Hytera Amends Anticompetitive Behavior Complaint Against Motorola, Alleges Misinformation
By Danny Ramey, Web/Assistant Editor
Thursday, September 13, 2018 | Comments

Hytera Communications amended its anticompetitive behavior lawsuit against Motorola Solutions, alleging that Motorola has undertaken a misinformation campaign to discredit Hytera and deter customers from buying Hytera products.

In the amended New Jersey complaint, Hytera accused Motorola of spreading misinformation about two court decisions to deter customers from buying Hytera products and dealers from selling them.

Hytera filed its lawsuit in the Federal District Court of New Jersey in December, accusing Motorola of monopolistic practices that include using its dominance of the public-safety LMR market to force dealers to drop Hytera products. Additionally, Hytera accused Motorola of using a series of sham lawsuits to impede Hytera’s business in the U.S.

The amendments to the complaint focus on statements that Motorola has made related to two other legal cases involving the companies. In July, a U.S. International Trade Commission (ITC) administrative law judge (ALJ) released an initial determination that found Hytera had infringed four Motorola patents. ALJ Mary Joan McNamara recommended that the ITC institute exclusion and cease-and-desist orders against Hytera that would prevent it from importing or selling and distributing the infringing products.

Shortly after, a German court found that Hytera Mobilfunk, a German subsidiary of Hytera, had infringed a German Motorola patent. The German court granted an injunction that prevents the use, sale, importation or distribution of infringing products in Germany.

The ITC is reviewing the judge’s initial determination and can reach a different decision if it finds the facts support such a conclusion. The ITC expects to reach its final conclusion by Nov. 16. During the review period, Hytera can continue to import, sell and distribute the alleged infringing products.

Hytera appealed the German decision to a higher court and said it would suspend sales of products affected by the injunction in Germany.

In the amended complaint, Hytera accused Motorola of spreading a rumor that an ITC judge had issued an order blocking Hytera from selling its products or supporting existing customers and that Hytera customers in the U.S. would have to return Hytera products they bought prior to the decision.

“The ALJ has made no such order,” Hytera wrote in its amended complaint. In her determination, McNamara said that the ITC would likely need more information before deciding whether or not Hytera and its dealers could continue to support existing customers. The German court ordered the recall and destruction of infringing products previously sold by Hytera Mobilfunk in Germany, but that order has no effect in the U.S.

Hytera also argued that Motorola is spreading misinformation about the German case to dealers and customers in the U.S. by telling them that they should not buy Hytera products because the German court’s order would prevent Hytera from providing support and the products would be recalled.

Hytera argued that while those versed in legal matters would know that the German order would not affect U.S. business, dealers and customers in the U.S. would likely be unaware of that.

“MSI’s (Motorola) misrepresentation that the ALJ’s recommendation or German ruling means a U.S. customer can no longer expect customer support from Hytera is misleading and designed to sow — and has had the effect of sowing — fear, uncertainty and doubt in customers, wrongfully disparaging Hytera and Hytera’s product,” Hytera wrote.

Hytera also noted that the ITC’s proposed sanctions against it would not cover all Hytera products.

“Contrary to MSI’s misstatements, Hytera will not be forced to exit the U.S. market, and as a result will be able to continue serving its dealers and customers,” Hytera wrote in its complaint.

Hytera said it has become aware of numerous customers in the past few months that decided not to purchase Hytera products after hearing the misinformation from Motorola and/or its dealers. The company provided at least nine examples in its amended complaint and said more would likely come up during discovery in the case.

“Early in 2017, Motorola Solutions embarked on a deliberate campaign of misinformation and misstatements against Hytera,” said Tom Wineland, vice president of Hytera Communications America (West). “That campaign has become more intense in 2018, as MSI continue to mislead and bully dealers that sell Hytera’s products in an effort to prevent them and their customers from doing business with Hytera.

“It is widely acknowledged by participants in the land mobile radio communications sector — including dealers who sell LMR products from all providers — that Motorola Solutions has engaged in anticompetitive behavior for decades to manipulate the market and maintain its monopoly,” Wineland said.

As part of the ITC proceedings, seven dealers that sell Hytera products filed public interest statements supporting Hytera and arguing that exclusion of Hytera products would harm both public safety and competitiveness in the U.S.

Wineland reiterated that Hytera is in the U.S. market to stay.

“Motorola Solutions embraces legitimate competition, but there is nothing legitimate about Hytera’s egregious and unlawful behavior,” a Motorola spokesperson said. “As the recent initial determination from Administrative Law Judge Mary Joan McNamara of the U.S. International Trade Commission and the judgment of the Mannheim Court in Germany make clear, Hytera has built its business by illegally copying the hard work and innovation of Motorola Solutions. We are committed to vigorously defending our valuable intellectual property, and we will continue to take steps to protect our customers, shareholders and other stakeholders from this serial infringer and misappropriator of our intellectual property.”

Plaintiffs in the amended complaint are Hytera America, Hytera Communications America (West) and PowerTrunk. Sepura, which Hytera purchased last year, was included as a plaintiff in the original complaint but removed in the amended complaint. Because PowerTrunk, previously a Sepura affiliate, is involved in the case, there was no need to keep Sepura as a plaintiff, a Hytera spokesperson said.

The new complaint also removes a section in which Hytera accused Motorola of forgoing its obligation to provide “fair, reasonable and nondiscriminatory” (FRAND) licensing of technology under the Digital Mobile Radio (DMR) standards process.

The Hytera spokesperson said Hytera is not waiving that issue but had another avenue to tackle the issue in one of the patent infringement cases between the two companies. “This Sherman Antitrust Act and Clayton Act litigation has always been focused on Motorola Solutions’ antitrust violations; the amended complaint adds new conduct that amplifies the original harms from those antitrust violations,” the spokesperson said.

In March, Motorola filed two motions in the case. One asked the court to dismiss the case, arguing that Hytera only filed the case out of fear that the ITC case and other lawsuits could prevent it from selling it in the U.S. Motorola also argued that none of its actions were anticompetitive and were only done to prevent the misuse of its intellectual property.

Motorola also filed a motion to transfer the case from New Jersey to the U.S. District Court for the Northern District of Illinois where Motorola filed a theft of trade secrets and patent infringement lawsuits against Hytera in March 2017.

Motorola accused Hytera of “venue shopping” for a court that would be sympathetic to its case and said that the case should be tried in the same court as the theft of trade secrets and patent infringement cases because they cover similar issues and events.

In July, Judge Esther Salas dismissed the motion to dismiss because of the motion to transfer. Once the court has decided on the motion to transfer, Motorola may refile that motion if necessary.

A decision has not been made on the motion to transfer, but Salas gave the parties until Sept. 14 to submit short supplemental briefs on how the amended complaint affects the motion to transfer. Motorola also has 60 days to file a response to the amended complaint.

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