MAKING THE RALLY ROAR WHILE PROVIDING A RETURN TO THE LOCAL COMMUNITY: TRADEMARK PROTECTION AND THE STURGIS MOTORCYCLE RALLY.

• Author: Sneed, Jason M.

1. INTRODUCTION

   For entertainment events held in an arena, a stadium, or a concert hall, the formula for profitability can be straightforward. The event promoter seeks to generate more revenues from gate receipts, concessions, and merchandise sales than the costs associated with details such as rent and talent or food, beverages, and merchandise sold to attendees.

   However, some events primarily occur in public spaces without the benefit of a gate at which admission may be charged. Often, the event promoter bears the brunt of costs associated with the event, including anything from security to traffic control, from sanitation to emergency management, from advertising and promotion to housing and feeding the employees and volunteers who staff the event. For these events, generating a profit can be challenging.

   Motorcycle rallies present particular challenges for the towns and communities responsible for providing event infrastructure. Rally attendees are, by their nature, mobile, traveling miles within a day, and more likely to purchase a meal or buy a souvenir at least fifty miles from the event "headquarters" or where the attendees stay the night. Yet the event "headquarters" may be a particular city or town in which area entrepreneurs set up massive tents, temporarily lease storefronts for merchandise sales, or fill their restaurants and bars during the duration of the event. One local community discovered a partial solution to solving this challenge: trademark protection and licensing.

   The biggest and best-known event in the world of motorcycle tourism is the Sturgis Motorcycle Rally, (1) annually attracting over a half-million bikers and tourists to Sturgis, South Dakota, a town of just over 6,000 annual residents. (2) For decades, the Sturgis Area Chamber of Commerce bore the responsibility for promoting the Sturgis Motorcycle Rally event, providing consumers with information, and working with the City of Sturgis to manage event logistics. The event's popularity continually increased from its origination in 1938 as a series of motorcycle races through the 1980s and 1990s to an event drawing hundreds of thousands of tourists and biking enthusiasts to Western South Dakota each August. (3) As the event's popularity grew, the costs and time necessary to sustain this responsibility overwhelmed the Chamber. (4) Moreover, while the City recovered some of its costs from property rentals, vendor fees, and increased taxable sales, both the City and the Chamber struggled to recoup the costs incurred managing and promoting an event of this magnitude. (5)

   Trademark protection and licensing can serve as a partial solution to generating revenue to fund an event, whether it is confined within an arena or spanning across miles of the Black Hills region. This article will outline an organizational blueprint for a community to capture revenues so as to sustain the management of a major tourism event. It will further evaluate the successes and the challenges the managing entity and municipality face to provide a return to the community, a community whose citizens each summer endure a week of loud entertainment, early mornings and late nights of engine roars, traffic congestion, and all the other challenges masses of tourists bring to a small community.

2. TOURISM AND THE STURGIS MOTORCYCLE RALLY EVENT

   The travel industry is the seventh largest employer in the private sector. (6) In 2017, Americans spent $1 trillion in traveler spending, which generated $2.4 trillion in economic output and supported 15.6 million American jobs. (7) Every year, Americans travel for business and leisure, to attend meetings, conferences, concerts, sporting events, festivals, and -importantly among them- the Sturgis Motorcycle Rally event.

   Each August, the Black Hills region of South Dakota roars as over half a million motorcycle enthusiasts ride, haul, and ship their bikes to the small town of Sturgis, South Dakota for the Sturgis Motorcycle Rally event. (8) The influx of bikers creates a flood of expenses, including supplies, insurance, rental and leasing, repairs and maintenance, housing, utilities, sanitation, and inspection fees and promotions. In addition, the City employs additional law enforcement and emergency or medical staff to assist with managing the event. (9) The total expenses associated with promoting and managing the Sturgis Motorcycle Rally event have recently exceeded $1 million each year. (10)

