Hytera files appeal of $543.7 million U.S. ruling in Motorola Solutions dispute

Hytera Communications yesterday filed its appeal of a U.S. district court’s judgment that the China-based LMR manufacturer should pay $543.7 million to Motorola Solutions as compensation for the use of stolen DMR trade secrets and copyrighted software, as well as numerous other rulings in the case.

In its notice of appeal with the Illinois federal district court of Judge Charles Norgle, Hytera stated that it is appealing to the U.S. Court of Appeals for the Seventh Circuit—the Chicago-based appeals court serving Illinois, Wisconsin and Indiana—”all rulings, proceedings, orders, findings and decisions (whether oral or written)” associated with Norgle’s March 5, 2020, judgment against Hytera.

In the March 2020 judgment, Norgle affirmed a unanimous jury finding that Hytera should pay $764.6 million for its use of DMR trade secrets and copyrighted software developed by Motorola. Norgle reduced this initial award amount to $543.7 million in January, noting that collecting $220.9 million of the original ruling “would constitute a double recovery.”

Hytera’s appeal also contests other findings in the lengthy case, including Norgle’s ruling last month that Hytera must pay Motorola Solutions $51.13 million in pre-judgment interest. The appeal contests some rulings that have not been quantified yet, including a ruling that Hytera must pay Motorola Solutions post-judgment interest payments and ongoing royalties on DMR sales that are still to be determined.

Norgle already has issued rulings that Hytera should pay Motorola Solutions more than $590 million in the case, but Motorola Solutions attorneys have submitted multiple legal filings during the past year that no payments toward the award amount have been made to date and that Hytera attorneys have indicated that the China-based LMR manufacturer does not intend to make any payments.

With this in mind, Motorola Solutions asked Norgle for a permanent injunction that would have prevented Hytera from selling many of its most profitable DMR offerings anywhere in the world. Norgle denied the injunction request in December 2020, but that ruling also required Hytera to compensate Motorola Solutions with a “reasonable royalty.”

Norgle initially ordered the companies to negotiate the terms of royalty payments, but those talks failed to produce an agreement. Norgle will decide what the ongoing royalty payments would be, but that ruling has not been issued yet.

Although the royalty payment has not yet been determined, Hytera is appealing Norgle’s ruling that a royalty-payment scheme is necessary, as well as a similar ruling regarding Hytera paying Motorola Solutions’ attorney fees in the case, which was first filed in March 2017.

Many industry sources have been monitoring the royalty decision closely, noting that high royalty payments to Motorola Solutions could make it difficult for Hytera DMR products to compete in the marketplace while still generating the kind of profit margins that Hytera has enjoyed from such sales for roughly the past decade.

Meanwhile, it is unclear exactly how the district court can ensure that the money Hytera owes via the court ruling would be paid to Motorola Solutions. Hytera’s U.S.-based entities that were subject to the initial lawsuit—Hytera America and Hytera Communications America (West)—filed for Chapter 11 bankruptcy in May 2020. The new Hytera US entity—established during the Chapter 11 bankruptcy—is not a party to the lawsuit and will not be responsible for royalty payments.

As a result, both Hytera and Motorola Solutions agree that Hytera Commmunications—the Hytera parent company based in China—will be responsible for all royalty payments, when that payment scheme is determined.

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.

Motorola Solutions provided the following statement about the matter to IWCE’s Urgent Communications:

“Based on overwhelming evidence presented at trial, both a jury in the U.S. District Court of Northern Illinois and the judge found that Hytera willfully and maliciously stole Motorola Solutions’ trade secrets and is infringing our copyrights, including by incorporating Motorola Solutions’ technologies into the products that it continues to sell today,” according to the statement from Motorola Solutions. “Although Hytera has now filed a notice of its intent to appeal aspects of those decisions, we are confident they will be upheld, and that Hytera will be held accountable for its ongoing, illegal actions. We remain focused on delivering exceptional products and solutions for our customers around the globe while vigorously defending our valuable intellectual property.”