a single thing coming from
a single source.” (Docket 128 at p. 9) (quoting Aromatique, Inc. v. Gold Seal,
Inc., 28 F.3d 863, 870 (8th Cir. 1994) (other citations omitted).
“In determining whether a mark has acquired distinctiveness, i.e.,
secondary meaning, ‘the chief inquiry is whether in the consumer’s mind the
mark has become associated with a particular source.’ ” Lovely Skin, 745 F.3d
at 882 (quoting Co-Rect Products, Inc. v. Marvy! Advertising Photography, Inc.,
780 F.2d 1324, 1332-33 (8th Cir.1985)). “A mark registered on the Principal
Register is presumed to be valid . . . and the presumption of validity is a strong
one.” Id. (referencing 15 U.S.C. § 1057(b), internal quotation marks and
citation omitted). “[T]he presumption of validity that attaches to a § 2(f)
registration includes a presumption that the registered mark has acquired
distinctiveness, or secondary meaning, at the time of its registration.” Id. at
882.
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For the same reasons stated above in response to defendants’ first
objection, this objection is overruled. The question remains—and it remains a
fact question to be resolved by the jury—has the registered mark acquired
distinctiveness, that is, secondary meaning? Resolution of this jury question
relies in substantial part on determining whether in the mind of a consumer
the STURGIS mark is associated with a particular source. Lovely Skin, 745
F.3d at 882. R&R #2 properly identified this as a jury question. (Docket 127
at p. 9). Defendants’ second objection is overruled.
3. EXTENSIVE EVIDENCE OF USE BY RUSHMORE AND OTHERS
DISTINGUISHES THIS CASE FROM THE LOVELY SKIN HOLDING
Defendants object to the magistrate judge comparing Lovely Skin as a
“road map” for the analysis in this case. (Docket 128 at p. 10). “And when the
‘road map’ of Lovely Skin is applied to the evidence of record, this case is
readily distinguishable from the facts of Lovely Skin.” Id.
The court concluded its analysis of defendants’ first two objections
recognizing the guidance offered by Lovely Skin and the other cases cited
above. The current objection is simply a restatement of defendants’ earlier
objections and requires no separate resolution by the court.
Defendants’ third objection is overruled.
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4. THE ISSUES OF FACT IDENTIFIED BY THE MAGISTRATE JUDGE
ARE NEITHER ACCURATE NOR COMPLETE
Defendants object to the list of fact questions identified in R&R #2 which
need to be resolved at trial. (Docket 128 at pp. 11-14). The court views the
fact questions posed in R&R #2 as simply illustrative, and not all-inclusive, of
the issues remaining for trial. The court will independently determine what
fact issues remain for trial during the pretrial conference. No separate
resolution of defendants’ objections need be conducted at this juncture.
Defendants’ fourth objection is overruled.
PLAINTIFF’S OBJECTIONS
Plaintiff “submits the following objections pertaining to the factual issues
which have carried over from Defendants’ first summary judgment motion into
[R&R #2]. The Magistrate made no new findings and thus Plaintiff is limiting
its submission to renewing prior objections. Plaintiff’s limited objections as set
forth below are identical to those made to [R&R #1] . . . and include a summary
notation of the Court’s resolution or ruling on the various, previously
submitted objections.” (Docket 129 at p. 2).
The court previously resolved plaintiff’s objections to R&R #1. See
Docket 113. The court will not revisit plaintiff’s objections or the court’s earlier
rulings. For these reasons, plaintiff’s objections are overruled.
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ORDER
Based on the above analysis, it is hereby
ORDERED that defendants’ objections (Docket 128) are overruled.
IT IS FURTHER ORDERED that plaintiff’s objections (Docket 129) are
overruled.
IT IS FURTHER ORDERED that the second report and recommendation
(Docket 127) is adopted by the court.
IT IS FURTHER ORDERED that defendants’ motion for summary
judgment (Docket 114) is denied.
IT IS FURTHER ORDERED that plaintiff’s motion for leave to conduct
additional discovery (Docket 119) is denied. Following consultation with the
parties, the court will enter a scheduling order for trial of the case.
Dated September 24, 2014.
BY THE COURT:
/s/ Jeffrey L. Viken
JEFFREY L. VIKEN
CHIEF JUDGE
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