   For South Dakota, the annual event generates not only major influxes in traffic flow, but also major increases in consumer spending, some of which directly and indirectly impacts the City of Sturgis and its citizens. On average, approximately 500,000 visitors attend the Sturgis Motorcycle Rally event each year, and according to Rally statistics for 2017, each attendee spends an average of $198.00 a day while at the event. (11) Most attendees will spend around five and a half days in the Black Hills during the event, (12) and approximately twenty-five percent of visitors will spend at least one night in eastern South Dakota on their way to or from the event, generating a direct impact of $31,250,000 in other areas of the state. (13) Overall, the Sturgis Motorcycle Rally event created a total of $655,129,411 in direct economic impact to South Dakota in 2018. (14) Such spending generates tourism taxes, such that, in 2018, South Dakota collected over $245,000.00 in tourism taxes pertaining to the rally. (15) This represented 3.6 percent of the total budget for the State Department of Tourism, making it the single largest event contributor to the Department's budget. (16)

   Indirectly, the Sturgis Motorcycle Rally event generated an additional economic impact of $131,025,882 to the State in 2018. (17) Many manufacturing and retail businesses, such as Polaris, Harley-Davidson, Indian Motorcycles and J&P Cycles, to name a few, have moved, expanded, or established business in the Black Hills region as a result of the Sturgis Motorcycle Rally event.

   To determine the overall impact on the state, South Dakota uses a 1.5 percent multiplier, and the total economic impact of the Sturgis Motorcycle Rally event is estimated at approximately $786,155,293. (18) In 2015, the gross domestic product total for South Dakota was $45,515 billion, and the Rally represented 1.725 percent of the total gross domestic product for South Dakota. (19)

   While the citizens of South Dakota - and particularly those in the Black Hills region - benefit generally from this massive influx of tourists each August, many of the specific benefits of the event flow to the campground operators, bar and restaurant proprietors, and hotel owners who provide services to Rally attendees. The costs of advertising and administering the event can overwhelm the organizations responsible for promoting the event and making it safe, sanitary, enjoyable, and effectively managed. Most citizens through the Black Hills region consider two choices each summer: (1) flee their home for half of August; or (2) endure the congestion, raucous crowds, and disruption to normal life for the week of the event. To the local business association comprised of small business owners, service professionals, ranchers and manufacturers, and to the local municipality, the costs and inconvenience of the major event quickly can outstrip the marginal taxes and fees recouped locally. (20) Enter Sturgis Motorcycle Rally, Inc. ("SMRI"): an organization created specifically to promote the event through owning, managing, and licensing the intellectual property rights pertaining to the world-famous event as a means of recovering some of the costs of promoting the Rally, administering the event, and providing a charitable return to the local communities that are burdened by it. (21)

3. TRADEMARK BASICS

   Before discussing how trademark protection can benefit a community organization, it is important to understand trademark law as opposed to copyright or patent law. A "trademark" may consist of:

   [A]ny word, name, symbol, or device, or any combination thereof (1) used by a person, or (2) which a person has a bona fide intention to use in commerce... to identify and distinguish his or her goods... from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown. (22) For example, the Coca-Cola Company's trademark Coca-Cola[R] (23) distinguishes its carbonated beverages from those of PEPSICO, Inc. and its Pepsi[R] (24) brand of carbonated beverages by using trademarks, just as Nike, Inc. uses its word mark NIKE[R] (25) along with its "swoosh" symbol to distinguish the company's products from similar products sold by other shoe companies that own and use trademarks like New Balance[R], Adidas[R], or Reebok[R].

   Trademarks also can include product packaging or product configurations, also known as trade dress. Trade dress usually constitutes the "overall image and appearance" of a product, or the totality of the elements, and "may include features such as size, shape, color or color combinations, texture, [and] graphics[.]" (26) Such marks include the Coca-Cola[R] bottle, (27) the Weber[R] grill (28) or the Apple[R] store layout. (29)

   Companies tend to prominently and consistently display trademarks on their products or in advertising their products or services to allow consumers to easily identify the source of those products or services. In fact, trademark law serves several purposes: (1) protect consumers from being confused or deceived about the source of goods or services; and (2) encourage businesses to stand behind...