# Design Ideas, Ltd. v. Lowe's Home Centers, LLC

> District Court, C.D. Illinois · November 30, 2021

URL: https://www.frixlaw.com/law-library/cases/10136565

## Case

- **Court:** District Court, C.D. Illinois
- **Decided:** November 30, 2021
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10136565

## How later opinions describe it (automated extraction)

- holding that the ordinary observer test is the only test for anticipation
- holding that the ordinary observer test is the only test for anticipation
- holding that the ordinary observer test is the only test for anticipation

## Opinion text

IN THE UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION

DESIGN IDEAS, LTD., )
)
Plaintiff, )
)
v. ) No. 20-cv-3204
)
LOWE’S HOME CENTERS LLC, )
HOME DEPOT U.S.A., INC., )
HOME DEPOT PRODUCT )
AUTHORITY, LLC, and MENARD, )
INC., )
)
Defendants )

OPINION

SUE E. MYERSCOUGH, U.S. District Judge.

This cause is before the Court on the motion (d/e 42) to
dismiss or transfer Plaintiff’s Second Amended Complaint filed by
Defendant Lowe’s Home Centers. Also before the Court are the
partial motion to dismiss filed by Defendants Home Depot U.S.A.
and Home Depot Product Authority (d/e 44) and the partial motion
to dismiss filed by Defendant Menards (d/e 54). For the reasons
stated below, each of the Defendants’ motions is DENIED.
I. BACKGROUND

On August 12, 2020, Plaintiff Design Ideas filed a Complaint
(d/e 1) that alleged eight patent infringement claims against Lowe’s
Home Centers (“Lowe’s”). Plaintiff alleged that Lowe’s infringed
eight of Plaintiff’s patents by selling an expanded wire mesh

container manufactured by Knape & Vogt (“K&V”), a nonparty, in
Lowe’s stores and online. Plaintiff asserts that the K&V container is
“virtually identical” to a container that Plaintiff sells exclusively to

The Container Store under the “Elfa” brand (the “Elfa container”)
and that Lowe’s sale of the K&V container infringes four of
Plaintiff’s “design patents” and four of Plaintiff’s “utility patents.”

See d/e 1. On December 8, 2020, Plaintiff filed an Amended
Complaint (d/e 14) which added Home Depot U.S.A. and Home
Depot Product Authority (together, “Home Depot”) as Defendants

and alleged that Home Depot was infringing the same eight patents
by selling a similar K&V container. On March 16, 2021, Plaintiff
filed the pending Second Amended Complaint (“SAC”), which adds
Menards as a Defendant and alleges that Menards’s sale of a similar
K&V container infringes the same eight patents allegedly infringed
by Lowe’s and Home Depot. See d/e 36.

Lowe’s has moved to dismiss all eight of Plaintiff’s claims
against Lowe’s under either Rule 12(b)(6) of the Federal Rules of
Civil Procedure for failure to state a claim, Rule 12(b)(1) for lack of

subject-matter jurisdiction, or Rule 12(b)(3) for improper venue.
See d/e 42. In the alternative, Lowe’s requests that the Court
transfer this action in its entirety to the Western District of North

Carolina pursuant to 28 U.S.C. § 1404(a). See id. Each of Lowe’s
arguments for dismissal and transfer is based on a contract that
Plaintiff and Lowe’s entered into in 2019 (the “DCBA Contract”).

Plaintiff did not attach the DCBA Contract to the SAC or mention
the DCBA Contract in the SAC. Nevertheless, Lowe’s asserts that
the DCBA Contract should be considered because it is “central” to

this action and contains a valid covenant not to sue which requires
dismissal of Plaintiff’s claims against Lowe’s. Lowe’s also asserts
that the DCBA Contract contains a valid forum-selection clause
that this Court should enforce by transferring Plaintiff’s action to

the Western District of North Carolina.
Andy Van Meter, Plaintiff’s President and co-founder, has filed
an affidavit stating that Plaintiff agreed to the DCBA Contract as

part of an “onboarding process” that Plaintiff underwent in 2019
and early 2020 when Plaintiff was attempting to sell Lowe’s an
“open wire shelving product” unrelated to the Elfa container at

issue in the instant action. See d/e 22, ¶¶ 10–13. Mr. Van Meter’s
affidavit also states that the negotiations that gave rise to the DCBA
Contract eventually fell through because the parties could not agree

on a price for the offered open wire shelving product. See id.,
¶¶ 14–16. Plaintiff argues that the DCBA Contract is invalid, that
the covenant not to sue contained in the DCBA Contract does not

prohibit the instant action, and that the instant action is outside
the scope of the DCBA Contract’s forum-selection clause.
Home Depot and Menards (together, the “Secondary

Defendants”) have filed partial motions to dismiss under Rule
12(b)(6). See d/e 44, 54. The Secondary Defendants argue that
Counts I, II, VII, and VIII of the SAC should be dismissed because
the four design patents asserted in those counts are anticipated by

prior art references and therefore invalid. Plaintiff asserts that the
design patents in question are not anticipated and that the
Secondary Defendants’ invalidity arguments are premature and

inappropriate for resolution on a Rule 12(b)(6) motion.
Plaintiff has responded to each of the Defendants’ motions to
dismiss. Each of the Defendants has filed a reply to one of

Plaintiff’s responses, and Plaintiff has filed surreplies to the
Defendants’ reply briefs. Home Depot has filed a filed a sursurreply
brief responding to Plaintiff’s surreply. As stated in the Court’s Text

Order of May 27, 2021, the Court considers the parties’ surreply
and sursurreply briefs only to the extent that doing so is
appropriate and necessary to the resolution of the pending motions

to dismiss and/or transfer the SAC.
II. LEGAL STANDARD

A motion under Rule 12(b)(6) challenges the sufficiency of
the complaint. Christensen v. Cty. of Boone, Ill., 483 F.3d 454, 458
(7th Cir. 2007). To state a claim for relief, a plaintiff need only
provide a short and plain statement of the claim showing he is
entitled to relief and giving the defendant fair notice of the claims.

Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008).
When considering a motion to dismiss under Rule 12(b)(6), the
Court construes the complaint in the light most favorable to the

plaintiff, accepting all well-pleaded allegations as true and
construing all reasonable inferences in plaintiff’s favor. Id.
However, the complaint must set forth facts that plausibly

demonstrate a claim for relief. Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 547 (2007). A plausible claim is one that alleges factual
content from which the Court can reasonably infer that the

defendant is liable for the misconduct alleged. Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009). Merely reciting the elements of a cause
of action or supporting claims with conclusory statements is

insufficient to state a cause of action. Id. Ordinarily, a court
deciding a 12(b)(6) motion cannot consider materials outside the
pleadings. See McCready v. eBay, 453 F.3d 882, 891 (7th Cir.

2006). However, a “narrow exception” to this general rule permits
“documents attached to a motion to dismiss [to be] considered part
of the pleadings if they are referred to in the plaintiff’s complaint
and are central to [the plaintiff’s] claim.” Levenstein v. Salafsky,

164 F.3d 345, 347 (7th Cir.1998).
A Rule 12(b)(1) motion asks a court to dismiss an action over
which the court lacks subject-matter jurisdiction. “The burden of

proof on a 12(b)(1) issue is on the party asserting jurisdiction.”
United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946
(7th Cir.2003), overruled on other grounds by Minn–Chem, Inc. v.

Agrium, Inc., 683 F.3d 845 (2012). Motions to dismiss for lack of
subject-matter jurisdiction fall into two general categories: “facial
and factual attack[s.]” Hay v. Ind. State Bd. of Tax Comm'rs, 312

F.3d 876, 879 n. 2 (7th Cir. 2002). “Facial challenges require only
that the court look to the complaint and see if the plaintiff has
sufficiently alleged a basis of subject matter jurisdiction.” Apex

Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443 (7th
Cir.2009). Factual challenges, by contrast, assert that “there is in
fact no subject matter jurisdiction” for a court to hear a “formally

sufficient” complaint. Id. at 444 (quoting United Phosphorus, Ltd.
v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir.2003)). A court
may properly “look beyond the jurisdictional allegations of the
complaint and view whatever evidence has been submitted on the

issue to determine whether in fact subject-matter jurisdiction
exists” to resolve a 12(b)(1) motion based on a factual challenge. Id.
However, in deciding a 12(b)(1) motion based on a facial challenge,

courts “do[] not look beyond the allegations in the complaint, which
are taken as true for the purposes of the motion.” Id.
Motions to transfer are governed by 28 U.S.C. § 1404(a), which

provides that “a district court may transfer any civil action to any
other district court where it might have been brought.” 28 U.S.C.
§ 1404(a). Transfer is appropriate when the moving party shows

that “[1] venue is proper in the transferee district; [2] the transfer
will serve the convenience of the parties and witnesses; and [3] the
transfer will serve the interests of justice.” Sioux Steel Co. v. Sukup

Mfg. Co., No. 17-CV-2193, 2018 WL 6492616, at *2 (C.D. Ill. Feb.
20, 2018). A motion to enforce a contractual forum-selection clause
is properly brought as a motion to transfer under § 1404(a). Atl.

Marine Const. Co. v. U.S. Dist. Ct. for W. Dist. of Texas, 571 U.S.
49, 59 (2013). Where a plaintiff’s action falls within the scope of a
valid forum-selection clause, transfer to the selected forum is
indicated unless “extraordinary circumstances unrelated to the

convenience of the parties” militate against transfer. Id. at 62.
III. ANALYSIS
A. The DCBA Contract Does Not Require Dismissal of
Plaintiff’s Claims Against Lowe’s.

Lowe’s has moved to dismiss the SAC under Rule 12(b)(6) for
failure to state a claim, Rule 12(b)(1)1 for lack of subject-matter
jurisdiction, and Rule 12(b)(3) for improper venue. Lowe’s has also
moved in the alternative to transfer this case to the Western District

of North Carolina pursuant to 28 U.S.C. § 1404(a).
1. A Forum-Selection Clause Cannot Be Enforced
Through a Motion to Dismiss under Rule 12(b)(3).

Lowe’s motion to dismiss under Rule 12(b)(3) for improper
venue must be denied. Lowe’s 12(b)(3) argument is that venue is
improper in this district because the DCBA Contract contains a
valid forum-selection clause designating the Western District of
North Carolina as the proper venue for this action. However, the

Supreme Court explicitly held in Atlantic Marine Construction Co.
v. United States District Court for the Western District of Texas,
571 U.S. 49 (2013), that a forum-selection clause cannot be

1 Lowe’s also moves to dismiss for lack of subject-matter jurisdiction under Rule 12(h)(3).
However, a motion to dismiss for lack of subject-matter jurisdiction is properly brought under
Rule 12(b)(1) rather than Rule 12(h)(3). See Fed. R. Civ. P. 12.
enforced by a motion to dismiss under Rule 12(b)(3). Id. at 52.
Instead, “a forum-selection clause may be enforced by a motion to

transfer under § 1404(a).” Id. Lowe’s has filed a motion to transfer
under § 1404(a), and the Court will consider Lowe’s forum-selection
clause arguments in deciding that motion.

