The U.S. Court of Appeals for the Federal Circuit has upheld a lower court ruling that prevented AT&T from appealing a $40 million verdict against the company in a patent lawsuit. The ruling is a major black eye for AT&T’s lawyers at Sidley Austin and Davis Cedillo & Mendoza, Inc., who missed their 30-day appeal window, and a cautionary tale for lawyers everywhere.

In the underlying suit, Two-Way Media, LLC, claimed that AT&T’s U-Verse television service infringed its patents. Two-Way won a $40 million jury verdict in March of 2013. The district court entered final judgment consistent with the jury’s verdict on October 7, 2013.

Around the same time, AT&T filed several motions for judgment as a matter of law, and for a new trial, and also requested that some of the motions be filed under seal. In November, the trial court issued a notice with attached orders. AT&T’s attorneys read the notice, but did not read the orders, because the notice indicated on its face that the attached orders related only to AT&T’s motions to seal. In fact, the enclosed orders both granted the motions to seal and denied AT&T’s post-trial motions on their merits, which started the appeals time clock running. A few days later, the court updated the descriptions of the orders on the docket, although it did not send new electronic filing notices of the update to counsel of record.

AT&T attorneys realized in January of 2014 that the trial court had resolved its post-trial motions, and requested additional time to appeal. U.S. District Court Judge Orlando Garcia denied the request and chastised AT&T’s attorneys for missing the deadline.

AT&T filed a $40 million bond while it appealed Judge Garcia’s ruling on their ability to appeal. The company fared no better at the Federal Circuit.

In response to AT&T’s (read: Sidley’s) argument that the clerk’s notice was misleading, two judges of the three-judge panel stated unremorsefully, “The civil docket, therefore, had a complete description of those orders had AT&T bothered to check the docket, as it should have done.”

The court further noted that AT&T received a proper notice assigning costs, which are available only to a prevailing party, which should have indicated to AT&T’s lawyers a resolution on the merits.

Judge Dyk dissented, on the grounds that “the substantive orders were not entered on the docket at the time that AT&T arguably received notice of the orders, and the required notice of the entry was not provided.”

It did not help that, in the words of the majority opinion, “The [notices] were sent to 18 attorneys at the two firms representing AT&T,” and that “the assistants at those firms actually downloaded copies of all of the orders onto the firms’ internal systems.”

The case is United States Court of Appeals for the Federal Circuit Case No. 2014-1302, Two-Way Media, LLCv. AT&T, Inc.

The court’s statement that the lawyers should have checked the docket, and the strong language used throughout the District Court and Appellate Court decisions indicates that AT&T’s attorneys may have ethical problems in addition to the adverse verdict.

There’s certainly a colorable argument that the attorneys’ conduct violates two of the most fundamental rules of professional conduct: Rule 1.1, which provides that lawyers shall provide competent representation to their clients, and Rule 1.3, which provides that lawyers shall act with reasonable diligence and promptness.