STURGIS | Citing a boost to the city’s coffers, City Manager Daniel Ainslie said Monday night the town needs to support the group that owns the trademark rights to Sturgis Motorcycle Rally in an upcoming court battle.
“Although the creation, defense and enforcement of the trademarks have proven to be quite contentious and divisive throughout the community, to date, it has produced the single largest return to the community,” he said to a packed room at Monday’s Sturgis City Council meeting.
The total value of the city’s licensing program in 2012 was $269,440 – $115,057 in sponsorship and $154,383 from magazine income, Ainslie said.
Ainslie said those funds have been reinvested into the community by funding the library, community center, parks, volunteer fire department and the police department.
“If these funds were eliminated, significant reductions in these services would be required or a very significant property tax increase would be necessary,” he said.
SMRi initiated a federal lawsuit in 2011 after it was allowed to register Sturgis, Sturgis Motorcycle Rally, Sturgis Rally & Races, Take the Ride to Sturgis and Sturgis Bike Week as patented trademarks. The organization claims that Rushmore Photo & Gifts and Wal-Mart have infringed on its trademarks by selling items that say “Sturgis” without getting the permission of SMRi. The courts recently have ruled the dispute should be heard by a jury.
City officials encouraged residents to attend Monday’s city council meeting to share any concerns they have with the city taking SMRi’s side in the fight to market the Sturgis name.
The council plans to take final action at its meeting on July 29.
SMRi President Dean Kinney told the council that if SMRi didn’t protect the trademarks, they could be lost to another organization.
“Cut through the rumors and wild accusations and ask yourselves, ‘who is really looking out for Sturgis?’” he said.
Jack Hoel, son of ‘Pappy’ Hoel, considered the founder of the Sturgis motorcycle rally, said the rally did pretty well for many years without SMRi.
“If you think they (SMRi) are in it because they are looking out for Sturgis, you are dead wrong. Don’t fall for that line,” he said. “We are not best served by one group controlling the words Sturgis or Black Hills.”
The city also pays SMRi to use the Sturgis name. Ainslie said the city paid Sturgis Motorcycle Rally Inc., $26,944 in 2012 in licensing fees so it could solicit rally sponsorships.
Hoel said that the city is setting itself up for liability by supporting SMRi.
“Given the fact that a city is deemed to have ‘deep pockets’ they will possibly pay a steep penalty for being on the wrong side,” he said.
“Though a very understandable concern, this would not occur,” he said. “The act of supporting an organization or having a representative on a nonprofit board does not financially bind one entity to another.”