IP Law Daily, TRADE SECRETS—N.D. Ill.: Motorola secures another court victory in Hytera trade secret battle, (Mar 26, 2024)

By George Basharis, J.D.

The court has agreed to Motorola’s request to open contempt proceedings against Hytera to determine whether the Chinese radio company continues to use Motorola’s trade secrets without paying royalties.

In a recent development in the ongoing legal dispute between Motorola Solutions, Inc., and Hytera Communications Corporation Ltd., the United States District Court for the Northern District of Illinois has granted Motorola’s motion to open contempt proceedings against Hytera. This is due to potential non-compliance with a previous royalty order. The contempt proceedings will ascertain whether Hytera violated the court’s royalty order by failing to pay royalties on its new H-Series products, which Motorola alleges infringed on its trade secrets and copyrights. Additionally, the court has temporarily prohibited Hytera from pursuing concurrent litigation in China that seeks a declaratory judgment on the non-infringement of Motorola’s trade secrets or copyrights by the new products (Motorola Solutions, Inc. v. Hytera Communications Corporation Ltd., March 25, 2024, Pacold, M.).

The dispute originated from a 2020 verdict in which Hytera was found to have misappropriated Motorola’s trade secrets, leading to an award of $543.7 million to Motorola. Motorola had alleged that Hytera, once a distributor of Motorola’s digital two-way radio communications systems, had misappropriated Motorola’s trade secrets and incorporated them into its own digital mobile radio (DMR) products.

The post-trial proceedings resulted in a royalty order requiring Hytera to pay royalties on ongoing sales of infringing products—products adjudicated at trial to use Motorola’s trade secrets and infringe its copyrights. Concurrently, Hytera launched its H-Series line of DMR products. According to Hytera, the company redesigned the H-Series to avoid using Motorola’s trade secrets and copyrights. Hytera also initiated proceedings in China, seeking a declaratory judgment that the H-Series products did not infringe on Motorola’s trade secrets or copyrights.

In the meantime, the parties litigated the terms of the royalty order, although the U.S. trial court was unaware of the Chinese case. The litigation centered around the definition of “covered products” and whether Hytera’s H-Series DMR products were included in the order. The trial court eventually determined that the H-Series products were not included in the royalty order because the products did not exist at the time of the trial.

Motorola filed a motion to open contempt proceedings against Hytera. Essentially, Motorola sought an opportunity to conduct discovery to substantiate its claims that Hytera’s H-Series products were not significantly different from the products adjudicated at trial to use Motorola’s trade secrets and infringe its copyrights. Motorola also sought an antisuit injunction to prevent Hytera from pursuing litigation in China, which challenged the infringement of Motorola’s trade secrets or copyrights on the H-Series products.

The court granted Motorola’s motion, rejecting Hytera’s argument that Motorola’s H-Series claims should be brought in a new lawsuit and proved to a new jury. The court reasoned that it had the discretion to open contempt proceedings and allow discovery, especially when significant questions regarding noncompliance with a court order were raised. The court determined that Motorola had raised substantial questions about potential violations of the royalty order by Hytera, justifying the opening of contempt proceedings.

Motorola filed a declaration by an expert who found the source code of H-Series products to be the same as or similar to the source code used in the products adjudicated at trial. Although a vast majority of the source code had not been made available to Motorola, the court noted that Motorola did not claim that the H-Series definitively used its trade secrets and copyrights, only that there was a meaningful reason to believe they were and that Hytera could be in contempt for not paying royalties on H-Series products as required by the trial court’s previous court order.

Hytera offered the declaration of its own expert that contradicted the findings of Motorola’s expert. Nonetheless, the court determined that Motorola had made a sufficiently detailed showing to warrant a deeper inquiry through civil contempt proceedings. At the time of trial, Hytera had not yet launched the H-Series, so there was no reason to raise it at trial. Motorola attempted to raise the H-Series during post-judgment proceedings; but at that point, any attempt to address the H-Series could have reasonably appeared premature, especially since Hytera did not notify the trial court or Motorola that it had filed its H-Series case in China. The extensive procedural history of the case, including the lengthy trial and substantial post-judgment proceedings, further reinforced the court’s assessment that contempt proceedings were warranted.

The court also issued an antisuit injunction, preventing Hytera from continuing its litigation in China seeking a declaratory judgment that Hytera’s H-Series products do not infringe Motorola’s trade secrets or copyrights. This injunction will remain in place until the contempt proceedings in the U.S. have concluded.

The Case is No. 1:17-cv-01973.

Attorneys: Brandon Hugh Brown (Kirkland & Ellis LLP) for Motorola Solutions, Inc. Boyd T. Cloern (Steptoe & Johnson LLP) for Hytera Communications Corp. Ltd.

Companies: Motorola Solutions, Inc.; Hytera Communications Corp. Ltd.

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