The United States District Court, District of Minnesota, granted Gander Mountain a victory in its long-standing dispute with Cabela's over the right to use certain Gander Mountain trademarks in direct marketing. The battle stems from a deal in 1996, when Gander Mountain was on the verge of bankruptcy and sold its catalog and direct marketing business to Cabela’s for $35 million.


Cabela’s reportedly paid $20 million for Gander’s inventory, $7.5 million for Gander’s customer list, and $7.5 million was paid in consideration for two separate agreements. First was a seven-year non-compete agreement and second, a trademark license agreement.


According to Cabela’s, Gander tried to sell its entire business, but Cabela’s was only interested in the direct marketing and catalog aspect. The seven-year non-compete clause expired in June of 2003, and Gander began selling merchandise on Gandermountain.com. This is when Cabela’s tried to enforce the second Trademark License Agreement, which gave Cabela’s the right to license the Gander Mountain name for direct marketing.


According to court documents obtained by Sports Executive Weekly, “Cabela’s has the right to purchase a perpetual, exclusive license to certain Gander Mountain trademarks…” As laid out in the original purchase agreement for Gander Mountain’s Direct Marketing assets, the purchase price for these trademarks was set at $1,000.


This order effectively nullifies this agreement by granting Gander Mountain's motion for summary judgment while denying Cabela's motion for summary judgment and dismissing Cabela's counterclaims. The judge's order stated, “Gander Mountain is free to use its trademarks in all respects including direct marketing to consumers.”


“We are now going to accelerate our pace toward becoming the leading multi-channel outdoor retailer in the nation,” said Mark Baker, Gander Mountain president and CEO. “We now have the freedom to regain that position, and with our upcoming entry into on-line selling, we have significant new opportunities to leverage the powerful Gander Mountain brand.


After the court's order has been formally entered, it will be subject to appeal and Cabela's believes this ruling is contrary to the agreement that was entered into by Cabela's and Gander Mountain in 1996.  Cabela's is currently reviewing the ruling and discussing its alternatives with legal counsel.


These alternatives include, but are not limited to, an appeal of the ruling. While Cabela's and its legal counsel said that they are “disappointed in the ruling,” Cabela's remains optimistic regarding further litigation. Cabela's management said that they will continue to protect the company’s  legal rights.


In other Gander Mountain news, the company has acquired the Baxter, Minn. location of Reeds Outdoor Super Store, including inventory and certain assets.  Gander will be closing the store and transitioning the inventory to its current Walker store.  The closing of the transaction is expected to occur in September 2007.


As a part of the agreement, Reeds will no longer have a presence in Baxter, but will continue to operate its store in Walker, Minn., its on-line store, catalog businesses and other retail locations in the future. Some of the Reeds employees will be hired by Gander while others will be transferred to one of Reeds other operating retail locations.