2. The DCBA Contract, Which Is Not Referred to in
Plaintiff’s Complaint, Cannot Be Submitted in
Support of Lowe’s Rule 12(b)(6) Motion.

Lowe’s argument for dismissal under Rule 12(b)(6) is that the
DCBA Contract contains a valid and enforceable covenant not to
sue in which Plaintiff agreed not to assert claims against Lowe’s for
infringement of any of Plaintiff’s intellectual property for a period of
time. Plaintiff responds that the DCBA Contract was not referred to
in Plaintiff’s complaint and, therefore, cannot be considered at this
procedural juncture unless the Court, pursuant to Rule 12(d),

converts Lowe’s Rule 12(b)(6) motion into a motion for summary
judgment.
Typically, motions to dismiss brought under Rule 12(b)(6)
cannot include materials outside the pleadings. See McCready v.

eBay, 453 F.3d 882, 891 (7th Cir. 2006). However, a “narrow
exception” to this general rule permits “documents attached to a
motion to dismiss [to be] considered part of the pleadings if they are

referred to in the plaintiff’s complaint and are central to [the
plaintiff’s] claim.” Levenstein v. Salafsky, 164 F.3d 345, 347 (7th
Cir. 1998). Lowe’s argues, citing Rosenblum v. Travelbybus.com

Ltd., 299 F.3d 657 (7th Cir. 2002), that the DCBA Contract is
central to the SAC and can be considered despite not being
explicitly referred to in the SAC.

In Rosenblum, the plaintiff brought a claim against his former
employer for breach of an acquisition agreement governing the
purchase and sale of the plaintiff’s business. See id. at 659. The

plaintiff in Rosenblum did not explicitly refer to an employment
agreement between him and his former employer in his complaint,
and yet the district court considered the employment agreement in

granting the defendant’s 12(b)(6) motion. See id. at 661. The
Seventh Circuit held that the defendant had been entitled to
append the employment agreement because the defendant’s
position was that the employment agreement and the acquisition
agreement were parts of a single instrument and that this
instrument was central to the plaintiff’s complaint. Id.

However, the instant action is distinguishable from Rosenblum
for two reasons. First, the SAC alleges patent infringement claims,
rather than claims for breach of contract, and the DCBA Contract is

therefore not “central” to any of Plaintiff’s claims against Lowe’s in
the way that the contract in Rosenblum was central to the breach of
contract claim in that case. Additionally, Lowe’s has not argued

that there is a contract referred to in the SAC that the DCBA
Contract forms a part of. While a defendant is entitled “to append
what it contends is the remainder” of an instrument central to a

plaintiff’s complaint when the plaintiff has attached only part of the
relevant instrument, id. at 661–62, Lowe’s has not contended that
the DCBA Contract is the remainder of any incomplete instrument

referenced in the SAC. Because the DCBA Contract is not
referenced in or central to the SAC, the Court can consider the
DCBA Contract in the context of Lowe’s 12(b)(6) motion only if the
Court elects to convert that motion into a motion for summary

judgment. See Fed. R. Civ. P. 12(d); Batteast Const. Co. v. Pub.
Bldg. Comm'n of Chicago, 195 F. Supp. 2d 1045, 1051 (N.D. Ill.
2001). The Court declines to convert Lowe’s 12(b)(6) motion into a

motion for summary judgment at this time because the parties have
not had an adequate chance to complete discovery. Accordingly,
the Court will not consider the DCBA Contract in connection with

Lowe’s 12(b)(6) motion and Lowe’s 12(b)(6) motion must be denied.
3. Plaintiff’s Claims Against Lowe’s Are Outside the
Scope of the DCBA Contract’s Covenant Not to Sue.

In addition to moving for dismissal under Rule 12(b)(6), Lowe’s
has also moved for dismissal under Rule 12(b)(1) for lack of
subject-matter jurisdiction. Lowe’s argues that, as “Plaintiff has
agreed not to sue the Defendant for these types of controversies,
there is no infringement, and the Court lacks subject matter

jurisdiction.” D/e 43, p. 6 (citing Revolution Eyewear, Inc. v. Aspect
Eyewear, Inc., 556 F.3d 1294, 1297 (Fed. Cir. 2009)).
In deciding a Rule 12(b)(1) motion that raises a “factual attack”

on the plaintiff’s allegations, a court “may consider and weigh
evidence outside the pleadings to determine whether it has power to
adjudicate the action.” Bazile v. Fin. Sys. of Green Bay, Inc., 983
F.3d 274, 279 (7th Cir. 2020). If a 12(b)(1) motion raises only a
“facial attack,” however, evidence outside the pleadings may not be
considered. Id. Lowe’s has not stated whether its 12(b)(1) motion

launches a factual or a facial attack on the SAC, and it is not
necessary for the Court to make a determination on this point
because Lowe’s 12(b)(1) motion must be denied regardless of

whether the DCBA Contract is considered.
The DCBA Contract contains a section entitled “Article 6:
Product Information; Intellectual Property” which states that

