Ariel Investments, LLC v. Ariel Capital Advisors LLC
238 F. Supp. 3d 1009
N.D. Ill.
2017

Background

  • Ariel Investments, a Chicago-based SEC-registered investment manager, owns multiple registered trademarks beginning with “Ariel” and operates mutual funds and separate accounts; it has marketed the brand for decades and polices use of the name.
  • Ariel Capital Advisors, founded in 2014 in Florida by Christopher Bray, is an SEC-registered wealth manager using the name “Ariel Capital” and a lion/shield logo; Bray chose the name for personal/religious reasons and had prior industry contacts.
  • Ariel Investments sent a cease-and-desist to Ariel Capital in 2014 and sued in 2015 alleging Lanham Act trademark infringement (§§ 1114, 1125(a)), Illinois deceptive trade practices, common-law unfair competition, and cybersquatting; cybersquatting had been dismissed on summary judgment earlier.
  • The central factual disputes concerned similarity of the marks (both begin with the word “Ariel”), overlap in services and markets (both provide investment advisory services and advertise in industry channels), evidence of actual confusion, and Bray’s awareness/intent.
  • At bench trial the court found Ariel Investments’ marks protectable and that the likelihood-of-confusion factors (similarity of marks, similarity of services, area/manner of use, strength of mark, and some actual confusion) favored Ariel Investments; intent and consumer care weighed less strongly for defendant.
  • Remedy: court denied disgorgement (defendant showed most clients followed Bray from prior firm) but granted a permanent injunction requiring Ariel Capital to cease use of the term “Ariel” (with transitional disclaimer), and ordered submission of a proposed injunction.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether Ariel Capital’s use of “Ariel” infringes Ariel Investments’ registered marks under §§ 32 and 43 of the Lanham Act Ariel: marks are protectable; Ariel Capital’s name/use is likely to cause consumer confusion given similar services, overlapping marketing channels, and instances of actual confusion Ariel Capital: marks are weak/common; companies target different client segments; Bray selected the name for personal reasons and did not intend to trade on Ariel Investments’ goodwill Held for Ariel Investments — court found likelihood of confusion on balance of seven-factor test (five factors favor plaintiff)
Whether state-law claims (Illinois Deceptive Trade Practices Act and common-law unfair competition) survive Ariel: same likelihood-of-confusion standard applies; state claims mirror Lanham Act relief Ariel Capital: same defenses as federal claim (weak marks, lack of intent, concurrent use) Held for Ariel Investments — state-law claims resolved in plaintiff’s favor because Lanham Act claims succeeded
Whether Ariel Investments is entitled to disgorgement of Ariel Capital’s profits Ariel: disgorgement appropriate as remedy for infringement Ariel Capital: profits were earned independently; clients transferred with Bray from prior firm, so profits not attributable to infringing use Held for Ariel Capital on disgorgement — defendant met burden to show profits not due to infringement
Whether a permanent injunction should issue preventing Ariel Capital’s use of “Ariel” Ariel: likelihood of confusion and risk to goodwill warrant injunctive relief; damages inadequate; public interest favors clarity Ariel Capital: (implicit) injunction would impose hardship; name chosen innocently Held for Ariel Investments — permanent injunction granted under equitable test (irreparable harm, inadequate legal remedy, balance of hardships, public interest)

Key Cases Cited

  • Phoenix Entm’t Partners v. Rumsey, 829 F.3d 817 (7th Cir.) (likelihood-of-confusion standard under Lanham Act)
  • CAE, Inc. v. Clean Air Eng’g, Inc., 267 F.3d 660 (7th Cir.) (seven-factor likelihood-of-confusion analysis and overlap of services)
  • Sorensen v. WD10 Co., 792 F.3d 712 (7th Cir.) (emphasizing similarity, intent, and actual confusion factors)
  • Meridian Mut. Ins. Co. v. Meridian Ins. Grp., Inc., 128 F.3d 1111 (7th Cir.) (salient-word analysis where the shared primary word dominates composite marks)
  • Sullivan v. CBS Corp., 385 F.3d 772 (7th Cir.) (weight given to salient element of composite marks)
  • WMS Gaming Inc. v. WPG Prods. Ltd., 542 F.3d 601 (7th Cir.) (burden on infringer to show profits had no cash value from infringement)
  • Mishawaka Rubber & Woolen Mfg. Co. v. S.S. Kresge Co., 316 U.S. 203 (U.S. 1942) (principle on source of customer choice and disgorgement proof)
  • eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (U.S.) (equitable factors for injunctive relief)
  • Re/Max N. Cent., Inc. v. Cook, 272 F.3d 424 (7th Cir.) (goodwill damage supports irreparable injury in trademark cases)
  • Int’l Kennel Club of Chicago, Inc. v. Mighty Star, Inc., 846 F.2d 1079 (7th Cir.) (telephonic inquiries probative of actual confusion)
  • AutoZone, Inc. v. Strick, 543 F.3d 923 (7th Cir.) (mark strength correlates to protection scope)
  • Forum Corp. of N. Am. v. Forum, Ltd., 903 F.2d 434 (7th Cir.) (concurrent use and overlap need not be direct competition)
  • Platinum Home Mortg. Corp. v. Platinum Fin. Grp., Inc., 149 F.3d 722 (7th Cir.) (actual confusion standard)
Read the full case