Contempt ruling says Hytera must make payments associated with sales of H-Series DMR products, which the company supposedly designed to escape royalties
By Donny Jackson, Editor, Urgent Communications
A US federal-court judge recently ordered LMR manufacturer Hytera Communications to pay Motorola Solutions more than US$70 million in unpaid royalties and interest for its sale of H-Series DMR products, which the judge ruled still use Motorola trade secrets that have been the subject of more than eight years of litigations.
Judge Martha Pacold of the US District Court for the Northern District of Illinois issued the order, claiming that the Hytera H-Series portfolio still utilizes stolen Motorola trade secrets, making the DMR products subject to court-ordered royalties established earlier in the litigation.
“Motorola’s motion to hold Hytera in contempt is granted,” Pacold stated in a 52-page decision. “Hytera is hereby held in contempt for violating the royalty order. Because the H-Series is substantially like the products covered by the royalty order, Hytera is significantly violating the unambiguous order by failing to pay Motorola royalties.
“Additionally, Hytera failed to make a reasonable and diligent effort to comply with the order. Civil contempt is warranted to compensate Motorola for losses sustained as a result of Hytera’s violations of the royalty order. Hytera is hereby ordered to pay US$59,300,624 in unpaid royalties on H-Series products and an additional US$11,173,428 in interest.”
China-based Hytera Communications launched its H-Series DMR product line in December 2021, just days after Judge Charles Norgle—Pacold’s district-judge predecessor hearing the case—ruled that Hytera must pay royalties on DMR products utilizing trade secrets and copyrighted software stolen from Motorola (before the company became known as Motorola Solutions).
In legal documents filed with the court at the time, Hytera Communcations representatives indicated that the royalties established by Norgle—US$80 per radio and US$378 per repeater—would wipe out almost all profit margins on the affected products.
Hytera Communications could not escape paying royalties on DMR products sold before December 2021, but the company did not expect to pay royalties on the bulk of DMR products sold after that. Hytera Communications claimed the H-Series products had been designed “from the ground up” without Motorola intellectual property, so those sales would not be subject to the royalties established by Judge Norgle.
Judge Pacold disagreed with Hytera’s claim in the latest decision, ruling that Motorola trade secrets and copyrighted software are still part of the H-Series product line.
“Although Hytera contends that the H-Series was the result of a redesign and thus not covered by the royalty order, the court concludes—based on the evidence submitted by the parties and presented at a week-long hearing—that the H-Series is substantially like the products adjudicated at trial,” according to Pacold’s order.
“The H-Series is built on the same basic foundation as the products covered in the royalty order and thus continues to unfairly benefit from the work Motorola did to solve the myriad engineering issues entailed in constructing a DMR platform. What Hytera labels a redesign is in truth substantially the same product.”
Judge Pacold’s ruling that Hytera owes US$59 million in royalties and US$11 million in interest reflect Hytera Communications’ sales of H-Series products through the first quarter of 2024—effectively, the first nine quarters of the H-Series being commercially available. This US$70 million total does not reflect the royalties Hytera Communications would have to pay Motorola Solutions for the sale of H-Series products since that time—six quarters worth, by the end of this month—and into the future, unless Pacold’s ruling is overturned on appeal.
These ongoing royalty payments are separate from the damages awarded to Motorola Solutions in the civil litigation against Hytera Communications that initially was filed in March 2017. After a four-month trial, a jury ruled unanimously in February 2020 that Hytera Communications used stolen Motorola trade secrets and copyrighted software to manufacture its successful DMR products.
The amount of the initial US$764 million damages award in the case has been altered several times since. After Hytera Communications last month paid US$69 million toward the total, the China-based LMR manufacturer still owes Motorola Solutions more than US$370 million, according to a Motorola Solutions press release about the matter.
Motorola Solutions Chairman and CEO Greg Brown applauded Pacold’s decision.
“This significant ruling from the District Court demonstrates the continued brazen nature of Hytera’s illegal conduct and willful disregard for the US judicial system,” Brown said in a prepared statement.
“Hytera’s H-Series design highlights the continued unlawful use of our trade secrets and copyrighted source code and Hytera’s inability to develop radios without stealing our technologies. We will relentlessly defend our intellectual property, holding Hytera accountable for its continued and ongoing illegal transgressions against our company.”
Hytera Communications provided the following prepared statement to IWCE’s Urgent Communications about the H-Series royalty ruling.
“While Hytera respects the court’s decision, we are disappointed with the outcome; we disagree with the alleged contempt for violating the court’s royalty order and the fines relevant to anti-suit compliance,” according to Hytera Communications.
“Hytera is carefully reviewing the rulings and will consider all available legal options, including appeal. Hytera maintains that the H-Series DMR radios, independently developed by our dedicated R&D team, are substantially different from the discontinued legacy DMR series (www.hytera.com/en/news/discontinuation-notice-of-certain-legacy-radios-of-dmr-protocol/). We believe in the triumph of proving the originality of H-Series at the appellate venue.”
This civil case should not be confused with the criminal-conspiracy case against Hytera Communications announced by the US Department of Justice in March 2022, although the facts in the criminal case are very similar to those in the Motorola Solutions civil lawsuit. In January, Hytera Communications pleaded guilty to conspiring with seven former employees to steal the trade secrets and copyrighted software from Motorola Solutions—known simply as Motorola at the time of the theft—that were key to Hytera’s development of its popular DMR product line.
Full financial terms of the guilty plea are expected to be announced after a sentencing hearing that is scheduled to be conducted Nov. 24 and Nov. 25.
This plea deal is the result of a 21-count indictment in which DoJ alleged that Hytera Communications and seven individuals conspired to steal DMR trade secrets from Motorola. Under the plea deal, Hytera Communications is required to make “full restitution” to Motorola Solutions.
Each of the alleged individual co-conspirators—Gee Siong Kok (G.S. Kok), Yih Tzye Kok, Samuel Chia Han Siong, Phaik Ee Ooi, Wong Kiat Hoe, Yu Kok Hoong, and Chua Siew Wei—were initially Motorola employees in Malaysia. Each of these individuals participated in a scheme to copy Motorola DMR trade secrets while still at Motorola and provide the information to Hytera upon being hired by the China-based LMR company.