“During the Term and the two-year period after the Term, Vendor
[Design Ideas] shall not assert a claim alleging that Lowe's or one of
its Affiliate's purchase, sale, offer for sale, distribution, or

promotion of products (including packaging) infringes Vendor's
intellectual property rights.” D/e 49, § 6.1. In other words, the
DCBA Contract prohibits Plaintiff from filing patent infringement

lawsuits concerning the sale of “products” for a period of more than
two years. Elsewhere in the DCBA Contract, the term “Products” is
defined to mean “the goods Vendor [Design Ideas] sells.” Id., § 13.1.
The allegedly infringing products in this action were sold to Lowe’s

by K&V, and not by Plaintiff. Plaintiff argues that the covenant not
to sue does not apply to the instant action because the term
“products,” as it is used in the covenant not to sue, refers only to

goods sold by Plaintiff.
Lowe’s response relies on the fact that the defined term
“Products” is spelled with a capital “P” in the “definitions” section of

the DCBA Contract, see id., § 13.1, while the covenant not to sue
uses the word “products” with a lowercase “p,” see id., § 6.1. Lowe’s
argues that the lowercase “p” indicates that the word “products” is

used in its general, everyday sense in the covenant not to sue,
rather than according to the more limited definition provided in the
DCBA Contract’s definitions section. See d/e 67, p. 3. According to

Lowe’s, the K&V containers are “products” even if they are not
“Products.” See id.
Plaintiff has submitted an affidavit from Andy van Meter, the

President and co-founder of Design Ideas. See d/e 22. This
affidavit states that Plaintiff approached Lowe’s in 2018 to sell
Lowe’s an “open wire shelving product.” This shelving product was
not similar to the Elfa container, and Plaintiff never contemplated

selling the Elfa container to Lowe’s. D/e 22, ¶¶ 9–10. Plaintiff
executed the DCBA Contract as part of an “onboarding process” to
become a Lowe’s vendor, in order to facilitate the potential sale of

the shelving products, but the sale was never finalized because
Plaintiff and Lowe’s could not agree on the price Lowe’s would pay
for the shelving products. Id., ¶¶ 11–14. The affidavit further

states that Mr. Van Meter’s understanding of the covenant not to
sue in Article 6 of the DCBA Contract was that “the specific
products we actually sold to Lowe's, not every product we make,

would have been free of any intellectual property claims by us
against Lowe's, including for two years after the agreement ended.”
Id., ¶ 20. Lowe’s has not disputed any of the relevant factual

assertions in the Van Meter affidavit, although Lowe’s did file a
motion to strike the Van Meter affidavit pursuant to Rule 12(f),
which motion the Court denied on September 27, 2021.2

North Carolina law governs the interpretation of the DCBA
Contract. See d/e 49, § 12.7. Under North Carolina law,

2 As Lowe’s noted in the memorandum of law (d/e 43) filed in support of Lowe’s motion to
dismiss the SAC, the Court may “look beyond the jurisdictional allegations of the Complaint
and view whatever evidence has been submitted on the issue” to determine whether
subject-matter jurisdiction exists. D/e 43, p. 7 (quoting Alicea-Hernandez v. Catholic Bishops
of Chicago, 320 F.3d 698, 701 (7th Cir. 2003)). Consideration of the Van Meter affidavit for the
purpose of deciding Lowe’s motion to dismiss for lack of subject-matter jurisdiction is,
therefore, appropriate.
“[i]nterpreting a contract requires the court to examine the language
of the contract itself for indications of the parties' intent at the

moment of execution.” State v. Philip Morris USA Inc., 618 S.E.2d
219, 225 (N.C. 2005). Furthermore, ambiguity in a contract is
construed against the party who drafted the contract. Wells Fargo

Ins. Servs. USA, Inc. v. Link, S.E.2d 458, 469 (N.C. 2019).
According to the uncontradicted assertions in the Van Meter
affidavit, Lowe’s drafted the DCBA Contract and offered it to

Plaintiff on a “take it or leave it” basis. D/e 22, ¶ 12. Therefore, for
Lowe’s to prevail on its argument as to the meaning of “products,”
the lack of capitalization of “product” in § 6.1 of the DCBA Contract

must unambiguously show that Plaintiff intended to sign away all
rights to sue Lowe’s for any infringement of Plaintiff’s intellectual
property for a period of more than two years.

This result would allow Lowe’s to sell carbon copies of
Plaintiff’s entire catalog during the protected period. Plaintiff
argues that this result would be absurd and unconscionable. See
Beverage Sys. of the Carolinas, LLC v. Associated Beverage Repair,

LLC, 784 S.E.2d 457, 463 (N.C. 2016) (referencing rule that
constructions of contracts that lead to “plainly . . . absurd result[s]”
are disfavored). Lowe’s argues that this result is not absurd or

unconscionable because the covenant is time-limited and because
Plaintiff would still be free to sue the manufacturers of the
infringing products, though not Lowe’s itself. See d/e 67, p. 4 n.2.

