Updated: DoJ indicts Hytera for criminal conspiracy to steal Motorola trade secrets

[Editor’s note: This article has been updated to include comments received from Hytera Communications Corp. and its U.S. subsidiary, Hytera US.]

China-based Hytera Communications Corp. has been charged by the U.S. Department of Justice (DoJ) with conspiracy to commit theft of DMR trade secrets from Motorola Solutions, according to a 21-count indictment that was partially unsealed yesterday in a federal court.

A redacted version of the 28-page indictment was made available to the public for the first time yesterday, but the charges were filed almost nine months ago, on May 11, 2021. The charges were filed by the “special November 2019 grand jury,” according to the indictment that was filed with the U.S. District Court in the Northern District of Illinois Eastern Division, which is located in Chicago.

Hytera Communications Corp.—the China-based parent company of Hytera subsidiaries located in the U.S. and other countries—is listed as a defendant for all 21 counts included in the indictment. The names of other defendants are redacted from the indictment, although the indictment mentions that at least some of those defendants are individuals.

Hytera has been entangled in a series of civil lawsuits filed by Motorola Solutions since March 2017. In a March 2020 judgment, U.S. Federal District Court Judge Charles 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 has appealed Norgle’s rulings, and Motorola Solutions has cross-appealed some aspects of the case, including Norgle’s initial decision to deny Motorola Solutions’ request for an injunction that would have blocked Hytera’s ability to sell much of its traditional DMR portfolio.

It appears that the alleged Hytera illegal activity cited in the DoJ indictment mirrors the accusations of trade-secret theft made—deemed credible by a jury and Norgle—by Motorola Solutions in the civil litigation, but the DoJ indictment outlines criminal charges against Hytera.

“If convicted, Hytera faces a potential criminal fine of three times the value of the stolen trade secret to the company, including expenses for research, design and other costs that it avoided,” according to the DoJ press release about the matter. “A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.”

Hytera Communications Corp. provided the following response about the indictment in response to a request for comment from IWCE’s Urgent Communications.

“Hytera is disappointed to read the charges in the indictment, and respectfully disagrees with the allegations,” according to the Hytera Communications Corp. statement. “The indictment purports to describe activities by former Motorola employees that occurred in Malaysia more than a decade ago. Hytera looks forward to pleading not-guilty and telling its side of the story in court.

“Hytera is committed to honoring the intellectual property rights of others, and to complying with the laws of every jurisdiction in which it operates. Hytera will continue to provide high quality and innovative products and services to its customers throughout the world.”

In addition, the Hytera statement notes the company’s position that Hytera US—the new Hytera subsidiary in the U.S. that was created after the assets of Hytera’s previous U.S. subsidiaries were sold as part of a Chapter 11 bankruptcy proceeding—”is not relevant to this [DoJ] case.”

Hytera US reiterated this position in a statement posted on the company’s website.

“Hytera US Inc is not a party to the indictment and has not been accused of any wrongdoing,” according to the Hytera US statement. “The allegations underlying the indictment were the subject of a civil case brought by Motorola against HCC that targeted certain higher-end legacy models.

“Neither the civil case nor the indictment relates to the Hytera products most popular in the United States. Most importantly, neither relates to Hytera’s new H-Series DMR Radios.”

Hytera announced the launch of its H-Series family of DMR radios in December.

Motorola Solutions issued a statement about the DoJ indictment against Hytera from Mark Hacker, the company’s executive vice president, general counsel and chief administrative officer.

“The criminal charges filed by the U.S. Department of Justice against Hytera underscore the calculated and deliberate character of Hytera’s illegal activity directed at Motorola Solutions,” Hacker said. “The 21-count indictment alleges that Hytera engaged in a decade-long criminal conspiracy to steal and use Motorola Solutions’ trade secrets and proprietary information in order to develop and sell digital mobile radios.

“According to the indictment, Hytera’s CEO acted in furtherance of the conspiracy, and it appears that among its steps to conceal, misrepresent and hide the conspiracy, Hytera gave false testimony in a United States court.”

Indeed, the DoJ indictment states that that someone from Hytera misrepresented the employment timeline of an individual whose name has been redacted—presumably one of the defendants—during testimony given as part of the civil case filed by Motorola Solutions.

“A Hytera employee testified during a deposition and at trial in the civil case that [redacted name] was fired in the fall of 2018 for refusing to cooperate with Hytera’s internal investigation, when in fact [redacted name] worked for Hytera from no later than December 2018, throughout the trial of the civil case, to at least June 22, 2020,” according to the indictment.

During the four-month civil 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 thereafter 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.

The DoJ indictment cites e-mail correspondence with the CEO of Hytera Communications Corp. about the Motorola Solutions lawsuit that was filed in March 2017. Once again, names were redacted from this part of the charge.

“On or about May 22, 2017, [redacted] e-mailed Hytera’s CEO about ‘aligning’ his story with [redacted] in connection with a civil lawsuit brought in the Northern District of Illinois by Motorola against Hytera alleging theft of Motorola’s DMR trade secrets,” the DoJ indictment states.

To date, Motorola Solutions has not received any money from Hytera, despite the massive judgment against the China-based LMR manufacturer. Hacker said Motorola Solutions hope that will change in the future.

“We will continue our civil litigation against Hytera in jurisdictions around the world to prevent Hytera’s serial infringement and to collect the hundreds of millions of dollars in damages it owes to Motorola Solutions,” Hacker said in the prepared statement. “We are committed to protecting our technology for the benefit of our industry, customers, channel and distribution partners, shareholders and other stakeholders.”

This criminal indictment is not the first time that someone associated with the DoJ has been involved in the Hytera dispute. In August 2020, a U.S. trustee recommended that a California bankruptcy court dismiss the Chapter 11 bankruptcy case for Hytera’s two U.S. subsidiaries at the time in the wake of Norgle’s massive civil-case judgment.

“The bankruptcy system was not designed to enable debtors [Hytera’s U.S. subsidiaries] who have engaged in theft to file bankruptcy and to continue to profit from that theft and cleanse themselves of their wrongdoing through an illusionary sales process,” U.S. Trustee Peter Anderson stated in his recommendation. “But that is what the debtors are attempting here.”

Despite this, the bankruptcy sale was completed, with the assets of Hytera’s U.S. subsidiaries being sold to a new entity called Hytera US, which was not a party to the civil litigation filed by Motorola Solutions.

As a result, it is unclear exactly how the district court can ensure that the money Hytera owes via the court ruling in the civil case 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.

In addition, the new Hytera US entity is not responsible for royalty payments to Motorola Solutions that were set by Norgle in December 2021.

IWCE’s Urgent Communications asked Hytera officials whether Hytera US would be a party to these DoJ charges filed in May 2021, but no response was received in time to include in this article.