IP Law Daily, PATENT—Fed. Cir.: Lost profits award partially vacated in automated car wash system patent dispute, (Mar 24, 2025)

By Saurabh Kashyap, B.A., LL.B., LL.M.

Prevailing party failed to prove the functional relationship required to recover lost profits on unpatented convoyed sales.

The U.S. Court of Appeals for the Federal Circuit partially vacated a Wisconsin district court’s final judgment in a patent dispute between car wash system manufacturer Wash World Inc. and rival Belanger Inc., holding that the lower court erred in upholding a portion of the jury’s damages award. While the appellate court affirmed the jury’s finding of infringement of Belanger’s U.S. Patent No. 8,602,041 (the '041 patent), it ruled that the $9.8 million in lost profits awarded by the jury included an impermissible $2.6 million component-based on convoyed sales. Because Belanger failed to prove the functional relationship required to recover damages on unpatented components, the appellate court remanded with instructions to reduce the damages award to $7,482,152 (Wash World Inc. v. Belanger Inc., No. 23-1841 (Fed. Cir. Mar. 24, 2025)).

Background. The plaintiff/ appellant, Wash World Inc., is a Wisconsin-based car wash equipment manufacturer. The defendant/ appellee, Belanger Inc. (formerly known as Piston OPW Inc.), is a competing car wash system manufacturer and the owner of the ’041 patent, which relates to automated car wash systems equipped with illuminated spray arms. In 2018, Belanger sent Wash World a cease-and-desist letter alleging that its “Razor EDGE” system infringed the ’041 patent. Wash World responded by filing a declaratory judgment action seeking a finding of non-infringement. Belanger counterclaimed for infringement and sought damages.

The district court adopted the plain and ordinary meaning for all disputed terms. Wash World moved for summary judgment of non-infringement, arguing that the Razor EDGE system lacked several required features of the asserted claims, including an “outer cushioning sleeve,” a “predefined wash area,” and a spray arm “dependingly mounted” from the carriage. The court denied the motion, and the case proceeded to trial.

After a four-day jury trial, the jury found Wash World liable for infringing claim 7 and dependent claims 11–14 of the '041 patent. It awarded Belanger $9.8 million in lost profits and $260,000 in reasonable royalties, and the district court entered judgment in Belanger's favor. Wash World moved for judgment as a matter of law or, in the alternative, for a new trial or remittitur. The district court denied the motion, and Wash World appealed.

Claim construction arguments. On appeal, Wash World argued that the district court erred by failing to properly construe three claim terms: “outer cushioning sleeve,” “predefined wash area,” and “dependingly mounted from.” The Federal Circuit held that Wash World had forfeited its arguments as to the first two terms by presenting materially different constructions for the first time on appeal.

Concerning the term "outer cushioning sleeve," Wash World had proposed below that the sleeve be a "thick sleeve of extruded foam plastic," but on appeal, it sought a construction requiring the sleeve to be "soft and resilient" and capable of being compressed and springing back into shape. The appellate court held that this new construction had not been fairly presented to the district court and was therefore forfeited. Citing Digital-Vending Servs. Int’l, LLC v. Univ. of Phx., Inc., 672 F.3d 1270 (Fed. Cir. 2012) and Conoco, Inc. v. Energy & Envtl. Int’l, L.C., 460 F.3d 1349 (Fed. Cir. 2006), the court reiterated that parties may not raise new claim construction positions for the first time on appeal.

Similarly, for the claim term "predefined wash area," Wash World had argued at trial that the wash area must be centrally located within the wash bay. On appeal, however, it claimed that the term required the wash area to be fixed in advance and not vary with each vehicle. The appellate court found this argument also forfeited.

No error in construction of “dependingly mounted from.” Wash World's only preserved construction challenge concerned the term "dependingly mounted from." Though not explicitly construing the term during the claim construction phase, the district court rejected Wash World's argument at summary judgment that the claim required the spray arm to be directly connected to the carriage. The Federal Circuit agreed with the district court, holding that the term permitted indirect mounting via an intervening structure, such as a trolley.

The appellate court explained that nothing in the claim language required a direct connection and that the specification did not include any language limiting the term. It relied on Apple Inc. v. Wi-LAN Inc., 25 F.4th 960 (Fed. Cir. 2022), where the court reiterated that a single embodiment in the specification does not limit claim scope absent clear intent to do so.

Remittitur preserved and warranted. The most significant appellate relief granted was on the issue of damages. Wash World argued that $2.6 million of the $9.8 million in lost profits was improperly based on “convoyed sales” of unpatented components—such as dryers and accessories—that were not functionally related to the patented system. Belanger argued that the remittitur issue was forfeited because Wash World had not clearly asked the district court for that specific relief.

The Federal Circuit disagreed. It found that Wash World had raised the issue of convoyed sales throughout the litigation, including in its Daubert motion, at trial, and in its post-trial motions. Although Wash World had not specified the exact dollar amount to be remitted until its reply brief, the appellate court held that the issue had been sufficiently preserved, particularly since Belanger and the district court had responded to the argument on the merits.

The court also concluded that exceptional circumstances warranted consideration even if the issue had not been preserved. Specifically, Belanger had argued below that the jury's $9.8 million award aligned exactly with the opinion of its expert, Dr. McDuff, whose analysis included $14,164 in profits per unit attributable to unpatented components. Because the jury awarded damages precisely equal to Dr. McDuff's bottom-range figure and because Belanger had told the trial court that the jury had adopted this figure, the Federal Circuit held that Belanger was judicially estopped from arguing otherwise.

Functional relationship. On the merits, the appellate court agreed with Wash World that Belanger failed to prove a functional relationship between the patented system and the unpatented components, as required to recover damages for convoyed sales. Citing Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538 (Fed. Cir. 1995) (en banc) and American Seating Co. v. USSC Grp., Inc., 514 F.3d 1262 (Fed. Cir. 2008), the court held that convoyed sales damages are only available when the patented and unpatented items form a single functional unit. The court rejected Belanger’s reliance on testimony that the components were often sold together as a “package,” holding that mere co-sale or convenience was insufficient.

Because the record contained no evidence of the requisite functional integration and because the amount attributable to the convoyed sales was clearly identifiable, the court vacated that portion of the award and remanded for remittitur.

Conclusion. Thus, the Federal Circuit affirmed the finding of infringement but vacated the damages award in part. It remanded the case with instructions for the district court to reduce the damages by $2,577,848, resulting in a final award of $7,482,152 in favor of Belanger.

The Case is No. 23-1841.

Judge: Stark, L.

Attorneys: Michael David Gannon (Baker & Hostetler LLP) for Wash World Inc. Christopher Robert Dillon (Fish & Richardson P.C.) for Belanger Inc.

Companies: Wash World Inc.; Belanger Inc.

MainStory: TopStory Patent FedCirNews GCNNews