by Dennis Crouch

The Federal Circuit decision in Two-Way Media focuses on a narrow issue of appellate deadlines – with a 2-1 majority concluding that AT&T cannot recover from missing its deadline for filing a notice to appeal following resolution of the defendant’s post-verdict motions.

AT&T had apparently relied upon the court’s PACER/ECF docket and email notification that had incorrectly labeled the Court’s final order (JMOL denial) as a decision on a motion to seal even though the underlying PDF documents clearly denied the JMOL motions. According to the appellate panel – that reliance was insufficient to excuse the delay.

The case is a cautionary tale warning against over reliance upon PACER/PAIR in docketing due-dates and particularly against automated docketing systems or docketing departments that rely primarily upon document headers to populate their information. Rather, the court writes here that “it is the responsibility of every attorney to read the substance of each order received from the court and that it is not sufficient to rely on the email notifications received from the electronic filing system.”

In the lawsuit, a jury found that AT&T infringed Two-Way Media’s U.S. Patent Nos. 5,778,187 and 5,983,005 under the doctrine of equivalents and that the asserted patent claims were neither anticipated or obvious. The result then was a $27.5 million reasonable royalty verdict raised to about $40 million with interest.

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The rules of appellate procedure provide that a notice of appeal must be filed within 30 days of the final judgment. Fed R. App. Proc. 4(a)(1). Here, that timeline was triggered with the Judge’s November 22, 2013 docketing of its orders denying JMOL. However, AT&T claims that it did not have actual notice of the decisions until January 15, 2014 — well past the 30-day period. AT&T quickly filed a motion with the district court to extend/reopen the appeal period pursuant to Federal Rules of Appellate Procedure 4(a)(5) and (6). Those provisions provide for “extending” the appeal period if “the party shows excusable neglect or good cause,” F.R.A.P. R. 4(a)(5)(A)(i), or “reopening” the appeal period when “the moving party did not receive notice … of the entry of the judgment.” The district court denied that motion and the Federal Circuit has now affirmed – holding that the lower court’s decision was within its proper discretion.

The following is the Federal Circuit’s write-up on the district court findings:

In considering AT&T’s motion under Rule 4(a)(5), the court found that the AT&T had failed to show good cause or excusable neglect. Although the [Notices of Electronic Filing] communicated an arguably incomplete description of the orders, the district court noted that even a total lack of notice would not be enough, standing alone, to justify extending the time for filing an appeal. The court concluded that it is the responsibility of every attorney to read the substance of each order received from the court and that it is not sufficient to rely on the email notifications received from the electronic filing system. The court explained that the NEFs were sent to 18 attorneys at the two firms representing AT&T. The court further noted that assistants at those firms actually downloaded copies of all of the orders onto the firms’ internal systems. Finally, the court pointed to the fact that, on that same day, the court also issued orders denying the unsealed JMOL motion and entering a bill of costs—both of which produced accurately labeled NEFs. The district court therefore refused to extend the appeal period under Rule 4(a)(5). . . . After concluding that AT&T’s neglect was not excusable, the court turned to AT&T’s request for relief under Rule 4(a)(6). . . . Here, the district court found that AT&T did receive notice of the entry of judgment when it received and downloaded those judgments from the electronic docket and that TWM would be prejudiced by the reopening of the appeal period, rendering Rule 4(a)(6) inapplicable.

On appeal, the Federal Circuit affirmed this reasoning. Thus, no appeal and AT&T must pay the $40 million.

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The majority here was written by Judge O’Malley who has the tendency to give deference to district court judgments and be a stickler for following the rules of procedure. Judge Dyk wrote in dissent – arguing that AT&T had proven its case of not receiving notice because the docket listing was incorrect.