Ariel Investments, LLC v. Ariel Capital Advisors LLC

In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 17-1516 & 17-2645
ARIEL INVESTMENTS, LLC,
Plaintiff-Appellee,
v.
ARIEL CAPITAL ADVISORS LLC,
Defendant-Appellant.
____________________
Appeals from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 15 C 3717 — Matthew F. Kennelly, Judge.
____________________
ARGUED JANUARY 17, 2018 — DECIDED JANUARY 31, 2018
____________________
Before FLAUM, EASTERBROOK, and BARRETT, Circuit Judges.
EASTERBROOK, Circuit Judge. Ariel Investments and Ariel
Capital Advisors both manage money for affluent clients.
Ariel Investments has been using its name since 1983 and
Ariel Capital only since 2014. After a bench trial in this suit
under the Lanham Act, 15 U.S.C. §§ 1114, 1125(a), the district
court found that Ariel Capital is infringing Ariel Invest-
ments’ trademarks and ordered it to stop. 238 F. Supp. 3d
1009 (N.D. Ill. 2017).

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2 Nos. 17-1516 & 17-2645
Ariel Capital does not dispute any of the district judge’s
findings of fact or conclusions of law. Instead it denies the
court’s power to adjudicate the controversy. Ariel Invest-
ments, based in Illinois, does business nationwide and elect-
ed to file suit at home. Ariel Capital, based in Florida, would
like to have a national presence but so far does not. It does
not have a client in Illinois, does not have any property or
staff in Illinois, does not advertise in Illinois, and never has
had an employee or agent even visit Illinois—until it had to
defend this suit.
The Lanham Act does not authorize nationwide service
of process. A plaintiff therefore must secure personal juris-
diction under state law. See Fed. R. Civ. P. 4(k)(1)(A). Illinois
permits service to the constitutional limits of its power, 735
ILCS 5/2-209(c), and the district court held that this includes
power over Ariel Capital, which knew or should have
known that its choice of name would injure Ariel Invest-
ments in Illinois. 2015 U.S. Dist. LEXIS 187800 (N.D. Ill. Oct.
29, 2015). The court explained:
[T]he basis asserted for personal jurisdiction is not merely causa-
tion of harm in Illinois. Rather, Ariel [Investments’] contention is
that Ariel [Capital] deliberately set out to trade on the reputation
and goodwill of an Illinois entity. As a matter of policy, the law
ought not require a holder of intellectual property … in these
circumstances to go to the home forum of one who has, in effect,
reached into the holder’s home forum to take its property. When
an out-of-state entity chooses to trade on the established name of
an entity in the forum state and use that name for its own gain, it
has, in the Court’s view, established a relationship not just with
the in-state entity, but with the forum state itself.
2015 U.S. Dist. LEXIS 187800 at *9–10. Perhaps the Lanham
Act ought to authorize nationwide service, as the antitrust
and securities laws do. See 15 U.S.C. §§ 22, 77v, 78aa. But it

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Nos. 17-1516 & 17-2645 3
does not, so personal jurisdiction depends on state law.
Knowing about a potential for harm in a particular state is
not the same as acting in that state—and it takes the latter to
permit personal jurisdiction under state law.
Walden v. Fiore, 134 S. Ct. 1115 (2014), controls this case.
Fiore alleged that Walden had wrongfully seized cash in
Georgia, knowing that his act would injure her in Nevada. A
court of appeals held it sufficient for personal jurisdiction in
State A that a defendant, all of whose acts occurred in State
B, knew that injury would be felt in State A and “expressly
aimed” his conduct at a resident of State A. See 134 S. Ct. at
1120 (describing the court of appeals’ rationale). The Su-
preme Court rejected that view and held that a defendant’s
knowledge and intent concerning a resident of State A do
not justify compelling that person to defend himself there.
Instead, the Justices held, a state may assert specific ju-
risdiction (that is, jurisdiction based on a particular transac-
tion) only if the defendant has “a substantial connection with
the forum State” (134 S. Ct. at 1121). The connection must be
of the defendant’s creation, not of the plaintiff’s. Id. at 1122.
And the Court’s “‘minimum contacts’ analysis looks to the
defendant’s contacts with the forum State itself, not the de-
fendant’s contacts with persons who reside there.” Ibid. See
also Advanced Tactical Ordinance Systems, LLC v. Real Action
Paintball, Inc., 751 F.3d 796 (7th Cir. 2014) (applying Walden
to a trademark case).
The district court thought that Ariel Capital had set out
to injure Ariel Investments, knowing that it is located in Illi-
nois. That’s exactly the sort of allegation the Justices deemed
inadequate in Walden, because “the plaintiff cannot be the
only link between the defendant and the forum. Rather, it is

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4 Nos. 17-1516 & 17-2645
the defendant’s conduct that must form the necessary con-
nection with the forum State that is the basis for its jurisdic-
tion over him.” 134 S. Ct. at 1122. The Court added: “These
same principles apply when intentional torts are involved.”
Id. at 1123. No matter how one might characterize the rela-
tion between Ariel Investments and Ariel Capital, it is easy
to describe the relation between Illinois and Ariel Capital:
none. That resolves this litigation.
Ariel Investments tells us that a defendant should be sub-
ject to personal jurisdiction in any state at which it “aimed
its actions.” That contention is incompatible with Walden; it
is exactly what the court of appeals in Walden had held, and
not a single Justice accepted the position. More: even by Ari-
el Investments’ standard, Ariel Capital would prevail. The
trial showed that Ariel Capital did not “aim at” either Illi-
nois or Ariel Investments but rather ignored both. The
founder of Ariel Capital testified, without contradiction, that
he named the firm to honor his daughter, Ariel Marie Bray,
rather than to injure Ariel Investments. State and federal
laws often require entrepreneurs to consider the effects of
their choices on third parties, but when they violate such re-
quirements by closing their eyes to the effects of their deci-
sions, they do not “aim at” any particular person or state.
We end with a few words about Ariel Investments’ con-
tention that Calder v. Jones, 465 U.S. 783 (1984), supports per-
sonal jurisdiction in Illinois. An actress living in California
sued a reporter and editor for defamation appearing in an
article written and edited in Florida and published in a
weekly newspaper based in Florida. Calder held that the ac-
tress could sue in California—though not just because that’s
where she suffered injury. The newspaper’s California circu-

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Nos. 17-1516 & 17-2645 5
lation was 600,000, and the reporter gathered information by
phone calls to California. The story concerned events in Cali-
fornia. As Walden observed, because publication to third par-
ties is an element of libel, the defendants’ tort occurred in
California. 134 S. Ct. at 1124. The defendants in Calder thus
had the sort of state-specific connection with California that
Ariel Capital lacks with Illinois. If trademark infringement
happened, that wrong occurred in Florida, or perhaps some
other state where people who wanted to do business with
Ariel Investments ended up dealing with Ariel Capital be-
cause of the similar names. That state cannot be Illinois,
where Ariel Capital lacks clients.
REVERSED

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