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.
Does anyone else here have difficulty believing that not one person in this group of 18 lawyers and paralegals clicked the link and read the order? This is a $40 million judgment, after all. If any one of these 18 says, “yes, I read it” then actual notice gets imputed to the firm and the client. The incentive to forget having clicked the link was quite strong.
Minor correction: all 18 were lawyers. My skepticism concerns the claim that not one of them read the order.
Seems unlikely that not a single one clicked to have at least a quick look. You’d think the senior partner in charge of the litigation would at least just double check to see what it said. (Orders can often have other stuff added in there such as little warnings from the judge.)
Not reading the underlying order, perhaps that is a mistake.
But what bothers me is that the clerk updated the docket entry on Nov. 25 (three days after the original entry) which did not generate an ECF notice. Several points:
(1) Why doesn’t this generate an ECF notice?
(2) Since it doesn’t, do lawyers now have to pay PACER fees just to “check” that the docket hasn’t been surreptitiously changed by the clerk, under penalty of potentially waving rights? And then spending whatever time is necessary to cross-check every entry with previous copies of the docket?
This latter point seems especially problematic. PACER fees quickly add up (especially on large dockets), and unlike that first view of a document, there is no free access to dockets even if you’re involved in the case. Then you have to compare two documents to make sure changes haven’t happened.
How are practitioners supposed to balance keeping costs to their client down while at the same time making sure they have met their affirmative duties to check the docket (presuming that’s what’s now required)? How often are we required to now “check” dockets? I’m really troubled by this part of the opinion.
Would love for David to weigh in on this one.
This latter point seems especially problematic. PACER fees quickly add up (especially on large dockets), and unlike that first view of a document, there is no free access to dockets even if you’re involved in the case. Then you have to compare two documents to make sure changes haven’t happened.
The documents didn’t change in this case. It would be a completely different case if the clerk “surreptitiously” switched documents.
This case simply says that you shouldn’t rely on the docket text entries – you have to actually read all of the judge’s orders and do your own evaluation of what impact those orders have on deadlines.
Does it?
Many courts issue minute orders,where there is no document, only a text entry on the docket.
Suppose the clerk misstated something in putting in the entry, and later changes it. No ECF notice is generated. Then what? Are you on notice? Would the Federal Circuit find that you had the affirmative duty to check the docket repeatedly for changes in minute orders? Do you have to check orders from 10 months ago?
Why is PACER not sending ECF notices for these changes?
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.
This quote is for all the people who say “If argument X is such a good argument, why didn’t [big corp’s] gaggle of super lawyers raise it at trial?”
‘for all the people who say “If argument X is such a good argument, why didn’t [big corp’s] gaggle of super lawyers raise it’
Reminds me of Samsung’s billion dollar Apple trial where S’s lawyers repeatedly couldn’t make filing deadlines and were denied various defenses and evidence by the magistrate as sanction for failure to comply.
Why did Samsung continue paying Quinn Emmanuel tens of millions for service like that with ten digits on the line? I can imagine no logical explanation.
Most (if not all) clients are completely clueless as to what they’re getting, even in patent prosecution/drafting. I always wanted to perform an analysis for clients to determine whether or not their counsel is good. Most of them are not. And it seems (as a general rule), the bigger the firm, the worse the quality of work product, especially for patent prosecution. I can’t tell you how many large firms I’ve seen handing case drafting and prosecution to agents or attorneys with little to no experience.
Anon, on “articles” and “licensing.”
LSI CORPORATION v. ITC
link to cafc.uscourts.gov
“Several months before the scheduled hearing, on January
10, 2013, this court in InterDigital Communications,
LLC v. Int’l Trade Comm’n clarified certain requirements
for entities seeking to take advantage of the Commission’s
exclusionary remedy under § 1337. 707 F.3d 1295, 1296
(Fed. Cir. 2013) (referred to by the parties as InterDigital
II because it was a decision accompanying a denial of a
petition for rehearing). The statute bars importation of
articles that infringe a patent “only if an industry in the
United States, relating to the articles protected by the
patent . . . exists or is in the process of being established.”
