STURGIS – Virginia Rhodes Cycle Shirts’ business operates at the epi-center of the Sturgis Motorcycle Rally – Lazelle Street and Junction Avenue.

But the long-time vendor said she is glad to be on the sidelines when it comes to the Sturgis trademark controversy.

She’s been a fixture at the rally for more than 50 years and left for a three years before returning again this year. She is one of few vendors who don’t pay royalties to Sturgis Motorcycle Rally Inc., the stewards of the Sturgis Brand.

“When the lawsuit came up, we were mentioned by the judge as being the first people ever to use it. So we get to use it,” she said of the Sturgis Bike Week name.

In the 1990s, Cycle Shirts sold the rights to the name to Sturgis Bike Week Inc. whose primary members were Bob Davis, Francie Reubel-Alberts and Gary Lippold. Then, in 2009, Sturgis Bike Week Inc. sold the intellectual property to the Sturgis Area Chamber of Commerce. The deal included the Sturgis Bike Week name, trademark, website, copyrighted artwork and several domain names.

But it also stipulated that Rhodes and her Cycle Shirts business would not have to pay to use the name.

“When I sold it to Robert Davis and his people it was with rights to use it forever for myself and my heirs,” she said. “I have another letter from the Chamber that was from 1978 that gave me more things that I could do.”

Rhodes said she knew that if she sold the logo she had better protect herself.

“I think it’s set in concrete,” she said.

Rhodes said business has been good. People recognize her bright red cargo truck with the famous 3 shirts for $30 message. Also recognizable are the long tables holding a rainbow of Rally shirts. Rhodes grandson, Alan Bohannon, an internal audit manager for Books-A-Million, now owns Cycle Shirts. He and his mom, Lisa help out during Rally week.

Down Lazelle Street from Rhodes, Armando Lorenz, manager of Biker Clothing Company, said he was pleased to see Rhodes set up on the corner this year.

He said it was a great reminder of a more simple time for business people at the Rally.

Lorenz is hoping to see some resolution to a court case concerning the Rally trademarks.

He said that when he realized a few years back that the money for the royalties on each “officially licensed” Sturgis item was not going directly to help the town of Sturgis he was disheartened.

“I’m a fair guy, but you owning the name of a town? It’s not fair that one single person, or company is getting all this, especially when they did not invent it,” he said.

Although Lorenzo wouldn’t say the name of Sturgis Motorcycle Rally Inc., or individual members of the SMRI board of directors, he did confirm when asked that it was the organization to which he and countless others at the Rally pay royalties to use the word Sturgis.

SMRI, who call themselves the official stewards of the Sturgis brand, were dealt a blow in the past year when two separate courts ruled that they did not own or have valid trademark rights to names “Sturgis,” “Sturgis Rally & Races,” and “Sturgis Motorcycle Rally.”

A federal appeals court ruled in November 2018 that SMRI doesn’t own the Rally or its intellectual property. Then in February, Judge Jeffrey Viken of the U.S. District Court, District of South Dakota, Western Division ruled the same saying “The record does not support a finding that SMRI owns, produces, or operates the rally, or does anything else that might allow it to acquire ownership over the rally itself or its intellectual property.”

Sturgis Motorcycle Rally, Inc., was born in June of 2010 when the Sturgis Chamber of Commerce board voted to convey the trademarks to a new organization. Chamber board members then knew it would take deep pockets to fight for the trademarks.

SMRI spends hundreds of thousands of dollars each year on the fight.

SMRI has been overseeing the Officially Licensed Sturgis products since 2010. And they do give a portion of what they earn from the royalties - $50,000 - back to the Sturgis Rally Charities each year to benefit local nonprofits.

Although many rally vendors objected to paying the licensing fee, they signed contracts with the group. That is except for Rapid City’s Rushmore Photo & Gifts.

So, in 2011 SMRI sued them with a trademark infringement lawsuit. After four years of litigation, a jury rendered a verdict in favor of SMRI, awarding it $912,500 in damages. The award was later vacated by a judge.

The rulings this past year have reversed the course and left SMRI licensees and other interested parties confused.

The case remains in litigation. United States Magistrate Judge Daneta Wollmann reports that SMRI and Rushmore Photo & Gifts were unable to reach a settlement agreement in the case following a settlement conference this spring. That means that the current motions related to the Sturgis trademark case are being considered by Judge Viken who has yet to issue a decision.

This past year’s decisions have actually helped fill rally vendor spaces for Sturgis real estate agent Dave Wilson.

“I’ve actually sold out better than I have for years. It’s the trademark thing being gone. People are coming back,” Wilson said prior to this year’s Rally. “Nothing against the trademark. The vendors don’t mind paying the city, but they object to who gets all the money. The money is not going to the city.”

Wilson said many of the “mom and pop” vendors who don’t have volumes of items to sell, but want to sell something with the Sturgis name on it had been driven away from the Rally by the trademark licensing requirement, but are now returning.

The city of Sturgis has a licensing agreement with SMRI to use the rally trademarks, and annually pays a royalty to the organization, said Sturgis City Manager Daniel Ainslie. In 2018, that payment was $83,375. In 2019, it is anticipated that the city will pay SMRI $87,777 through its licensing agreement.

“We were hopeful that all sides (in the trademark case) would come to an agreement, but unfortunately that didn’t happen,” Ainslie said. “Honestly, everything is still in litigation. Until there is a clear path forward, we’re proceeding as is.”

When vendors this year asked about whether or not they had to pay royalties, Ainslie said the city told them the case is still pending.

“We advised them to contact SMRI for clarification on that,” he said.

Dean Kinney, chairperson of SMRI, said the case remains very complicated with many legal issues outstanding.

“We would urge potential sellers of Sturgis Rally product to seek their own legal advice,” Kinney said. “SMRi has no generalized guidance as to what our enforcement plans may be, except to say that this not-for-profit, managed entirely by a volunteer board, continues to hold a large portfolio of Sturgis Rally-related trademarks, service marks and copyrights that it intends to protect on behalf of the greater Sturgis area.”

In 2011, the trademark issue surfaced in Daytona where each year in March the city hosts Bike Week.

It was then that an Orlando federal judge ruled that "Bike Week Daytona Beach" is a label that anyone can use and nobody can own.

U.S. District Court Judge Mary S. Scriven canceled a state trademark and any attempts to claim a federal trademark for Bike Week by a Brooklyn, N.Y., company, Consolidated Distributors, that prints souvenir T-shirts.

The Daytona Regional Chamber of Commerce, representing several businesses that profit from the event, fought the trademark claim. If Consolidated had prevailed, it could have prevented souvenir shops, hoteliers, bars and other businesses from using the term and might have required them to pay royalties just like in Sturgis.

Biker Clothing Company, based in Daytona Beach, first started coming to Sturgis in 2014 just before the 75th Sturgis Motorcycle Rally.

Company executives continue to follow the Sturgis Motorcycle Rally Inc. court case, Lorenz said.

“They are figuring all that stuff out. I’m just making sure that we are making the money here,” he said.

When Lorenz heard the February court verdict he said he was excited to think that there would no longer be royalties to pay on Sturgis merchandise.

The business environment in Sturgis can be fickle. Lorenz said that he and others understand that during an anniversary year, such as the upcoming 80th, there is money to be made, but on the off years, it can be a gamble to set up shop.

“You hope to come home with enough money to pay your mortgage and your student loans. You do all this work. You pay your employees. You pay your taxes and you’re left with nothing. It’s kind of unfair,” he said.

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