U.S. government, Hytera Communications share key evidence, arguments for February criminal trial

U.S. Department of Justice (DoJ) attorneys recently filed legal briefs outlining key evidence it plans to present against Hytera Communications as part of criminal-conspiracy case against the company, but lawyers for Hytera claim significant evidence should not be allowed in the upcoming trial.

Set to begin in February, the twice-delayed criminal trial will consider whether China-based LMR manufacturer Hytera Communications and seven former employees conspired more than 15 years ago to steal trade secrets from Motorola Solutions—simply known as Motorola at the time—to accelerate development of Hytera’s DMR products.

“Hytera devised and executed a conspiracy to take, copy, and possess Motorola’s DMR proprietary information and trade secrets to avoid investing its own time and resources into the development of a digital product and instead profit from Motorola’s years-long, multimillion-dollar developments,” a DOJ legal brief filed in October states.

“By stealing Motorola’s proprietary and trade-secret information and recruiting knowledgeable Motorola employees to implement the stolen technology, Hytera could introduce a DMR product years earlier than if it developed a product from scratch.”

This 94-page DoJ legal brief filed in October states that the key players directing the alleged conspiracy were Hytera founder/CEO Chen Qingzhou and G.S. Kok, an engineer whom Chen recruited from Motorola in 2006 and 2007 to head Hytera’s development of DMR products.

“Chen told G.S. to take Motorola’s technology, including source code for DMR products, and use it at Hytera to develop the technology faster,” according to the DoJ filing in October. “During Chen’s recruitment of G.S., Chen requested, and G.S. eventually agreed, that they would steal Motorola’s DMR technology.”

Stealing the DMR technology from Motorola was the only way for Hytera to meet Chen’s goal, which was for Hytera Communications to offer DMR products that were comparable to Motorola’s but cheaper—and to do it with a two-year timeframe, according to the DoJ filing in October. Given that it took Motorola four years to develop its DMR products with 400 engineers working on the project, G.S. Kok believed it would take Hytera “about eight years to develop a [DMR] product from scratch,” according to the DoJ filing in October.

“Chen told G.S. to take the source code,” the October DoJ filing states. “He made a reference to G.S. that ‘if we are caught, let them sue us,’ or words to that effect. As G.S. is expected to testify, Chen instructed G.S. to take as much of the source code from Motorola as he could.”

In the October DoJ filing, the U.S. government asserts that Chen and G.S. Kok met “on a near-daily basis” soon after G.S. Kok joined Hytera in early 2008. Chen also allegedly approved the use of stolen code from Motorola in communications that included Samuel Chia, one of individual co-conspirators in the case.

“At one point, Chia had issues with a squelching algorithm, and he and G.S. [Kok] went to Chen’s office to discuss whether to use the squelch algorithm that was stolen from Motorola,” the October DoJ filing states. “G.S. and Chia told Chen there was a risk that Motorola would detect Hytera’s use of the stolen code, and Chen told them to use it anyway.

“Likewise, G.S. and Chia went to Chen to inform him that they planned to implement stolen code related to a DMR timer because they wanted to flag the risk of detection to Chen. Chen again told them to use the stolen code. Similarly, around 2010, G.S. and Chia again approached Chen to let him know that Hytera’s radios were experiencing problems with timing as it applied to trunking.

“G.S. and Chia identified a possible solution: the use of Motorola’s stolen code. Chia and G.S. made clear to Chen, however, that Motorola’s source code was proprietary and its continued use was illegal. Chen nevertheless told them to use the stolen code. When Chia or G.S. raised the possibility of being caught, Chen responded “let them catch us,” or words to that effect.”

Hytera Communications attorneys have not contested that software code and trade secrets were stolen from Motorola and used in Hytera’s DMR products, but they have maintained in legal filings that these acts were executed by “rogue employees” without the company’s knowledge.