§ 1337(a)(2). The statute adds, as relevant here, that
such an industry exists “if there is in the United States,
with respect to the articles protected by the patent,”
“substantial investment in [the patent’s] exploitation,
including . . . licensing.” § 1337(a)(3)(C). In InterDigital
II, we stated that, when a complainant seeks to establish
the existence of such an industry based on its investment
in licensing activities, the complainant must show that
those licensing activities relate specifically to “articles
protected by the patent.” 707 F.3d at 1298. Such an
investment, we said, “must pertain to products that are
covered by the patent that is being asserted.” Id. at 1297–
98. ”
Id. at *3-4.
Ned,
The key words in your quote are: “OR is in the process of being established.”
As such, there need NOT be any actual immediate product.
I think that I have the better view.
Still crazy to see what amounts to a clerical error being the deciding factor in losing a case.
Especially when the clerical error was on part of the clerk of the court….
Dyke points out in the dissent that although the clerk provided notice of entry of a sealing order, it did not later provide an updated notice when the sealing order entry was changed to reflect denial of a motion.
“A notice of electronic filing was generated for each of the sealing order docket entries, notifying the parties that the sealing motions had
been granted. Later that day, the clerk modified docket entries 613,
615, and 616 to state that the substantive JMOL and/or new trial motions had been denied.” … “Notice of the substantive order docket
entries was not provided to the parties.”
So, contrary to the arguments made that the AT&T attorneys got notice, in fact they never were notified by the clerk of the court that the docket entries were changed, thereby triggering an appeal clock.
But notice of the actual orders was in fact given. It is merely the label that you are resting on for the supposition of lack of notice. I certainly hope that you are not espousing the notion that law firms don’t have to read actual full orders given by the court and can just “mail it in” by reading labels.
Any minimally competent attorney should read an order sent to him or her by email, no matter how it is labeled.
In this case, all 18 of AT&T’s “lawyers” failed to read the correctly labeled order denying their unsealed JMOL motion, as well as the incorrectly labeled order denying their sealed motion.
Blaming the court clerk in this case is beyond arrogant and should be ground for frivolous appeal.
Reading the order again is not pertinent to timing. It is the docketing of the order on the record that is pertinent. AT&T was not given notice of the docketing of all of the final orders.
Ned – Is the requirement docketing or notice_of_docketing?
Dennis, Docketing. It has to be correct.
“As shown by United States v. F. & M. Schaefer
Brewing Co., 356 U.S. 227 (1958), and numerous Court of
Appeals cases, a docket entry that does not comply with
FRCP 79(a) does not trigger the time for appeal.4”
See, note 4 for more cases.
The time for appeal did not begin until ALL final orders were docketed and properly docketed so that attorney inspection of the docket would lead to no doubt that a final order had been entered.
Dennis, the lack of notice is relevant to FRAP4(a)(6) where the court has the discretion to extend the time for appeal if the party did not receive notice of “entry” into the docket of the order, some timing issues, and lack of prejudice.
There was no dispute that AT&T did not receive notice of the docket entry of the all final orders.
Since the district court committed legal error here by holding it had no authority to extend time, the court’s finding here was a legal abuse of discretion.
Your last argument is interesting, Ned, if your summary of the facts is accurate. If the court actually held that it had no discretion, then I agree that is reversible error. A failure to actually exercise discretion is an abuse of that discretion.
Actually, the Federal Circuit affirmed the district court’s exercise of discretion under FRAP 4(a)(5) & (6). The district court found no excusable neglect under (a)(5) because the attorneys should have read the order that they admittedly downloaded, especially since a bill of costs had been entered. The district court also found that (a)(6) was not satisfied because the attorneys had actual notice of the order.
Steve, They did not receive actual notice of the entry of the order. See the definition of entry in (7).
4(a)(6) “The district court may reopen the time to fi le an appeal for a period of 14 days after the date when its order to
reopen is entered,”
(7) “A judgment or order is entered … (i) when the judgment or order is entered in the civil docket…”
The order was in fact entered on the docket and downloaded, but not read, by AT&T’s attorneys. Because the underlying order itself indicated final judgment, “no magic words” were necessary in the docket entry and the authorities relied upon by AT&T were inapposite.