Regardless of whether the construction advanced by Lowe’s
rises to the level of absurdity or unconscionability, it is not the best
available interpretation. Lowe’s has not cited to any case from any

jurisdiction in which an uncapitalized letter at the beginning of a
defined term carries the kind of interpretive weight that Lowe’s asks
the Court to assign to the lowercase “p” in “products.” But see

Tompkins v. Cent. Laborers' Pension Fund, No. 09-CV-4004, 2011
WL 3349839, at *7 (C.D. Ill. Aug. 3, 2011) aff'd, 712 F.3d 995 (7th
Cir. 2013), and aff'd, 712 F.3d 995 (7th Cir. 2013) (finding that

single uncapitalized occurrence of defined term carried the same
meaning as the defined term); Hot Rods, LLC v. Northrop Grumman
Sys. Corp., 242 Cal. App. 4th 1166, 1181 (2015) (“While the word
‘claim’ in section 16.2 is not capitalized, it is nonetheless a defined

term in the agreement and we interpret it accordingly.”). The DCBA
Contract is a “Digital Commerce Buying Agreement,” an “agreement
to memorialize the terms governing Lowe’s purchase of Products

from Vendor [Design Ideas].” D/e 49, p. 2. Every Article of the
DCBA Contract other than Article 6 concerns the sale of Plaintiff’s
Products to Lowe’s. See, e.g., id., §§ 1–3 (setting conditions of

processing of orders from Plaintiff by Lowe’s, delivery of Products
from Plaintiff to Lowe’s, and negotiation of prices for orders from
Plaintiff by Lowe’s). The majority of Article 6 itself is also concerned

with the sale of “Products,” with a capital “P.” See id., § 6.1
(authorizing Lowe’s to sell Plaintiff’s “Products” and then stating
that Plaintiff agrees not to sue Lowe’s for patent infringement

involving “products”). It is a “sound rule of construction that
where a word has a clear and definite meaning when used in one
part of a . . . document, but has not when used in another,” the

word’s meaning is presumed to be consistent. Antonin Scalia &
Bryan A. Garner, Reading Law: The Interpretation of Legal Texts
170 (2012) (quoting Herbert Broom, A Selection of Legal Maxims
443 (Joseph Gerald Pease & Herbert Chitty eds., 8th ed. 1911)).
Moreover, the word “products” is not used in a way consistent
with the meaning suggested by Lowe’s anywhere outside of Article

6, while the defined term “Products” appears dozens of times
throughout the DCBA Contract. No careful drafter would provide a
narrow definition for “Product,” use the term consistently

throughout the DCBA Contract, and then include one anomalous
usage under a different definition with only a single uncapitalized
letter to signal the change. Nor is it realistic to suppose that the

parties understood a contract otherwise exclusively concerned with
the sale of Plaintiff’s Products to Lowe’s to also include blanket
immunity from unrelated infringement claims.

Lowe’s argues that Plaintiff’s interpretation of Article 6 renders
the covenant not to sue “a nullity” because “Products supplied by
Plaintiff cannot possibly infringe Plaintiff’s own patents.” D/e 67,

p. 6. Lowe’s is correct that Plaintiff would have been prohibited
from “asserting its patent against Products it sells to Lowe’s” even
without the covenant not to sue. But the covenant does not refer to
“patents,” but rather to “intellectual property rights” generally. The

covenant prohibits any claim asserting that “purchase, sale, offer
for sale, distribution, or promotion of products (including
packaging)” infringes Plaintiff’s “intellectual property rights.”

D/e 49, § 6.1. This language allows Lowe’s to use Plaintiff’s
trademarks and/or copyrights while advertising or distributing
Products. Therefore, Plaintiff’s interpretation of the DCBA Contract

does not render the covenant to sue superfluous.
Additionally, the covenant not to sue appears in the same
paragraph as an authorization for “Lowe’s to advertise, offer to sell,

and sell Products on Lowe’s digital sales channels” and a license for
Lowe’s to use trademarks and other intellectual property rights
relating to “images, models, or recordings of the Products.” Id. In

this context, the only sensible reading of a ban on intellectual
property claims involving “Lowe’s . . . purchase, sale, offer for sale,
distribution, or promotion of products (including packaging)” is that

it, like the other provisions in Article 6, is intended to protect Lowe’s
from lawsuits over the use of images of Products and trademarks
and copyrighted materials associated with Products in the course of
packaging, distributing, and advertising products.
For all of these reasons, the Court finds that the word
“products” in § 6.1 of the DCBA Contract clearly and

unambiguously refers to Products sold by Design Ideas. In the
alternative, the Court finds that the inconsistent capitalization of
“products” renders § 6.1 ambiguous and that this ambiguity is

construed against Lowe’s. In either case, the DCBA Contract’s
covenant not to sue does not deprive this Court of subject-matter
jurisdiction over Plaintiff’s claims against Lowe’s.

Lowe’s also argues that the Court lacks subject-matter
jurisdiction because the DCBA Contract’s forum-selection clause
provides that “The courts in Charlotte, North Carolina have

exclusive jurisdiction” over all “disputes arising from, or related to,
this agreement.” D/e 49, § 12.7. For the reasons discussed below
in the context of Lowe’s motion to transfer, the Court finds that the

instant action is outside the scope of the forum-selection clause.
Therefore, the forum-selection clause does not deprive this Court of
subject-matter jurisdiction.
B. Lowe’s Has Not Shown that Plaintiff’s Action Should Be
Transferred to the Western District of North Carolina.

1. Plaintiff’s Claims Are Outside the Scope of the DCBA
Contract’s Forum-Selection Clause.

Lowe’s has also moved in the alternative for transfer of this
action, including Plaintiff’s claims against the Secondary
Defendants, to the Western District of North Carolina pursuant to
28 U.S.C. § 1404(a). Ordinarily, courts decide motions to transfer
under § 1404(a) by performing a discretionary balancing of public
and private interests involving separate inquiries into: (1) whether
venue is proper in the transferor and transferee courts; (2) the
convenience of parties and witnesses; and (3) the interest of justice.

