Judgment Overturned in Leviton Mfg. Co. v. Universal Security Instruments

On May 28, 2010, the Federal Circuit vacated a million dollar judgment in Leviton Mfg. Co. v. Universal Security Instruments after finding that material issues of fact precluded summary judgment on inequitable conduct. The dispute began after Leviton sued Shanghai Meihao for infringement of Leviton’s 6,864,766 ("the ‘766 patent"). The ‘766 patent was a continuation of an earlier patent which had a priority date of 1999. However, six months prior to filing what would become the ‘766 patent, Leviton attorneys filed another application (Germain application) which claimed nearly identical subject matter to the ‘766 patent, but shared no inventors with the ‘766 patent. Meihao argued that the ‘766 patent was invalid due to inequitable conduct because the Germain application was never disclosed to the patent office during the prosecution of the ‘766 patent. The district court found that the failure to disclose the Germain application was material to the ‘766 prosecution and that the Leviton attorneys acted with intent to deceive. The district court ordered a judgment of costs and attorney’s fees against Leviton based on the finding of inequitable conduct and vexatious litigation.

On appeal, the Federal Circuit agreed that the Germain application was material to the ‘766 prosecution, but the court found that an issue of material fact remained on whether Leviton’s attorney’s acted with intent to deceive. Meihao argued that intent to deceive could be inferred from, among other things, the experience of the attorneys, and the motivation of receiving an earlier priority date for the claims by adding the claims as a continuation. Leviton countered that because of the ‘766 patent's earlier date, the prosecuting attorney did not consider the Germain application to be relevant prior art. The majority found that Leviton's rationale for failure to disclose created an issue of fact which could not be disposed of on summary judgment. The court distinguished between an omission and an affirmative act and stated that the district court “could not find that Leviton intended to deceive the PTO by failing to notify the PTO of related litigations without an evidentiary hearing.”

In dissent, Judge Prost agreed that findings of inequitable conduct on summary judgment are reserved for exceptional cases, but she believed that the facts of this case warranted summary judgment, saying, "In overturning the district court's finding of deceptive intent on these facts, the majority's legal standards and reasoning take the burden to establish deceptive intent to an unprecedented level."