An NEF is a notice, not a docket entry. It is an acronym for “NOTICE of Electronic Filing.” In this case, the court clerk entered a corrected description of the relevant order within a few days after sending actual notice of that order, which AT&T’s law firm admittedly downloaded but did not read. Consequently, the time for appeal began to run no later than the date of the corrected docket entry.
Ned,
Again, as I understand the facts, actual notice was given, albeit merely mislabeled – any amount of reasonable due diligence on the part of the law firm (that is, merely reading the information supplied by the court and NOT relying solely on the labeling) would have in fact prevented the missed date.
I am still not seeing the legal error here.
The legal error was related to the district court holding that it did not have authority under FRAP4(a)(6) to extend the time to appeal. The grounds for this motion are that the party did not receive notice of the “entry” of the order [onto the docket], some timing issues, and lack of prejudice.
However, the court did have discretion. Thus, its ruling was a mistake of law, and that is per se an abuse of discretion under controlling authority.
“The grounds for this motion are that the party did not receive notice ”
Ned, as I have pointed out to you several times now, this statement of your is simply not in accord with the facts of the case. The notice may have been mislabeled, but the body of the item that the law firm did have did in fact give them notice.
I am not sure why you insist on repeating an error once that error has been pointed out to you.
This is why GCs hire megafirms with teams of 30 + lawyers. 18 clearly is not enough.
No this case is about Biglaw cost-cutting measures over the past couple of years. Biglaw could hire a hundred attorneys and I would argue the same result would occur.
Competent experienced support staff matter!
I was being sarcastic. 18 lawyers who don’t read court orders, miss deadlines and fail to timely appeal a $40 million judgment are clearly overpaid. Competent lawyers matter — even just one.
Wasn’t Sidley the firm that pulled The Medicines Company’s chestnuts out of the fire when the latter (or rather, it counsel at the time, Fish & Neave, later Ropes & Gray) missed the deadline for filing for a patent term extension on Angiomax (bivalirudin)? Irony is so ironic.
Laughing, perhaps ironic.
But we all have a new rule and it is absurd. We must constantly monitor the electronic docket for new or revised orders as we will be held accountable even if the clerk does not e-mail the new or revised order to us.
I think that overstates the issue, Ned. The links that were sent to the 18 lawyers was mislabeled, but led to the actual orders. No one opened those links and read them.
The “new rule” here is that somebody at the law firm has to be responsible for actually downloading each docketed item and reading it. That doesn’t sound terribly onerous to me.
DanH, reading the orders by themselves does not start the time to appeal. This is completely irrelevant except to the extent it should have put the firm on notice to look at the record.
It is the docketing of the final order on the clerks record coupled with a notice of the docketing of the order that is what starts the clock. The court indicated that the firm had the duty to monitor electronic docket under circumstances such as this were the original entry did not indicate the docketing of an final order.
Something akin to this happens in prosecution of patents where knowledge of the office action does not start the time to respond. Is the date of actual mailing of the office action that starts the time.
Note also, that the time to appeal does not begin until all outstanding motions for JMOL are decided and entered on the docket.
This is not a new rule actually predates PACER
The district court denied the motion under FRAP 4a(b) because it was held it without authority to exercise discretion because “[b]ecause Defendants received notice of the denial of their post-trial motions”
This finding was legally erroneous as the district court did have discretion according to the majority.
““A district court by
definition abuses its discretion when it makes an error of
law.” Koon v. United States, 518 U.S. 81, 100 (1996); Am.
Signature, Inc. v. United States, 598 F.3d 816, 823 (Fed.
Cir. 2010) (“An abuse of discretion may be established
under Federal Circuit law by showing that the court made
a clear error of judgment in weighing the relevant factors
or exercised its discretion based on an error of law or
clearly erroneous fact finding.” (internal quotation marks
omitted)).”
The facts show also that AT&T never received notice that the court’s JMOL had been docketed on the record. It is this docketing, not the receipt of the order, that starts the clock running.
So say you Ned. But, I’ve been on litigation teams. This is pretty ridiculous. I can’t imagine this happening.
Night, me neither.
But the law is the law. District court denied the motion thinking he had not authority. That was and error of law.
