Federal judge to decide Hytera’s DMR future after Motorola Solutions files final injunction argument
Motorola Solutions this week asked a federal judge to issue a global permanent injunction that would block most Hytera Communications’ sales of DMR products, claiming that China-based Hytera has “no intention” of paying a $764 million court-ordered award and continues to sell DMR offerings absent a court order.
In the final brief submitted on the permanent-injunction matter, Motorola Solutions argued that Hytera has shown a “brazen disregard” of the jury verdict that found Hytera guilty of using stolen Motorola Solutions trade secrets and copyrighted software code to build its DMR business. In March, U.S. District Court Judge Charles Norgle of the Northern District of Illinois entered a judgment requiring China-based Hytera Communications to pay Motorola Solutions $345.8 million in compensatory damages and $418.8 million in punitive damages.
“Over four months after the jury found Hytera willfully and maliciously stole Motorola’s trade secrets and infringed Motorola’s copyrights, Hytera continues to sell the very products the jury found contain Motorola’s stolen technology,” the Motorola Solutions filing states.
“Hytera’s refusal to stop selling products with Motorola’s stolen trade secrets and source code unless enjoined …
confirms that injunctive relief is necessary to protect innovation—the lifeblood of the global economy—from the unlawful conduct that threatens to destroy it. Having proven that Hytera stole its trade secrets and infringed its copyrights, Motorola should no longer be forced to compete with its own innovations. A permanent injunction should be entered.”
Motorola Solutions’ brief marks the end of scheduled legal arguments in the post-trial portion of the Hytera case, which has been marked by numerous motions by both parties. Hytera’s requests include a new trial and a significant reduction in monetary damages to pay, while company officials have stated plans to appeal the decision. Motorola Solutions is seeking attorney’s fees, additional awards for recent Hytera sales and a permanent injunction that would extend beyond the U.S. borders based on the Defend Trade Secrets Act (DTSA) that was enacted in May 2016.
With all scheduled briefs complete, Norgle is free to issue decisions on all of the post-trial matters, although all sources declined to speculate on a timetable for such rulings.
Norgle has many requests to consider, but the most significant decision will be the one he makes regarding Motorola Solutions’ request for a worldwide permanent injunction against Hytera.
Attorneys for Hytera have argued that a permanent injunction blocking most DMR sales would be duplicative, because the jury already awarded Motorola Solutions $764.6 million—the full amount sought by the Chicago-based communications-equipment giant.
But Motorola Solution expressed doubt that it will receive any Hytera money, despite the damages awarded unanimously by an 8-member jury that were upheld in Norgle’s final judgment.
“Monetary damages are particularly inadequate here. because Hytera has made clear that it has no intention of ever paying any so-called royalty, and in fact that it will do whatever it takes—illegal or not—to avoid paying this Court’s judgment, including by moving assets outside the United States,” according to the Motorola Solutions brief.
“Despite contending that final judgment was entered on March 5, 2020, Hytera has refused to post a bond. The two U.S. Hytera entities have filed for bankruptcy, and without the help of foreign courts, Motorola has little hope of collecting from Hytera Communications Corporation. This ‘reinforces the inadequacy of a remedy at law.’”
When asked whether Hytera plans to pay the damages the federal-court jury said it owes Motorola Solutions, a Hytera spokesperson provided IWCE’s Urgent Communications with the following statement:
“Motorola Solutions’ permanent injunction request is not even appropriate in the first instance. Motorola has not shown actual success on its asserted trade secrets and copyright claims,” according to the e-mailed Hytera statement.
“The court and parties are unable to determine which trade secrets and copyright claims the jury had relied on in making their liability finding. Because a permanent injunction must track adjudicated wrongdoing only, and the jury did not identify which alleged secrets or copyright claims formed the basis for their adjudication, no injunction is proper. “
In this week’s brief, Motorola Solutions’ attorneys disagreed with such assessments from Hytera.
“The jury was given the option to apportion damages if it found fewer than all 21 trade secrets misappropriated; yet the jury awarded the full damages amount Motorola requested. Part of that award was $73.5 million for avoided R&D for all asserted trade secrets,” according to the Motorola Solutions brief. “Based on the entirety of the jury’s verdict, it is therefore clear that—consistent with the presumption—the jury in fact found all trade secrets misappropriated and all copyrights infringed.”
Hytera attorneys submitted a brief earlier this month claiming that that the language in the proposed permanent injunction was so vague that it was not clear what Hytera would have to do to comply, invalidating the request. But Motorola Solutions’ attorneys cite two examples in which the language was created by Hytera.
“Hytera claims not to understand what it means ‘to remove from its possession … All Motorola-branded documents … that Motorola contends were improperly acquired by Hytera,’” according to the Motorola Solutions brief. “Yet this portion of Motorola’s proposed order adopted Hytera’s own proposal. Hytera’s contention that its own language is somehow incomprehensible confirms that Hytera will say anything, regardless of whether it has a basis to do so, to avoid an injunction and obeying the law.