Rsch. Automation, Inc. v. Schrader-Bridgeport Int'l, Inc., 626 F.3d
973, 977 (7th Cir. 2010). This analysis changes, however, when a
valid forum selection clause applies to the dispute in question. See

Atlantic Marine, 571 U.S. at 63. The Supreme Court held in
Atlantic Marine that “when the parties' contract contains a valid
forum-selection clause, which ‘represents the parties’ agreement as
to the most proper forum,’” transfer is almost always appropriate.
Id. (quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 33
(1988)).

Lowe’s argues that its motion to transfer should be analyzed
under Atlantic Marine because the DCBA Contract contains a
forum-selection clause stating that: “The courts in Charlotte, North

Carolina, have exclusive jurisdiction over all disputes and Vendor
[Design Ideas] hereby consents to the jurisdiction of those courts.”
D/e 49, § 7.1. But Atlantic Marine’s transfer analysis applies only

when the parties have entered into a forum-selection clause that is
“contractually valid” and “represents the parties’ agreement as to
the most proper forum.” Atlantic Marine, 571 U.S. at 63. A

forum-selection clause represents an agreement as to the proper
forum for the claims at issue only when the claims fall within the
scope of the clause. See Hugel v. Corp. of Lloyd's, 999 F.2d 206,

209 (7th Cir. 1993); Houston Cas. Co. v. Thomas Linderman
Graham, Inc., No. 17-CV-40, 2017 WL 3172415, at *2 (M.D.N.C.
July 25, 2017).
“‘[T]he body of law selected in an otherwise valid choice-of-law

clause’ governs the interpretation of a forum-selection
clause.” Queen City Pastry, LLC v. Bakery Tech. Enterprises, LLC,
No. 14-CV-143, 2015 WL 3932722, at *3 (W.D.N.C. June 26,

2015) (quoting Martinez v. Bloomberg LP, 740 F.3d 211, 218 (2d
Cir. 2014)). Here, the DCBA Contract selects North Carolina law,
see d/e 49, § 12.7, so North Carolina law governs the question of

whether Plaintiff’s claims are within the scope of the forum-
selection clause. See Houston Cas. Co., 2017 WL 3172415, at *2.
Here, the forum-selection clause states that “[t]he courts in

Charlotte, North Carolina have exclusive jurisdiction over all
Disputes and [Design Ideas] hereby consents to the jurisdiction of
those courts.” D/e 49, § 12.7. The term “Disputes” is defined to

include “all disputes arising from, or related to, this agreement,
including, without limitation, contract, tort, statutory, and equity
disputes.” Id. In other words, the forum-selection clause applies to

the instant action if the action “aris[es] from, or relate[s] to,” the
DCBA Contract.
The core example of a claim arising out of or relating to a
contract is a claim for breach of the contract, but forum-selection

clauses are “interpreted broadly and can encompass claims other
than breach of contract,” see Arion, LLC v. LMLC Holdings, Inc., No.
18-CV-5904, 2018 WL 6590533, at *3 (N.D. Ill. Dec. 14, 2018),

where a plaintiff attempts to “get out from under the forum-
selection clause” by pleading a claim other than breach of contract
that nevertheless “concern[s] the contractual relationship between

the parties.” Am. Patriot Ins. Agency, Inc. v. Mut. Risk Mgmt., Ltd.,
364 F.3d 884, 889 (7th Cir. 2004). However, a “significant
relationship” must exist between the dispute and the contract at

issue for the dispute to arise out of or relate to the contract. Long
v. Silver, 248 F.3d 309, 316 (4th Cir. 2001). North Carolina courts
have held that claims “aris[e] out of or relat[e] to” a contract when

the conduct giving rise to the claims “occurred in connection with,
or as a part of, the formation of, performance under, or breach of
the contract.” ELJ, Inc. v. Jefferys, 763 S.E.2d 18, at *2 (N.C. App.

2014) (quoting Rodgers Builders, Inc. v. McQueen, S.E.2d 726, 731
(N.C. App. 1985)).
In ELJ, Inc. v. Jefferys, 763 S.E.2d 18 (N.C. App. 2014), the
plaintiff sued the defendant for defamation, alleging that the

defendant had made defamatory comments about plaintiff while the
two were competing for construction bids. Id. at *1. The parties
were both contractors in the construction industry and had

previously worked together on a construction project. Id. In
connection with that earlier project, the parties had signed a
contract containing an arbitration clause requiring arbitration of

“[a]ny claim arising out of or related to” their construction contract.
Id. The defendant moved to compel arbitration of the plaintiff’s
defamation claims on the basis of the arbitration clause, and the

motion was denied. Id. at *1–*2. The Court of Appeals of North
Carolina held that, even if the allegedly defamatory statements were
about the plaintiff’s performance on the relevant project, the

plaintiff’s defamation claims did not arise out of or relate to the
parties’ contract. Id. at *3. The ELJ court held that “[t]he only
evident relevance” of the earlier project to the defamation claims

was to “explain how the parties knew each other prior to the later
bids.” Id. at *3.
Here, the conduct giving rise to Plaintiff’s claims is Lowe’s sale
of the allegedly infringing K&V containers. According to the

uncontradicted assertions in the Van Meter affidavit, the DCBA
Contract was executed in 2019 as part of an ultimately
unsuccessful series of negotiations regarding the potential sale of a

line of products not at issue in this case. Lowe’s has not attempted
to establish any connection between the DCBA Contract and the
K&V containers and has not suggested that the DCBA Contract

bears any significant relationship to the patents asserted in the
SAC. Like the contract in ELJ, the DCBA Contract relates to the
instant action only in that it concerns one prior interaction between

the two parties to the instant dispute. Plaintiff’s patent
infringement claims do not arise under the DCBA Contract or relate
to the formation of, performance under, or breach of the DCBA

Contract. Accordingly, Plaintiff’s claims are outside the scope of the
DCBA Contract’s forum-selection clause.
2. Lowe’s Has Not Shown that the § 1404(a) Factors
Favor Transfer.