In addition to G.S. Kok and Chia, five other individuals have been charged by the DoJ with criminal conspiracy: Y.T. Kok, Ken Wong, Y.K. Hoong, Eunice Chua and Peiyi Ooi. Each of these individuals worked for Motorola and participated in copying DMR-related assets from Motorola servers prior to joining Hytera Communications, according to the DoJ.

Even if these allegations are proven in federal court, it should not implicate Hytera Communications, according to the company’s response to the DoJ filing in October.

“At most, the government’s [October filing] shows that there may have been a conspiracy among the indicted individuals—one that did not include Hytera—to steal Motorola documents without regard for whether those documents contained information that was confidential or generally known in the industry,” the Hytera response states.

“But even that conspiracy is barred by the statute of limitations and occurred entirely outside of the United States. Proving a conspiracy is not the same as proving the conspiracy charged in the indictment.”

Hytera’s response states that “the government fails to show that Hytera was a member of the alleged conspiracy, because its narrative relies almost entirely on an unreliable cooperating witness, G.S. Kok, whose prior sworn testimony is inconsistent with the government’s proffer in fundamental ways.”

G.S. Kok provided this different testimony when he was questioned in September 2017 as part of the civil litigation filed by Motorola Solutions against Hytera in March 2017, according to the Hytera response.

“The story G.S. Kok apparently intends to tell represents a complete 180 degree turn from his prior sworn testimony,” according to the Hytera response filing. “Kok swore under oath that no one at Hytera directed him to obtain Motorola confidential information to build a competing product. He testified that at the time he left Motorola for Hytera, he had no plans to take Motorola’s confidential information. He further testified that even after he joined Hytera, he remained unaware that Hytera was using Motorola’s confidential information.

“Indeed, Kok also testified that (1) Hytera had not offered him a job prior to leaving Motorola; (2) he did not know when Hytera brought its first two-way radio to market; (3) he could not remember whether he made any effort to recruit Sam Chia to join Hytera; (4) he did not know whether Y.T. Kok had access to source code while employed by Hytera; and (5) he could not remember whether he made any attempt to recruit Y.T. Kok to leave Motorola and join Hytera.

“If Kok testifies consistent with the government’s proffer, he will contradict all of that sworn testimony.”

With this in mind, the Hytera response brief states that G.S. Kok’s expected statements now should be considered to be “inadmissible hearsay.”

Hytera Communications’ response brief asserts that evidence against the company should only include statements made by individuals “who were employed by Hytera at the time that the statements were made.” In addition, the trial should only include statements that led up to Hytera launching its DMR products in May 2010, noting that subsequent statements “post-date the government’s alleged conspiracy,” so they should not be admissible.

Hytera’s response brief also devotes several pages noting that the DoJ’s October filing does not demonstrate that Chen was part of the conspiracy.

But DoJ attorneys claim in a reply brief filed last week that Chen’s participation in the conspiracy is not a prerequisite to the case, noting that Chen is not charged as a co-conspirator in the matter.

“The government does not need to show Chen, or any other specific C-suite executive, committed the criminal conduct for the company to be liable as a conspirator,” according to the DoJ’s reply brief. “The question is not the employee’s rank, but whether he or she acted to the company’s benefit and within his or her responsibilities.

“And there is no serious dispute the G.S. Kok, a former board member at Hytera, Samuel Chia, Y.T. Kok, and Hytera’s other codefendants conspired to do just that: They agreed to leave Motorola for large pay increases— including stock in Hytera—in return for building and maintaining Hytera’s competitive DMR product line, and, to do so, agreed to steal, repurpose, and reuse their former employers’ designs and code and incorporate those materials into Hytera’s products. The pages Hytera devotes to defending Chen are thus misspent.”

This DoJ reply brief also challenged Hytera’s claim that G.S. Kok’s testimony should not be admissible.

“Hytera’s claim that G.S. Kok should not be believed because he lied during his civil deposition backfires,” according to the DoJ reply brief. “He is credible, in part, because he will admit he lied during his civil deposition, and the fact of his previous lies is evidence of the ongoing conspiracy.”