Motorola Solutions issues reply to bankruptcy filings by Hytera’s U.S. subsidiaries, says legal actions will proceed

Motorola Solutions today issued a statement indicating the company’s belief that recent bankruptcy filings by Hytera Communications’ subsidiaries based in the United States will not halt pending legal efforts seeking an injunction that would prohibit Hytera Communications from selling much of its DMR product portfolio.

Provided to IWCE’s Urgent Communications this morning, the Motorola Solutions statement describes the Chapter 11 bankruptcy filings by Hytera America and Hytera Communications America (West) as being “part of Hytera’s purported ‘retreat to China’ strategy” after Hytera lost a U.S. federal court case. 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.

“The Hytera parent entity—the entity that is ultimately responsible for all of Hytera’s activity and co-liable for the $765 million judgment—did not file for bankruptcy,” according to the Motorola Solutions statement. “Hytera’s bankruptcy filings appear to be motivated by evading the $765 million judgment and Motorola Solutions’ pending request that the Court enjoin Hytera’s ongoing sales of Motorola Solutions’ stolen technology by seeking a stay of the proceedings against the U.S. subsidiary defendants.

“However, all pending proceedings will continue against the Hytera parent entity, Hytera Communications Corporation, Ltd., including Motorola Solutions’ post-verdict requests for the Court to enjoin Hytera’s ongoing sales and to award over $200 million in additional damages, interest, and other recoverable expenses to be added to the jury’s $765 million verdict.  Motorola Solutions remains committed to providing its mission-critical products to all customers in need.”

In a response provided to IWCE’s Urgent Communications, Hytera reiterated the company’s reasoning behind having the U.S. subsidiaries file Chapter 11 bankruptcy.

“Hytera America filed Chapter 11 in order to maintain its current business operations in the U.S., including continuing to serve and support its dealers and customers, and to preserve the going concern value of its business for the benefit of all creditors and stakeholders,” according to the Hytera statement.

Motorola Solutions did not respond to a request from IWCE’s Urgent Communications about the source of the company’s  “Hytera’s purported ‘retreat to China’ strategy” referenced in today’s statement in time to be included in this article. Hytera also did not address this portion of the Motorola Solutions statement in the response provided to IWCE’s Urgent Communications.

Attorneys for Hytera and Motorola Solution were scheduled to meet today in a mediation session, according to a joint status report filed by the companies earlier this month with the federal court in Chicago. Sources familiar with the case have noted that the sides have participated in mediation sessions previously during the litigation without resulting in any broad settlements on the most important disputes in the case.

If there is no settlement agreement, Motorola Solutions is scheduled to file its first legal brief in support of its injunction request tomorrow. Hytera would be required to file briefs opposing the permanent-injunction request by June 9. Motorola Solutions’ deadline for filing a reply on the matter would be June 23. At that point, the injunction decision would be left to the judge.

During the trial, 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.

In its statement, Hytera again expressed the company’s disappointment with the federal-court ruling .

“As a result, [Hytera] has requested judgment as a matter of law and a new trial,” according to the Hytera statement. “Hytera is further prepared to appeal any adverse rulings in a process that may take two or more years. Hytera has faith that the American justice system will provide a fair outcome for this trade-secret and copyright dispute.”

If Hytera’s request for a new trial is not granted, Hytera attorneys argue that the award to Motorola 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.