Because the parties have not pre-selected a forum for
Plaintiff’s claims, the Atlantic Marine analysis does not apply to
Lowe’s transfer motion. Instead, the ordinary § 1404(a) transfer
analysis applies, and the Court weighs “the convenience of parties
and witnesses” and “the interests of justice” to evaluate whether
transfer is appropriate. Rsch. Automation, 626 F.3d at 978. “[T]he
moving party bears the burden of demonstrating ‘that the transferee

forum is clearly more convenient.’” Body Sci. LLC v. Bos. Sci.
Corp., 846 F. Supp. 2d 980, 991 (N.D. Ill. 2012) (quoting Coffey v.
Van Dorn Iron Works, 796 F.2d 217, 219–20 (7th Cir.1986)). Here,

Lowe’s has not shown that the Western District of North Carolina is
clearly more convenient for the parties or witnesses and has not
shown that the interests of justice favor the Western District of

North Carolina.
In assessing the convenience of the parties, a court considers
four factors: (1) the plaintiff's choice of forum; (2) the situs of the

material events; (3) the relative ease of access to sources of proof;
and (4) the convenience of the parties and witnesses. Here, the first
factor, Plaintiff’s choice of forum, controls. Lowe’s has not argued

that more of the events material to this action took place in North
Carolina than in Illinois or that relevant sources of proof may be
more easily accessed in North Carolina. See Rsch. Automation, 626
F.3d at 978. While Lowe’s argues that North Carolina is as

convenient for parties and witnesses as Illinois, only one of the
three Defendants in this matter is headquartered in North Carolina.
Lowe’s has not suggested that either Home Depot or Menards has

any particularly strong connection to North Carolina. In the
absence of any showing that the convenience of parties or witnesses
favors North Carolina, the Court declines to disturb Plaintiff’s

choice of forum. See Deb v. SIRVA, Inc., 832 F.3d 800, 806 (7th
Cir. 2016) (“[U]nless the balance is strongly in favor of the
defendant, the plaintiff's choice of forum should rarely be

disturbed.”).
The interests of justice also weigh strongly against transfer.
The interests of justice are served by “efficient administration of the

court system.” Rsch. Automation, 626 F.3d at 978. Allowing cases
that involve some of the same parties, seek the same remedy, and
concern similar legal and factual issues to be litigated in different

districts does not serve the efficient administration of the court
system. See Aliano v. Quaker Oats Co., No. 16 C 3087, 2017 WL
56638, at *3 (N.D. Ill. Jan. 4, 2017). The instant action bears
substantial similarities to another case in this district, Design Ideas

v. Target, No. 20-CV-03231, in which neither party has requested
transfer. Furthermore, transfer of this case would require either
severing Plaintiff’s claims against Lowe’s from the virtually identical

claims against the Secondary Defendants or else transferring the
Secondary Defendants to North Carolina along with Lowe’s. Either
option would create duplicative litigation and would be an

inefficient use of scarce judicial resources. Accordingly, the Court
finds that the Central District of Illinois is the appropriate venue for
the instant action.

C. The Invalidity Defenses Raised by the Secondary
Defendants Are Premature.

The Secondary Defendants have each filed a partial motion to
dismiss under Rule 12(b)(6). Both Home Depot and Menards argue
that Counts I, II, VII, and VIII of the SAC should be dismissed
because the asserted design patents are invalid as anticipated.
Menards also argues that its products do not infringe on the
asserted patents because Menards’s products do not include

“seamless” corners. See d/e 54, ¶ 2.
Menards has forfeited its seamless-corners argument.
Menards’s 12(b)(6) motion (d/e 54) contains only two brief
sentences explaining the nature of its seamless-corners argument,
and the supporting memorandum of law (d/e 65) does not mention
the argument at all. An argument presented without any

supporting authority or reasoning is “merely an assertion which
does not sufficiently raise the issue to merit the court's
consideration.” Alberici Constr., Inc. v. Wrigley, No. 08-CV-2164,

2009 WL 10685153, at *3 (C.D. Ill. Feb. 12, 2009).
As the Secondary Defendants’ 12(b)(6) motions and supporting
briefs are substantially identical except with respect to Menards’s

inclusion of the seamless-corners argument, the Court analyzes
both motions together.
Plaintiff alleges that each of the Defendants has infringed eight

of Plaintiff’s patents, including four “design patents” and four
“utility patents.” Generally, a “utility patent” protects the way an
article is used and works, while a “design patent” protects the way

an article looks. Manual of Patent Examining Procedure § 1502.01
(9th ed. Rev. Jan. 2018). A design patent “protects the non-
functional aspects of an ornamental design as seen as a whole and
as shown in the patent.” Amini Innovation Corp. v. Anthony Cal.,

Inc., 439 F.3d 1365, 1370 (Fed. Cir. 2006).
A design patent is not valid unless it is “new.” 35 U.S.C.
§ 171(a). A design patent is “anticipated,” that is, invalid because it

is not new, “if, in the eye of an ordinary observer, giving such
attention as a purchaser usually gives,” the design is “substantially
the same” as a prior art reference. Samsung Electronics Co., Ltd. v.

