AT&T Has to Pay $40 Million Because It Didn’t Read Document

An AT&T Wireless retail store front, in Philadelphia.

An AT&T Wireless retail store front, in Philadelphia.

Photographer: Matt Rourke/AP Photo

Call it AT&T Inc.’s $40 million “whoops.”

The telephone company will have to shell out that much in a patent-infringement case because its lawyers didn’t read a court document, an appeals court ruled Thursday.

AT&T missed a deadline to appeal a jury verdict for $27.5 million, plus interest, won by closely held Two-Way Media LLC for using its technology for tracking what you watch on streaming video services.

The problem started with a faulty court docket notice, which said the trial judge had granted AT&T’s request to seal some documents. A reading of the actual order showed the judge had denied AT&T’s request to overturn the jury verdict, setting the 30-day clock ticking for the time to appeal.

AT&T’s lawyers at the firm Sidley Austin were never notified when the docket entry was corrected and, by the time they realized what the judge had done, 51 days had passed.

AT&T said its missed deadline was “excusable neglect” because of the incorrect docket entry. But the U.S. Court of Appeals for the Federal Circuit sided with the trial judge, who said at least 18 lawyers and assistants had been given the information needed to know when the deadline was. He refused to extend the time period for the appeal.

Judge Backed

The appeals panel, in a 2-1 ruling, said District Judge Orlando Garcia in San Antonio acted within his rights when he said it was “inexcusable for AT&T’s multiple counsel to fail to read all of the underlying orders they received, or -- at minimum -- to monitor the docket for any corrections or additional rulings.”

For AT&T, which reported $132.4 billion in revenue last year, the $40 million equals less than a day’s worth of sales.

AT&T can ask the panel to reconsider its decision or request it be heard before all active judges of the court. If that doesn’t work, the next step would be the Supreme Court, which in 1998 left intact a default judgment against a company that failed to respond to a lawsuit that was lost on a legal assistant’s desk for more than a month.

“More often than not, the courts will bend over backward to grant a re-opening and save the day for the party who missed a key deadline,” David Peirez, a corporate lawyer with Reisman Peirez in New York, said. “However in this case, it is tough to sympathize with AT&T since 18 lawyers dropped the ball.”

AT&T had no comment, said Marty Richter, a spokesman for the Dallas-based company. A spokeswoman for the law firm Sidley Austin didn’t comment on the ruling.

The patent case is Two-Way Media LLC v. AT&T Inc., 14-1302, U.S. Court of Appeals for the Federal Circuit (Washington).

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