Hytera radio sales halted for stealing Motorola trade secrets

Aug 12, 2023

John Pletz is a senior reporter covering technology, aviation and cannabis for Crain’s Chicago Business. He joined Crain's in 2007 and previously covered technology for the American-Statesman in Austin, Texas.

A federal judge plans to stop a Chinese company from selling its two-way radios worldwide as punishment for not paying $49 million in royalties to Motorola Solutions after being found guilty of stealing its trade secrets.

It’s just the latest twist in the saga between Chicago-based Motorola and Hytera Communications that dates back to 2017, when Motorola sued the former distributor over its signature handheld radios.

In a case whose details read like a spy novel, Motorola accused Hytera of hiring three engineers who were working for Motorola in Penang, Malaysia. Motorola says the men secretly took about 10,000 documents containing some of the company's most important technology, including source code for software, which allowed Hytera to launch its own line of hand-held radios that it had been unable to build.

Motorola won a civil case in early 2020 in which a Chicago jury found that Hytera stole its trade secrets and infringed on its copyrights. The court ordered an award of $765 million in damages, which was later reduced to $544 million.

Motorola wanted the court to stop Hytera from selling radios and tower equipment with the stolen technology, but it instead ordered the Chinese company to pay a royalty.

Hytera was ordered to pay $49 million in royalties for sales that already had occurred, but it never paid up. So Motorola went back to court, seeking a contempt order.

U.S. District Judge Martha Pacold issued a ruling over the weekend in favor of Motorola and chastised Hytera because “it has not complied with the very order it sought.”

“Hytera has not paid a single cent of what it owes, and Motorola has shown clearly and convincingly that Hytera’s efforts described in the written documents and at the contempt hearing were neither reasonable nor diligent.”

Hytera, whose U.S. subsidiaries have filed for bankruptcy, asked for more time. Pacold had run out of patience.

“Hytera (had) nearly eight months to secure funds to pay its royalty obligation on time,” she wrote. “Instead, Hytera waited until four weeks before the payment was due to begin making calls to its lenders to seek additional capital to pay what it owed.”

She pointed to evidence presented by Motorola during an Aug. 18 hearing that Hytera’s parent company has $16 million in unrestricted cash and $700 million in net assets.

“A worldwide injunction halting the sales of a major driver of revenues is likely to induce Hytera to use its existing assets to immediately make the deposit along with the required late-payment fee,” Pacold ruled. “Hytera sought an ongoing royalty as opposed to an injunction, and it litigated forcefully against a permanent injunction.”

Details of the injunction are still being worked out.

“We are pleased that the U.S. District Court for the Northern District of Illinois has found Hytera in civil contempt,” Motorola said in a statement. “We will continue to hold Hytera accountable for its egregious conduct and defend Motorola Solutions’ valuable intellectual property."

The drama is far from over. A criminal case against the company and seven employees is pending in federal court.

Motorola spent tens of millions bringing the case against its Chinese rival, and CEO Greg Brown has publicly cautioned other companies to think twice about doing business in China. A patent case against Hytera is still awaiting trial in federal court in Chicago. Hytera has countersued Motorola for unfair competition in an antitrust case.

John Pletz is a senior reporter covering technology, aviation and cannabis for Crain’s Chicago Business. He joined Crain's in 2007 and previously covered technology for the American-Statesman in Austin, Texas.

The software maker sees an opportunity to invest in a market where some startups may have to retreat to save cash.

The deeper-than-expected cutbacks come as the pandemic-fueled boom in retail and logistics reverses course.

The Batavia-based science center is getting set to launch a global, $4 billion effort to study one of the biggest questions physicists have ever attempted to answer.