“Hytera contends it does not comprehend Motorola’s definition of Trade Secret Information, specifically ‘what it means for information to be “derived … in part” from other information.’ Hytera itself used the phrases “in whole or in part” and “derived” in its proposed injunction. Those same phrases are not inscrutable simply because Motorola is using them.”
In its brief, Motorola Solutions states that its market share in all regions of the world have declined or remained steady each year, while Hytera’s market share has increased annually, thanks to products it could not have created without the trade secrets and copyrighted software code stolen from Motorola Meanwhile, Hytera continues to compete in the marketplace with Motorola Solutions, even after the federal-court jury reached its unanimous verdict in February.
“Motorola has continued to lose customers to Hytera even after the jury verdict, including where it offered significant price cuts in order to try to win the bids,” the Motorola Solutions filing states. “This is precisely the type of ongoing irreparable harm an injunction would prevent. Hytera does not dispute lost customers constitute irreparable harm, nor could it.”
Hytera also has cited a public-interest argument in its opposition to the proposed permanent injunction, noting that removing a key player—Hytera—would harm competition in the DMR marketplace and potentially result in increased prices. Hytera has claimed that it would be especially difficult for customers that recently purchased DMR products from Hytera, noting that other DMR manufacturers cannot duplicate its feature sets.
In its brief, Motorola Solutions it has the capacity and capability to be an alternative to Hytera’s customer base.
“Hytera sold DMR radios to several customers on the eve of trial and after the verdict,” according to the Motorola Solutions brief. “Hytera was well aware of the risk of an injunction at the time it sold those radios, and its failure to advise its customers of that risk should not be rewarded with no injunction.
“Hytera chose to continue selling radios and taking orders, despite a significant risk that it would be enjoined. Ample time has passed after the February 2020 verdict for Hytera, its dealers, and its customers to prepare for Hytera’s exclusion from the market. Hytera cannot now rely on its illegal actions and the purported harm those actions allegedly created to argue against an injunction.”
A group of Hytera dealers have submitted letters noting the hardships that an injunction would place on their businesses and the communications of their customers, but this should not dissuade Norgle from issuing an injunction—and the injunction should apply to Hytera’s dealers, as well as the corporation, according to the Motorola Solutions brief.
“Hytera’s dealer e-mails make clear that the customers can, in fact, switch to a different DMR radio vendor,” the filing states. “While Hytera claims this is ‘an expensive task, in terms of both time and money,’ Hytera implicitly concedes a switch is feasible and does not say who would bear this expense, Hytera or its customers.”
Even if Norgle grants the permanent injunction against Hytera, there is a question surrounding its scope.
Hytera attorneys have argued that an injunction issued by a U.S. federal court only would apply within the U.S., leaving Hytera able to sell the DMR products in other countries. But Motorola Solutions asserts that language in the
DTSA supports granting an injunction in this case, because Hytera engaged in an “act in furtherance of the offense” in the U.S. through its participation in U.S. trade shows.
“To invoke the extraterritorial application of the DTSA, the plain language only requires the “an act in furtherance” be committed in the U.S.,” according to the Motorola Solutions filing. “It does not say, as Hytera’s interpretation would require, that “the same act” be committed in the U.S. and outside the U.S.
“Based on this plain language, the Court concluded that Hytera’s admitted participation in trade shows in the U.S. permitted extraterritorial application of the DTSA. No separate requirement exists for injunctions, and thus, a worldwide injunction should enter under the Court’s rulings on the extraterritorial application of the DTSA here.”
A footnote in the Motorola Solutions brief cites Hytera’s participation in only one trade show conducted in the U.S.—IWCE, which is a partner of IWCE’s Urgent Communications.
“Hytera’s participation in the IWCE conferences to advertise its brand and products undeniably furthers its worldwide sales of its DMR products containing Motorola’s trade secrets and copyrighted source code, particularly given the attendance of customers from around the globe,” the Motorola Solutions filing states.
During the trial that began last November, Hytera attorneys acknowledged that three former Motorola [the company had not yet changed its name to Motorola Solutions at the time] employees—Samuel Chia, Y.T. Kok and G.S. Kok—accessed more than 7,000 Motorola documents prior to each of them leaving and joining Hytera shortly in 2008. However, Hytera attorneys described the three engineers as “bad apples” who did not share with anyone else at Hytera that the DMR trade secrets and software were taken from Motorola.
If a new trial is not permitted, Hytera attorneys argue that the award to Motorola—reportedly described by a Hytera attorney as a “bankrupting amount”—should be reduced significantly.
In contrast, Motorola Solutions asks that the financial award that China-based Hytera should pay should be increased by including the profits that Hytera has realized during the time since the trial started, interest and attorney fees.