CHICAGO (CN) — A federal judge opened contempt proceedings Monday against Chinese telecom company Hytera at the behest of Hytera's U.S. rival Motorola Solutions.
Motorola Solutions, a multinational corporation headquartered in Chicago, claims Hytera owes it royalties on a radio product line. It claims Hytera's version of the radios, known as the "H-series," is one of numerous products that violate Motorola's trade secrets and copyright protections.
Hytera, based in the city of Shenzhen and partially state-owned, has rejected these claims and not yet paid any royalties on the H-Series. It has pursued its own litigation against Motorola in China, asking the Intermediate People's Court in Shenzhen to declare that its H-Series radios do not infringe Motorola's trade secrets or copyrights. U.S. District Judge Martha Pacold nevertheless decided contempt proceedings were appropriate over Hytera's refusal to pay the disputed royalties, finding it's not necessary for the court to first decide on the merits of Motorola's contempt accusations.
"It is not necessary, nor would it be appropriate, to decide any issue going to the merits of the contempt (i.e., whether Motorola has ultimately shown that Hytera is in contempt), in order to decide whether opening contempt proceedings is appropriate," Pacold wrote.
Pacold also cited the "nature and quality of Motorola’s allegations" and the court's familiarity with the case at hand to justify her position.
Motorola first sued its Chinese competitor in 2017. It claimed Hytera poached its senior engineers, who in turn took over 7,000 technical documents with them to speed up Hytera's development of digital two-way radios.
Motorola claimed that despite knowing many of the technologies were proprietary, “Hytera simply copied and used these critical technologies in its own competing products — products that bear the hallmarks of Motorola’s innovation and product development.”
A 3 1/2-month jury trial in Chicago between November 2019 and February 2020 came down in Motorola's favor, with Hytera ordered to pay Motorola nearly $765 million in damages. The court reduced this figure to a little over $543 million in January 2021, stipulating in July 2022 that Hytera also owed Motorola royalties for additional trade secret and copyright violations that began in July 2019.
Meanwhile, the Intermediate People's Court in Shenzhen agreed to hear Hytera's claim in February 2023, and requested Motorola provide its rebuttal evidence by April 1, 2024. Arguing that this was a "vexatious" attempt by Hytera to duck the authority of the District of Northern Illinois, Motorola also asked Pacold to bar Hytera from pursuing its suit in China. Motorola also argued that it could not trust the Shenzhen court to protect any trade secrets it presented as rebuttal evidence.
"There is currently no safeguard in place to prevent inappropriate disclosure of Motorola’s trade secrets and source code, nor any guarantee that the Shenzhen court would impose restrictions on access to such materials to adequately protect Motorola," the American company claimed in court filings.
Hytera rebutted that the H-Series radios were not governed by either the 2019-2020 trial or the court's subsequent 2022 royalty order, as it launched the products in October 2021. It waved away Motorola's complaints of "vexation" in the same breath.
"There is nothing inappropriate or vexatious about Hytera seeking a judicial determination in its home country about the propriety of its conduct," Hytera argued in its response to Motorola's motion to open contempt proceedings. "What is vexatious is the present motion. The parties and this court spent nearly a year litigating Motorola’s allegation of contempt under the royalty order, and Motorola never raised applying it to the H-Series."
The company also argued Motorola was pursuing a bad-faith argument when it accused the Shenzhen court of being untrustworthy, saying there was no reason to think the judiciary in China wouldn't offer Motorola the same protections it enjoys in the U.S.
"Motorola... raises the specter of its inability to safeguard its trade secrets in the context of the Chinese action or to defend itself procedurally and through access to discovery mechanisms," Hytera argued. "But Motorola has litigated in China dozens of times, as both plaintiff and defendant, with a very high success rate of 90%. Having itself made ample use of the Chinese court system, its concerns are both duplicitous and unfounded."
Pacold ultimately came down on the side of the company based in her own state. As part of her order on Monday, she issued an injunction barring Hytera from pursuing its case in China while contempt proceedings take place in Chicago.
"Hytera is correct that if this case does not result in a finding of contempt or a finding of infringement, it will not dispose of the issues in the action in China," Pacold wrote. "But it may. And that potential, along with the considerations that factually, the issues overlap substantially, and that this case is extraordinarily fact-intensive, weigh in favor of an injunction."
An attorney for Hytera did not respond to request for comment on this development.
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