Judge Denies Motorola Motion for Permanent Injunction, Grants Reasonable Royalty
Monday, December 21, 2020 | Comments
A judge for a U.S. district court denied a motion from Motorola Solutions seeking an injunction that would prevent Hytera Communications from importing, distributing and selling specific products. At the same time, the judge granted Motorola a royalty for Hytera’s use of Motorola’s trade secrets.

Motorola Solutions sued Hytera Communications in March 2017 for theft of trade secrets, alleging that former Motorola employees had gone to work at Hytera and brought proprietary Motorola information with them and integrated that information into Hytera’s Digital Mobile Radio (DMR) products. In February, a jury for the U.S. District Court for the Northern District of Illinois awarded Motorola $764.6 million after determining that Hytera had used Motorola trade secrets in its products.

Following that decision, Motorola Solutions asked the court for a permanent injunction that would prevent Hytera from importing, selling and distributing DMR products found to include Motorola’s trade secrets. Motorola argued that an injunction was necessary because Hytera’s use of its trade secrets was hurting Motorola’s market share and its reputation, and Hytera’s lower prices from using the trade secrets was causing Motorola to have to lower its prices.

“The court agrees with Hytera that the market share and pricing injuries suffered by Motorola can be compensated by monetary damages and that any reputational harm is speculative,” U.S. District Judge Charles Norgle wrote in his decision. “… Motorola has, throughout the trial, shown that it can quantify the market share that it has lost, and the measure of damages which were awarded specifically contemplated which of Hytera’s sales Motorola would have made if Hytera had not misappropriated its trade secrets. Motorola’s damages were then based on profit Motorola would have made on those sales, which the jury awarded.”

Norgle determined further that while the damages in the case were only backward looking and an injunction could prevent further infringement and harm, the types of harm suffered by Motorola could be covered with damages.

“With respect to reputational harm, the court agrees with Hytera that such harm is speculative and based on attorney argument that the court does not agree with,” Norgle wrote. “Although Hytera has positioned itself in a certain way, including with respect to this lawsuit, the ultimate vindication of Motorola’s rights tend to cut against a finding that Motorola has suffered reputational harm in this case.”

Norgle also wrote that Motorola could likely quantify all the harm caused by Hytera through expert analysis but that would likely require repeat lawsuits covering different time periods.

“This matter has been a lengthy, expensive process for both sides, and although the damages likely could be quantified, the court recognizes that the task of doing it is not an easy or inexpensive one,” Norgle wrote. “In sum, the court finds that Motorola could quantify its future losses and remedy them in a future suit, thus rendering a permanent injunction inequitable in this scenario.”

However, Norgle also said that the Defend Trade Secrets Act (DTSA) gives a court the ability to condition future use of trade secrets on a reasonable royalty if it finds “exceptional circumstances” exist.

“Here, exceptional circumstances certainly do exist,” Norgle wrote. “The potential scope, impact and difficulties a worldwide injunction could cause, particularly during an ongoing pandemic, pose a large potential problem. And although Motorola has been able to quantify its losses in this case, and likely could again, the process of doing so has been extremely expensive, time-consuming and difficult. Thus, as Hytera perceptively states in its supplemental submission, ‘the path forward’ in this case is for the award of a reasonable royalty.”

Norgle did not determine a specific amount for the royalty yet and acknowledged that the two parties are in mediation on that specific issue. Therefore, he gave the parties until Jan. 14 to reach an agreement on that issue. If an agreement is not reached, each party will submit its own proposal.

“Over the past two years, in numerous jurisdictions around the world, Motorola Solutions has consistently prevailed in our intellectual property litigation against Hytera,” a Motorola spokesperson said. “Notwithstanding the court’s decision regarding a permanent injunction, this trial was a clear victory for Motorola Solutions and all companies that develop innovative, proprietary technologies.”

The spokesperson pointed to the jury-awarded damages and the court’s denial of Hytera’s request for a new motion.

“This outcome is a clear repudiation of the illegal and anti-competitive tactics Hytera has employed for more than a decade,” the spokesperson said. “The court’s decision today confirms that Hytera’s sale of products containing Motorola Solutions’ trade secrets continues to harm Motorola Solutions following the verdict, granting Motorola Solutions’ request for a royalty on every sale Hytera makes of the DMR products at issue going forward into the future.”

Specifically regarding the permanent injunction, the spokesperson said Motorola is considering all options for further action but did not elaborate on those options.

Hytera released a brief statement acknowledging the court’s decision and indicated that it is still pursuing potential appeal of the jury’s damages award.

“Respectfully disagreeing with the jury, Hytera has been prepared to appeal the verdict at the appeal court,” the statement said. “Hytera has faith that the American justice system will provide a fair outcome for this trade secret and copyright dispute.”

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Comments
On 12/31/20, James Hopper Sr said:
I am a Motorola dealer and have been a dealer since the Motorola Radius days in the mid 80 s. Motorola makes a very good radio and always has. However Hytera is also manufacturing a good radio at a much lower price. With all the court actions going between them no one has yet to tell us technical people what patents Hytera used. I do know that Hytera this year changed their radios so all the model numbers will have an I at the end which was supposed to signify that the Motorola patents have been removed. We as dealer in Hytera s products have not been able to find any difference in the performance of the Hytera radios before and after the modifications. I wish that someone with the knowledge would explain to us exactly what the patent infringement entailed. The courts seem to focus on the patents but do not say what the potential advantage that they provided the Hytera equipment.
Once again Motorola manufactures excellent equipment that many business s seem to want. They want the best. But Hytera is certainly a good choice if the customer is not as concerned about the name on the equipment. Hytera provides value to the marketplace and should be allowed to continue.

On 12/29/20, Nate Kirschman said:
One thing that I can agree with Judge Norgle about Motorola s reputation was not damaged. It was enhanced as being the arrogant bully of the business. When I think of the number of times I ve personally observed that they and their distribution channels have publicly punished and disparaged organizations and individuals for having made a non-Motorola decision I m not surprised by any punitive actions that they take. They are entitled to defend their trade secrets and a reasonable royalty is a fair result. A request of the court for permanent injunction to restrain competitive trade is a complete overstep. Motorola should sell the difference not kill the competition. We wonder why US firms aren t able to compete and the answer is right out of Motorola s mouth Protect margins. It s important to remain profitable but at some point or another the competitive price has to count and costs to produce and sell product have to be adjusted for long-term success. US manufacturers will continue to fail until they get it.

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