“The facts show also that AT&T never received notice that the court’s JMOL had been docketed on the record.”
Ned, your statement is not correct. You are misreading the CAFC decision. The timing did run per the rules, and notice (albeit mislabeled) was indeed given. The docket was correctly registered and the clock correctly run per that docket.
The issue here is merely whether the law firm performed diligently in actually reading what the court actually sent them (mislabeled or not).
The law firm evidently did not do so.
Contrary to your assertions, this key fact is very much relevant and is most decidedly not a red herring.
My post below at 2.1.2.1 remains on point, and there is in truth no “error of law” that you have shown.
“We conclude that the district court did not abuse its
discretion when it found that AT&T did not satisfy its
burden to show excusable neglect for its failure to read
the underlying orders and check the docket for more than
a month after the court issued the final orders.”
Note, anon, not checking the docket was the problem.
Ned,
You appear now to be trying to prove my case against you.
Meanwhile, at the PTO, all you have to do is give us money and say you’re sorry*, and almost any missed deadline is forgiven. Even if you’re not really sorry.
* i.e., it was “unintentional”
On a related note, is no one here surprised that the district court denied AT&T’s motion to extend in the first place?
Absolutely. A clear abuse of discretion — primarily directed to covering its own clerical mistakes.
This point seems to be at the heart of it:—
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.
Apparently, not a single one of 18 lawyers for AT&T clicked the link and read the actual order. It’s difficult to go into an appeal and argue that the district court abused its discretion — i.e., that there was “excusable neglect” as a matter of law. There may be a few statements in the opinion that will have consequences in less egregious cases, but it’s hard to imagine reaching a different result here.
DCL not a single one of 18 lawyers for AT&T clicked the link and read the actual order
A lot of times members of a litigation team have specific tasks and, depending on what’s happening in the case, have been instructed by the client or partner in charge of the case not to do any work on the case until further notice. That’s doubly true when there are two firms involved in the litigation. Tasks are divided up and law firm attorneys usually have so much other work to do that they don’t spend much time worrying about tasks that aren’t assigned to them.
It’s also the case that most clients would have a freekout (and rightfully so) if they were billed by 18 different attorneys for reading a JMOL order (particularly if the order was expected and there was nothing particularly unusual about the substance). Probably only one or two of those 18 attorneys had the responsibility of reading the order and, apparently, they either decided to let their docket management system take care of the docketing details or their was some other “failure to communicate” the information to their docketing department.
The best practice, of course — before and after this case — is for at least one attorney to read the order, confirm the correct docketing date, and make sure the docketing department is on the same page. Still, humans will make mistakes. Some of them aren’t fixable.
I could see a district court letting them off the hook, but can’t see the argument that it was an abuse of discretion not to.
It’s not that all 18 lawyers somehow screwed up, it’s that no one with a JD thought it was their job even to skim the actual orders, and all 18 thought that it was either someone else’s job or that it was ok to rely on a clerk’s shorthand to tell them whether they needed to read the order or not. A one-page order granting a motion to seal takes less than a minute to read and probably wouldn’t show up on a bill.
Reasonable people can disagree about how understandable these facts are, but under an abuse of discretion standard, the appeal seems DOA on this point.
That seems to me to be a reason not to put 18 lawyers on a single case.
Dennis, the citation to 18 lawyers was intended to be a smear by Federal Circuit. The issue was not whether they read the content of the e-mail notice.
The time for appeal ran from the time the orders were properly docketed. AT&T did not receive notice of docketing. The Fed. Cir. says that AT&T should have constantly monitored the docket for this. You and I both know that this is bogus beyond belief.
The court should have granted the motion, but did not do so because the court committed legal error compounding the previous error by the clerk.
This needs to be overturned. It is outrageous, in my view.
Re: “The Fed. Cir. says that AT&T should have constantly monitored the docket for this. You and I both know that this is bogus beyond belief.”
I’m not a litigator, so this may be a dumb question, but is that really so onerous? We monitor PAIR for our pending applications (not constantly, but at reasonable periodic intervals). How hard is it to monitor the court docket?
“I’m not a litigator, so this may be a dumb question, but is that really so onerous?”
