Hytera says it made $56 million royalty payment, seeks dismissal of proposed injunction on two-way-radio sales

Hytera Communications informed a federal court that it deposited a long-awaited $56.3 million royalty payment into an escrow account for Motorola Solutions last Friday, requesting that a judge drop a proposed injunction that would block Hytera from selling any two-way-radio products worldwide.

In a legal filing that was posted publicly on last Friday night, Hytera Communications claimed that the $56.3 million payment represents the original $49 million royalty owed to Motorola Solution, plus the interest owed for the tardy nature of the payment that was due in July 2022. In light of the payment, Hytera asked U.S. District Judge Martha Pacold to purge her finding last week that Hytera was in contempt of court and to drop the proposed global injunction against the LMR company.

“HCC [Hytera Communications] informs the court that HCC has, today, wired funds to the escrow account in the amount required in the Court’s order of August 26, 2023, and is now in full compliance with its obligations under the royalty order, as modified by the August 26 order,” according to a Hytera statement included in a joint status report provided to Pacold.

“The wired sum amounts to $56,342,968.96, which comprises the principal royalty of $49,861,034.48 plus $6,481,934.48 (1% of the principal x 13 for 13 months). HCC asks that the Court consider HCC’s contempt purged and lift or decline to enter any injunction sanction.”

In the same joint status report, Motorola Solutions stated that it was first informed by Hytera of the $56 million royalty payment “shortly after 12 p.m. CT” on Friday and asked Judge Pacold for time to assess the situation. During the weekend, Pacold granted Motorola Solutions’ request to inform the court of its position on the matter tomorrow.

Motorola Solutions issued the following statement justifying its request in the joint status report that was released last Friday:

“Given the timing of Hytera’s disclosure, Motorola is still considering its position concerning whether the amount is sufficient to satisfy the Royalty Order (in that regard, Motorola notes that the amount deposited does not appear to compound the 1% monthly interest amount) and what Motorola believes are the appropriate next steps in view of Hytera’s disclosure today,” according to the Motorola Solutions statement.

“Accordingly, Motorola respectfully requests that it be permitted more time to consider these issues and given permission to submit Motorola’s positions on them by no later than next Wednesday, September 6, 2023. This modest period of time (two business days from now, in light of the Labor Day holiday) is necessary in order for Motorola to fully consider and evaluate the import of these developments, which were raised to Motorola for the first time with only a handful of hours before the close of business today remaining.”

Early last week, Judge Pacold ruled that Hytera Communications was in contempt of court for failing to make the $49 million royalty payment—to be held in escrow for Motorola Solutions, pending the outcome of legal appeals—that was due in July 2022. This order also proposed issuing an injunction that would block Hytera Communications from selling all two-way-radio products—not just the DMR products that were the subject of the royalty payment—throughout the world.

But Pacold’s order also stated that Hytera Communications could avoid having the proposed global injunction become effective, noting that Hytera can “have [the injunction] lifted any time by complying with the royalty order.” If Pacold determines that Hytera Communications’ payment represents compliance with the royalty order, then this statement indicates that the judge would not impose the proposed injunction.

Should Pacold determine that Hytera Communications still should be subject to an injunction that would block the company selling two-way-radio products, she would have to weigh the very different inputs from the attorneys representing Motorola Solutions and Hytera Communications.

Last Wednesday, Motorola Solutions submitted its proposed language for a global injunction against Hytera, stating that a proposed two-way-radio sales prohibition apply to Hytera Communications and its “affiliates, subsidiaries, and distributors and resellers of any type.”

Hytera Communications expressed opposition to this Motorola Solutions proposals in a legal brief submitted last Friday, noting that any injunction should apply only to Hytera Communications—the China-based parent company of Hytera subsidiaries—not subsidiaries and other entities that are not parties to this civil litigation.

In the joint status report, Hytera Communications did not disclose how it was able to fund the $56.3 million payment. However, earlier in the week, Hytera Communications submitted legal filings that indicated the LMR company was in new discussions with at least two banks to arrange for the financing necessary to meet the obligations of the royalty order.

A Hytera Communications spokesperson informed IWCE’s Urgent Communications that the company does not have any further comments on the matter beyond its legal filings.

On Tuesday afternoon, Motorola Solutions provided the following statement on the matter in an email to IWCE’s Urgent Communications:

“We are pleased that Hytera has finally made the initial court-mandated royalty payment, originally due in July 2022, to begin compensating Motorola Solutions for Hytera’s yearslong theft and use of our innovative trade secrets and copyrights,” according to the Motorola Solutions statement.

“The fact that Hytera was compelled to make this payment—following a finding of civil contempt against Hytera by the U.S. District Court for the Northern District of Illinois—further underscores the importance of the legal actions we have taken to date. We will continue to hold Hytera accountable for its illegal conduct, which courts in the U.S. and around the world have independently validated, to protect our valuable intellectual property for the benefit of our company, customers, partners, shareholders and our industry as a whole.

“We remain focused on continuing to deliver pioneering innovations that help save lives and keep people, property and places safe.”