Federal judge reduces Hytera legal payment to Motorola Solutions by $220.9 million

A federal judge ruled that China-based LMR manufacturer Hytera Communications owes Motorola Solutions $543.7 million in the lengthy legal dispute between the companies—a reduction of more than $220 million from the $764.6 million in damages awarded to Motorola Solutions when the court ruled on the matter last year.

Judge Charles Norgle of the United States District Court for the Northern District of Illinois changed the damages owed by Hytera in an order—dated Jan. 8 but released today—that notes the need to  “the court now agrees that allowing Motorola to recover Hytera’s profits and Hytera’s avoided costs on research and development [by utilizing DMR intellectual property stolen from Motorola] would constitute a double recovery.

“The court thus finds it improper for Motorola to recover both the $135.8 million in disgorged profits and the $73.6 million in avoided research-and-development costs … The proper award among these two alternatives is the $135.8 million disgorgement of Hytera’s profits.”

This decision also results in a reduction in the punitive damages awarded in the case, because they were calculated based on the size of the compensatory-damage award, according to Norgle’s order.

In March 2020, Norgle entered a judgment obligating Hytera to pay $345.8 million in compensatory damages and $418.8 million—a total of $764.6 million—in punitive damages for using stolen Motorola Solutions trade secrets and copyrighted software code to build its popular DMR product portfolio.

Under Norgle’s new order, Hytera is liable for paying Motorola Solutions $272.1 million in compensatory damages and $271.6 million in punitive damages, for a total of $543.7 million—a $220.9 million reduction compared to the damages awarded in March 2020.

Last month, Norgle denied a Motorola Solutions request for a permanent injunction that would have prevented Hytera from selling much of its DMR portfolio worldwide, but he ruled that Hytera should pay royalties to Motorola Solutions. By Thursday, the companies are supposed to agree to a negotiated royalty payment plan, or each will submit a proposal for Norgle to consider, according to the December ruling.

With this in mind, Norgle’s latest order does not address the amount of money Hytera would have pay Motorola Solutions in royalty fees but reiterates the need for such compensation.

“Hytera’s avoided R&D [research-and-development cost] does not constitute a fully paid up royalty,” according to Norgle.

Hytera Communications had its U.S. subsidiaries—Hytera America and Hytera Communications America (West)—file for Chapter 11 bankruptcy protection in May 2020, citing financial issues caused by Norgle affirming the $764.6 million award against Hytera in March. Last month, a bankruptcy judge in California verbally approved the sale of Hytera U.S. assets not included in the case before Norgle to a new Hytera Communications entity called Hytera US. Motorola Solutions is scheduled to file a brief with the bankruptcy court tomorrow about what products should be excluded from the December sale to Hytera US, and Hytera attorneys are scheduled to file their response by Jan. 19, according to bankruptcy-court documents.

In the meantime, the Hytera America and Hytera Communications America (West) subsidiaries in the U.S. continue to exist, according to sources familiar with the matter.

These legal decisions and filings are the latest in a series of protracted disputes between Hytera Communications and Motorola Solutions that began in March 2017.

During the federal-court trial that began in November 2019, 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.