Not really. In my past litigation days (I’m in-house now) on large cases like this, an associate was usually assigned responsibility to receive and review all orders, filings, etc. to make sure deadlines were not missed. With 18 lawyers having filed appearances, I find it hard to believe that no one was responsible for actually reading the orders.
Slick, indeed, someone paralegal should have been monitoring the docket. But the impression created here is that all 18 lawyers should be monitoring. That is the impression left by the opinion.
But really?
Ned,
That is not the impression created here for me.
Instead, the impression created here was that at least one of the eighteen should have opened up the item from the court (which the law firm did have in its entirety), and actually read the notice given and could have seen right from the start exactly what information they had and that was docketed.
Not that all should have, but that apperantly not one of them actually did.
The reading of the order was legally irrelevant and red herring.
Malpractice for failure to read the order?
6, read my post when Dennis approves it. Far more complicated that it appears at first blush.
What this case really stands for is that there is a duty to monitor the electronic docket for entry of an order the party already has in their possession.
Happened to me recently. I noticed an order had been entered only because I checked.
DanH: your suggestion that it can’t possibly make any difference whether data comprises audio and/or video is just wrong.
That’s not my suggestion.
My “suggestion” is that in junk claims like this one (which are not unusual at all) the differences between audio and visual data [note: all audio and visual data] versus other kinds of data are treated as fundamental and technically critical to patentability over the prior art without any justification for doing that. Does “converting”, “routing” “monitoring” care at all what kind of data is being “converted”, “routing” or “monitoring”? Is there some technical problem specific to “converting” “routing” or “monitoring” of “audio/video” information (as opposed to other kinds of information) that is addressed and solved by this claim? Of course not.
Remember: “audio data” includes data encoding a single audible tone that lasts half a second (“beep!”). “Visual data” includes data encoding the display of a single white pixel. “Text data” includes the complete collected text of every edition of encyclopedia brittanica published in the past 200 years. Which data will present the greater challenge to this generic “network”?
This claim protects the use of basic, ancient logic to route information “over a network.” It’s junk. And its junkiness doesn’t change because you recite the meaning or desirability of the information in the claim.
Now thanks to AT&T’s screw up this troll gets tens of millions of dollars to help it continue with its “monetization” scam.
TWM would be prejudiced by the reopening of the appeal period,
Was there actual evidence for this “prejudice”?
In the opinion, the Federal Circuit expressly refuses to consider that point – instead finding that the no-lack-of-notice finding was sufficient to affirm.
The court explained that the NEFs were sent to 18 attorneys at the two firms representing AT&T.
There was a communication breakdown somewhere.
I assume the combination of the holidays and the usual fourth quarter craziness factored into the ball being dropped as well.
Hopefully the malpractice suit to follow which will send a message to Biglaw.
Ever since 2008 (after the crash), Biglaw has for cost-cutting reasons redefine or eliminated the role of “Litigation Manager (LM).” The LMs were typical older lawyers with significant litigation experience (e.g., pass-over associates). The LMs were experts on the draconian rules of each appellate court and were an internal mechanism to prevention such an embarrassing result as occurred here.
I recently worked with two BigLaw firms on a patent litigation and heard that they fired LMs a couple years ago and replaced them with a series of paralegals since. This is an accident waiting to happen.
John, I am sympathetic to AT&T here.
1. Under the prevailing law, discussed in the dissent, the order was not “entered” for timing the appeal until properly docketed. AT&T was never given notice of the docketing.
2. The court here created a new duty to constantly check the electronic docket for docketing of orders. I think this a bit unreasonable.
3. As the dissent noted, the district court denied the motion under Rule 4(a)(6) based on a error or law. Errors of law are per se abuses of discretion according to controlling authority.
All in all, another piece of very rough justice from the Federal Circuit. Makes one cringe.
“I am sympathetic to AT&T here.”
I agree 100% AT&T did not get what they contracted when they retained one of the most expensive IP firms in the US.
Dennis, the district court ruling was an abuse of discretion as a matter of law because it was based on an error of law.
Ned, help me out here – how was a law firm’s not reading the actual content of what it was sent an “error of law”…?
My reply got posted above at new post 8.