This Federal Circuit opinion analyzes claim construction arguments and requests for remittitur in the context of preserving issues for appeal.

Background

Belanger is a manufacturer of car wash systems. Belanger owns the ‘041 patent, which generally discloses a spray type car wash system with lighted spray arms that uses visual cues to help center vehicles within the wash apparatus while entering the bay.

Belanger accused Wash World’s “Razor EDGE” car wash system of infringing the ’041 patent. Wash World responded by seeking a declaratory judgment of noninfringement, and Belanger counterclaimed for infringement and damages. The jury found the “Razor EDGE” system infringed the ’041 patent, and awarded Belanger $10,060,000. The district court subsequently denied Wash World’s motion for judgment as a matter of law of non-infringement and, alternatively, for a new trial or remittitur of the damages award.

Wash World appealed to the Federal Circuit on two issues. Wash World first contended to overturn the infringement judgment due to alleged claim construction errors. Specifically, the disputed claim terms, which relate to how the claimed car wash operates, were (i) “outer cushioning sleeve”, (ii) “predefined wash area”, and (iii) “dependingly mounted”.

In addition, Wash World also contended to reduce the damages award through remittitur by approximately $2.6 million in lost profits from auxiliary products that allegedly lacked any functional relationship to Belanger’s patent claim, i.e., Wash World contended Belanger’s lost profits included improper convoyed sales. The alleged auxiliary products at issue here were unpatented dryers sold with the patented car wash system.

Belanger asserted both of these issues were forfeited.

Issues

1. Did Wash World forfeit its claim term construction proposals, and if not, did they fail on the merits?
2. Did Wash World forfeit its request for remittitur, and if not, did the district court abuse its discretion in awarding lost profits from auxiliary products?

Holdings

1. Mixed. Wash World forfeited its arguments on the (i) “outer cushioning sleeve” and (ii) “predefined wash area” terms. The (iii) “dependingly mounted” argument was not forfeited, but it failed on the merits.
2. Mixed. Wash World did not forfeit its request for remittitur. The district court did abuse its discretion in awarding lost profits from auxiliary products.

Reasoning

1. Claim construction. The Federal Circuit first held Wash World forfeited its claim construction arguments regarding the (i) “outer cushioning sleeve” and (ii) “predefined wash area” terms. However, the Federal Circuit held Wash World did not forfeit its claim construction argument regarding (iii) the “dependingly mounted” term. For the first and second terms, the Federal Circuit reasoned Wash World failed to preserve its claim construction arguments because Wash World proposed materially different constructions on appeal than those presented at the district court. Nor were there any exceptional circumstances here: Wash World chose what constructions to propose, was fully heard, and has never indicated to the trial court the new constructions it proposed on appeal. For the (iii) “dependingly mounted” term, the Federal Circuit reasoned although neither party identified such term as requiring construction during the claim construction stage, a dispute over the scope of this term became apparent during briefing on Wash World’s summary judgment motion in the district court. Thus, the proposed construction was not forfeited. Regardless, the Federal Circuit did not find the district court’s claim construction as legally erroneous having a prejudicial effect. The Federal Circuit rejected Wash World’s argument that “dependingly mounted” is limited to a direct connection, as nothing in the claim language suggests so and it is not dispositive that the ’041 patent’s specification only depicts embodiments that have a direct connection.
2. Remittitur. The Federal Circuit first held Wash World did not forfeit its request for remittitur because although Wash World could have been clearer in its opening brief regarding a remittitur of approximately $2.6 million, the review of the record showed the district court and Belanger understood this was a component of Wash World’s request. Even if such request was forfeited, the Federal Circuit found there were three exceptional circumstances here to reach the merits nonetheless. The first exceptional circumstance was the court can discern here the precise amount of damages awarded based on convoyed sales, as seen through Belanger’s own arguments to the district court which confirmed Belanger understood such precise amount. The second exceptional circumstance was one of estoppel: it would be inequitable to allow Belanger to prevail on appeal by arguing the court cannot determine the amount of damages based on convoyed sales as it would directly contradict Belanger’s previous arguments that the court could identify the amount of damages based on convoyed sales. The third exceptional circumstance was the requirements for obtaining lost profits for convoyed sales were plainly not satisfied. Moving onto the merits, the Federal Circuit likewise held the requirements for obtaining lost profits for such sales were plainly not satisfied here: there was no evidence of a functional relationship between Belanger’s car wash and the listed additional components (unpatented dryers) it sells. Belanger selling such products together as a package is simply only a “matter of convenience or business advantage.”

Conclusion

The Federal Circuit (i) affirmed the district court’s infringement judgment and (ii) vacated and remanded the damages judgment to remit approximately $2.6 million. This opinion highlights the importance of clearly and timely preserving arguments for appeal as exceptional circumstances may not always be present, and the requirements for remittitur in relation to lost profits.

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