Federal judge denies Motorola Solution injunction request, orders DMR royalty talks with Hytera
Hytera will be able to continue selling its portfolio of DMR products, but the China-based LMR manufacturer will have to pay Motorola Solutions a “reasonable royalty” for the right to use trade secrets that Hytera stole from Motorola more than a decade ago, according to a federal court ruling released today.
U.S. District Court Judge Charles Norgle denied Motorola Solutions’ request for a permanent injunction that would have blocked Hytera from selling much of its DMR offerings worldwide but indicated that Motorola Solutions should be compensated in the future in the form of a royalty amount that could be determined within weeks.
“The court finds that an injunction in this case would be inequitable and thus continues on to the alternative relief—a reasonable royalty,” Norgle states in his order. “Because the arguments in the pending briefing are undeveloped as to what a reasonable royalty in this case would be, the court will allow the highly competent counsel in this case to confer and propose a process as to determining this royalty.
“Hytera points out that the parties currently mediating this issue, and the court does not want to discourage an agreement among the parties. Thus, the parties shall submit a proposed plan no later than January 14, 2021. If no agreed plan can be reached, each party shall submit its own proposal.”
Hytera applauded the ruling, which most industry sources believe should allow the company to continue conducting its business with little or no significant negative impact on its existing customer base or dealer network.
“Hytera is very pleased with the recent ruling by the court, which officially denied [Motorola Solutions’] request for a permanent injunction,” according to the Hytera statement provided to IWCE’s Urgent Communications.
Motorola Solutions said it is “considering all options for further action” regarding its request for a permanent injunction in a statement provided to IWCE’s Urgent Communications. Otherwise, the intellectual-property lawsuit against Hytera has been a “clear victory” for Motorola Solutions, according to the statement.
“The jury in this case determined Hytera stole Motorola Solutions’ trade secrets and infringed our copyrights, and awarded $764.6 million in compensatory and exemplary damages to Motorola Solutions,” according to the Motorola Solutions’ statement. “Further, in October, the court denied Hytera’s motion for a new trial, noting that the February verdict was supported by ‘overwhelming evidence.’ This outcome is a clear repudiation of the illegal and anti-competitive tactics Hytera has employed for more than a decade.
“The Court’s decision today confirms that Hytera’s sale of products containing Motorola Solutions’ trade secrets continues to harm Motorola Solutions following the verdict, granting Motorola Solutions’ request for a royalty on every sale Hytera makes of the DMR products at issue going forward into the future. The Court will determine that additional royalty through subsequent briefing.”
Released online today, Norgle’s order was filed yesterday, according to an online federal-court database. However, none of the attorneys participating in a related Hytera bankruptcy hearing yesterday indicated any knowledge that an injunction decision from Norgle was imminent.
As a result, the California bankruptcy judge expressed support for the Chapter 11 sale of most Hytera’s U.S. assets to a new Hytera US entity and for the sale of the disputed DMR inventory—items that could have been subject to a Norgle injunction order—to be considered again during a Jan. 22 hearing.
Hytera America and Hytera Communications America (West) filed for Chapter 11 bankruptcy protection in May, in the wake of Norgle affirming a $764.6 million award against Hytera in March for utilize DMR trade secrets or copyrighted software stolen by former Motorola employees who left to work for Hytera in 2008. After the federal-court award was announced, Motorola Solutions asked Norgle for injunctive relief to block Hytera from selling many of its DMR products worldwide.
In his opinion, Norgle said that Motorola Solutions satisfied three of the four criteria he considered while making his assessment whether to grant a permanent injunction worldwide that would have prohibited the sale of many key Hytera DMR offerings.
Motorola Solutions attorneys were successful on the merits of the case, and Norgle said the arguments in the balance-of-hardship and public-interest tests “strongly favor” granting the Motorola Solutions injunction request. However, Motorola Solutions did not prove that it would suffer “irreparable harm” without an injunction, according to the federal-court judge.
“While the damages in this case are backward-looking only, and the injunction would prevent future harm, the nature of the harms suffered—and potentially to be suffered—by Motorola are compensable with damages,” Norgle states in his order. “In this respect, the words of another district court are persuasive, ‘This case is about money. No historic building is going to be destroyed. No toxins are going to be released into the environment. No ship is going to leave port, never to return.’
“While in some instances the theft of trade secrets no doubt could constitute irreparable harm, this is not the case … Given the testimony the court has heard about how the damages to Motorola can specifically be quantified and analyzed, the court cannot say that there is no adequate remedy at law for any market-share or price erosion.”
Although Norgle did not grant the requested injunctive relief, Motorola Solutions noted that the company is still awaiting for the judge to decide some aspects of the case that are extremely important to both Motorola Solutions and Hytera.
“The Court also notes that Motorola Solutions’ motion to force Hytera to immediately pay $764.6 million judgment, as well as Motorola Solutions’ motions for enhancement of that amount, are still under advisement,” according to the Motorola Solutions statement.
Norgle received the last briefs about the injunction request from the Hytera and Motorola Solutions attorneys weeks ago, but he did not issue an opinion until today. Motorola Solutions attorneys have argued that an worldwide injunction blocking the sale of many popular Hytera DMR offerings is needed, because Hytera has indicated that it will not pay the $764.6 million award and it continues to sell DMR products after the federal-court ruling.
Hytera attorneys have noted that the federal-court ruling does not limit Hytera’s ability to sell DMR products and that an injunction would be duplicative to the massive financial award already granted to Motorola Solution. In addition, Hytera filed briefs seeking a retrial and a reduction in the financial award granted by the federal court, but both requests have been denied.
Hytera previously has announced its intention to appeal the federal-court decision.
During the federal-court 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.
Hytera attorneys have argued that the award to Motorola should be reduced significantly, if the decision is not reversed. 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.
Hytera also has argued that an injunction issued by a U.S. federal court only should apply within the U.S., which would mean Hytera could sell the DMR products in other countries. But Motorola Solutions asserts that language in the Defend Trade Secrets Act (DTSA) supports granting worldwide 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.