Hytera opposes injunctive request, says Motorola Solutions ‘seeks to monopolize the market’

Hytera Communications asked a federal judge to deny the Motorola Solutions request to block Hytera from selling the bulk of its DMR product portfolio, noting that a potential injunction would amount to “double recovery” on top of a $764.6 million jury verdict and would hand Motorola Solutions monopoly power that would harm consumers.

“Motorola’s motivation behind seeking this injunction is transparent,” according to a Hytera filing in the U.S. District Court for the Northern District of Illinois. “Motorola seeks to monopolize the market, allowing it to raise prices and harm customers … Motorola’s ultimate goal to remove Hytera from the market will have anticompetitive implications around the world that need to be considered in full.”

Hytera filed these claims in response to the Motorola Solutions application for a temporary restraining order (TRO) that would prevent Hytera from selling DMR products that use trade secrets and copyrighted software code that was stolen by Hytera employees while working previously for Motorola Solutions. If granted, the Motorola Solutions TRO would block Hytera sales and distribution of these “accused products” for 14 days, during which the terms of a permanent worldwide injunction against Hytera would be established.

On Feb. 14, an eight-person federal jury found that Hytera has sold DMR products that improperly use Motorola Solutions trade secrets and copyrighted software code, awarding Motorola Solutions $345.8 million in compensatory damages and $418.8 million in punitive damages, for a total award of $764.6 million. Hytera realized about $238 million in profits from its use of the Motorola Solutions trade secrets and copyrighted software code, according to testimony presented during the three-month trial.

Hytera has announced plans to appeal the jury’s verdict. However, the existence of the large award amount is a key reason why Judge Charles Norgle should deny the Motorola Solutions application for a TRO blocking Hytera DMR sales, according to the Hytera filing.

“A substantial portion of the damages awarded to Motorola by the jury includes what Motorola’s own expert has deemed a fully paid, lump sum, perpetual license [emphasis included in the document],” the Hytera filing states. “An order enjoining Hytera from selling the Accused Products would thus amount to double recovery. While money damages typically compensate a plaintiff for past use of a trade secret and an injunction bars future use, here, the jury awarded Motorola compensation both for past and future use.

“Motorola emphasizes that the DMR market in the United States is a two-player market. Without Hytera, that becomes a one-player market owned exclusively by Motorola and a market where Hytera’s customers, which include public health institutions and schools, are left unsupported … A prohibitive injunction would be inequitable, based on the inclusion of the lump sum, perpetual royalty that was already awarded.”

In its TRO application, Motorola Solutions said the harms it has suffered as a result of Hytera competing against it while using stolen Motorola Solutions trade secrets “cannot be remedied through a judgment for past damages, even putting aside the likelihood that Hytera will attempt to avoid enforcement of any monetary judgment entered by this Court.”

As well as the “double recovery” and monopoly arguments, Hytera’s filing states that Norgle should deny the Motorola Solutions TRO application because Motorola Solutions has never before sought injunctive action in a matter that has been contested for years. In addition, enough time has expired that Hytera could have developed its own software by now, so it should not be penalized further into the future, according to the Hytera filing.

Finally, the Hytera filing argues that a U.S. court does not have jurisdiction to implement a worldwide injunction. In fact, such a wide-ranging injunction would harm consumers; for instance, Hytera would not be able to sell the impacted DMR products in China, where Motorola Solutions essentially has evacuated the market.

That is not the only aspect in which the Motorola Solutions TRO application is “overbroad,” according to the Hytera filing.

“Motorola also seeks to prevent Hytera from ever developing a product that incorporates any source code in Hytera’s current products, which, among other things, includes independently developed code and third-party code that Hytera is entitled to use,” the Hytera filing states.

“In effect, Motorola seeks a broad-ranging injunction that would cut Hytera off at its knees—an injunction that is far in excess of what any equitable principles could support. This is all the more reason to adopt a more reasoned, tempered approach after complete briefing in consideration of a permanent injunction and not in a rushed TRO proceeding for which Motorola has demonstrated no urgency.”

Although Hytera asserts that Norgle should deny the Motorola Solutions TRO altogether, the company did offer an alternative for consideration, if the judge deems that some sort of injunctive relief is necessary. The Hytera proposal calls for a 90-day preliminary injunction that would prohibit Hytera from “making, offering to sell, selling, or otherwise distributing anywhere in the United States” the bulk of its DMR product portfolio.

Hytera’s preliminary-injunction proposal also would have Hytera remove and quarantine Motorola trade-secret documents and source code, so that it cannot be used by Hytera for business purposes. However, the proposal would allow Hytera’s legal counsel to continue to access these documents as the company defends its positions in other litigation—a wrinkle that is very different from the Motorola Solutions proposal, according to Hytera.

“Motorola seeks to purge these files not just from Hytera itself but also from Hytera’s lawyers, seeking to ban them from possessing, viewing, or accessing those materials,” the Hytera filing states. “Motorola’s extraordinary request would require outside counsel to destroy the very evidence on which the claims in this case are based as well as the claims in other pending litigation both in the United States and overseas.

Hytera’s filing echoed many of the sentiments cited in a filing of a group of 20 Hytera dealers, which warned of the negative impacts of an injunction in the dispute with Motorola Solutions.

“Multiple dealers in the Dealers Group support local public-school systems, with multiple locations and anywhere from 400 to 1,000 radios in use,” according to the filing by the dealers’ group. “They depend on this system to dispatch school buses on a daily basis and to dispatch law-enforcement resources to respond to incidents at the schools.

“If an injunction is granted, these users will, simply put, be unable to replace repeaters in their system, or to purchase additional radios for their system, creating chaos. Quite literally, the only choice left to public responders, for example, would be to stop issuing additional radios to its police officers, firemen and paramedics. There is a very real risk to public safety from having first responders, hospitals, and similar users unable to communicate. In the public-school example, if a repeater can’t be replaced, the communications systems will be inoperable. Buses will be dispatched without radios; schools will not be able to summon assistance.

“The real-world implications of stopping, overnight, the sales of DMR products are potentially catastrophic.”

If Norgle grants the injunctive relief sought by Motorola Solutions, there would be a significant negative impact on the members of the Hytera dealers’ group, which estimates that its members have an average of $100,000 in inventory that would be affected by the proposed injunction.

“The impact on the Dealers Group itself would also be catastrophic—literally rendering their existing radio communications systems and their inventory obsolete overnight and unable to be sold,” according to the filing by the Hytera dealers’ group. “They would be unable to service their existing customers, losing sales immediately.

“At a minimum, the members of the Dealers Group will be required to establish new distributorships with either [Motorola Solutions] or other manufacturers and begin to carry new lines of equipment. This will take considerable time and effort, all while losing sales and carrying a useless inventory. As small businesses, it is unlikely that the Dealers Group can survive such a transition; there will be layoffs as dealers are required to cut costs, and it is not inconceivable that dealers will go out of business.”

Norgle reportedly indicated last week that he could reach a decision regarding the Motorola Solutions TRO application as soon as this week.