Apple Inc., 137 S. Ct. 429, 432 (2016) (quoting Gorham Mfg. Co. v.
White, 81 U.S. 511, 525 (14 Wall.) (1871)); see Int'l Seaway Trading
Corp. v. Walgreens Corp., 589 F.3d 1233, 1237 (Fed. Cir. 2009)

(holding that the ordinary observer test is the only test for
anticipation).
Here, the Secondary Defendants’ 12(b)(6) motions argue that

the four design patents asserted in the SAC are anticipated and
therefore invalid. Each of the four challenged Design Ideas patents
claims priority to the filing date of an earlier Design Ideas patent

application. Patent No. D856,678 (the “D’678 Patent”) and Patent
No. D895,291 (the “D’291 Patent”) claim priority to a patent with a
filing date of October 31, 2008. Patent No. D847510 (the “D’510
Patent”) and Patent No. D624,753 (the “D’753 Patent”) claim priority

to a patent with a filing date of February 27, 2003. The Secondary
Defendants argue that the D’678 and D’291 Patents are invalid
because they are anticipated by publicly available products from

2003. The Secondary Defendants also argue that the D’510, D’753,
and D’291 Patents are invalid because they are not entitled to the
priority dates they claim and are anticipated by publicly available

products that were on sale before the priority dates that the Patents
are actually entitled to.
Invalidity is an affirmative defense that a defendant has the

burden of proving by clear and convincing evidence. Tech.
Licensing Corp. v. Videotek, Inc., 545 F.3d 1316, 1327 (Fed. Cir.
2008). A plaintiff is not required to “plead around” affirmative

defenses, Hyson USA, Inc. v. Hyson 2U, Ltd., 821 F.3d 935, 939
(7th Cir. 2016), so it is usually inappropriate to dismiss a claim
under Rule 12(b)(6) on the basis of an invalidity defense. Midwest

Innovative Prod., LLC v. Kinamor, Inc., No. 16-CV-11005, 2017 WL
2362571, at *5 (N.D. Ill. May 31, 2017). The only exception to this
general rule applies when “the allegations of the complaint . . . set
forth everything necessary to satisfy the affirmative defense.” United

States v. Lewis, 411 F.3d 838, 842 (7th Cir.2005). “In other words,
‘the plaintiff must affirmatively plead himself out of court.’” Hyson
USA, 821 F.3d at 939 (quoting Chi. Bldg. Design v. Mongolian

House, Inc., 770 F.3d 610, 613 (7th Cir.2014)).
Here, Plaintiff has not pleaded itself out of court. The
Secondary Defendants’ invalidity arguments with respect to the

D’678 and D’291 patents request that the Court construe the
patent claims at issue and compare the asserted designs to the
prior art, evaluating the relative similarity of the designs. The Court

will not weigh and evaluate evidence in this manner on a 12(b)(6)
motion because determination of the substantive merits of Plaintiff’s
claims is a matter for trial or for summary judgment under Rule 56.

See In re Bill of Lading Transmission & Processing Sys. Pat. Litig.,
681 F.3d 1323, 1343 (Fed. Cir. 2012) (noting that “claim
construction at the pleading stage—with no claim construction

processes undertaken” is “inappropriate”); see also Novartis Pharm.
Corp. v. Actavis, Inc., No. 12-CV-366, 2012 WL 6212619, at *7-8
(D. Del. Dec. 5, 2012) (collecting cases and concluding that claim
construction “is inappropriate at the pleading stage”).
The Secondary Defendants’ anticipation arguments regarding
the D’510 and D’753 patents are also premature. These arguments

depend on materials from outside of the pleadings, namely the
patent application information for the D’510 and D’753 patents.
While some courts have taken judicial notice of the prosecution

histories of asserted patents, see, e.g., Lecat's Ventriloscope v. MT
Tool & Mfg., No. 16-CV-5298, 2018 WL 3651592, at *3 (N.D. Ill.
Aug. 1, 2018), courts have refused to do so when defendants

“improperly seek[] resolution of issues on the merits” in a 12(b)(6)
motion by “seek[ing] to admit materials outside the complaint to
resolve matters of claim construction and invalidity based

on anticipation and priority—matters typically resolved at later
stage of litigation.” Midwest Innovative, 2017 WL 2362571, at *2;
see Video Gaming Techs., Inc. v. Castle Hill Studios LLC, No. 17-

CV-454, 2018 WL 284991, at *3 (N.D. Okla. Jan. 3, 2018);
Facebook, Inc. v. Teachbook.com LLC, 819 F. Supp. 2d 764, 772
(N.D. Ill. 2011). Accordingly, the Court finds that Plaintiff has
adequately stated claims against the Secondary Defendants for

infringement of the four asserted design patents.
IV. CONCLUSION
For the reasons stated above, Defendant Lowe’s motion to

dismiss or transfer (d/e 42) is DENIED. The partial motion to
dismiss (d/e 44) filed by the Home Depot Defendants and the
partial motion to dismiss (d/e 54) filed by Defendant Menards are

likewise DENIED.

ENTERED: November 30, 2021

FOR THE COURT:
/s/Sue E. Myerscough
SUE E. MYERSCOUGH
UNITED STATES DISTRICT JUDGE

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10136565. Public record. Not legal advice.