• On September 20, 2010, the US Court of Appeals for the Tenth Circuit affirmed a $16.5 million verdict against AT&T in favor of its long-distance customers in California who were overcharged for Universal Service Fund (USF) contributions. The court of appeals first had to resolve whether the federal Communications Act of 1934 preempts California’s state unconscionability law that could have invalidated the mandatory arbitration provision in AT&T’s customer contract. On that issue, the court found that “although detariffing ended the strict uniformity imposed by § 203’s filed-rate doctrine, it did not lessen the preemptive force of the uniformity requirements that remained in §§ 201 and 202. The district court’s deferral to the FCC’s order, and its resulting determination that the FCA preempted the non-California residential plaintiffs’ substantive unconscionability claims, but not their procedural unconscionability claims, is therefore correct.” On the merits, the appeals court agreed that AT&T had overcharged for its USF contribution, finding that its contracts did not allow “repeatedly overcollecting [such] charges without timely issuing refunds or revising its UCC rate to compensate for its overbilling.” In re Universal Service Fund Telephone Billing Practice Litigation, Nos. 09-3059 et al. (10th Cir.).
  • On September 17, 2010, the US Court of Appeals for the Fifth Circuit affirmed a trial court’s grant of summary judgment in favor of Ingenio, a unit of AT&T, in a patent infringement suit brought by inventor DuVal Wiedmann. The court of appeals found that AT&T’s termination of a licensing agreement with Wiedmann did not constitute a breach. “We agree with the district court that ‘strict compliance with the contract’s notice provisions was not required,’ because DuVal received actual notice and was not ‘in any way prejudiced as a result of this minimal deviation’” from the notice provision, the appeals court said. The court remanded the case back to the trial court to examine the question whether AT&T owes Wiedmann royalties for the period between the contract termination and when the inventor sought re-examination from the US Patent and Trademark Office. DuVal Wiedmann LLC v. InfoRocket.com Inc., No. 09-50787 (5th Cir.).
  • Clarification: On September 2, 2010, the US District Court for the Northern District of Illinois granted summary judgment in favor of defendant Peerless Network and related defendants against plaintiff Neutral Tandem in a patent-infringement and antitrust case, and invalidated Neutral Tandem’s local transit traffic patent in the process. The court rejected Peerless’s argument that the challenged services were already provided (by Focal and INS, among others) before Neutral Tandem filed its patent, but held that an earlier patent had disclosed the terms of Neutral Tandem’s patent, rendering the patent invalid as a matter of law. Neutral Tandem, Inc. v. Peerless Network, LLC, No. 08 C 3402 (N.D. Ill.).