Judge Declines to Change Date from Which Hytera Royalty to Motorola is Determined
Monday, April 18, 2022 | Comments

An Illinois judge declined to change the initial date from which a royalty that Hytera Communications owes to Motorola Solutions was determined. Additionally, the judge declined to change the format of the royalty payment from a lump sum to a payment plan.

In 2017, Motorola sued Hytera for theft of trade secrets, alleging that Hytera had stolen proprietary information and used it in its DMR product. In 2019, a jury for the U.S. District Court of the Northern District of Illinois awarded Motorola $764.6 million in damages after determining that Hytera used Motorola trade secrets in its products.

Following that decision, Motorola asked U.S. District Judge Charles Norgle to implement a permanent injunction against Hytera that would prevent it from importing, selling or distributing any products that included Motorola trade secrets. Norgle denied that request but instead ruled that Hytera would pay a royalty for continued use of the secrets. At the time, Norgle determined that the payments would be made on a quarterly basis based on relevant sales in the previous quarter starting with sales made from July 1, 2019.

In a proposed royalty agreement submitted by the two parties that was ordered by the court, Hytera asked the judge to change it so that instead of July 1, 2019 being the start date for the royalties, December 14, 2021 would be. If not December 14, 2021, the earliest start date should be December 17, 2020, Hytera said. December 17 was the date that Norgle denied Motorola’s motion for a permanent injunction.

Hytera argued that in determining that July date, the court was incorrect in assuming that the two parties had agreed on that as the starting point. On top of that Hytera said that it was unable to make the first lump sum payment, which would be $45 million. Hytera said those two factors as well as the fact that the U.S. Department of Justice recently unsealed a criminal indictment against it for similar allegations justified reconsideration of the date and the lump sum payments.

On the argument of Hytera not being able to afford the lump sum payment, Norgle noted that its argument failed because, at least according to Hytera itself, Hytera’s inability to pay is not new knowledge.

“By Hytera’s own admission, Hytera’s financial condition was known to it and its counsel when Hytera submitted its initial brief on the royalty issues in February 2021, yet Hytera made no argument that because of its financial condition, its royalty obligation should begin later than July 1, 2019 or that any royalty obligation that began before December 17, 2020 should be paid over a period of time,” the judge wrote. “In other words, Hytera’s financial condition is not newly discovered evidence, and Hytera could have raised those arguments in the first instance, but it did not.”

On the fact that the DoJ’s indictment has put even more stress on Hytera’s financial condition, Norgle said that it does not justify reconsideration or modification of the royalty.

“As Hytera notes, ‘financial inability to pay’ is generally a defense to a civil contempt motion for failure to comply with a court order directing payment,” he wrote. “The court will cross that bridge only if and when it has to. For now, the court’s ruling that Hytera’s royalty obligation starts on July 1, 2019 and that Hytera’s first royalty payment shall include royalties due for its sales from July 1, 2019 through the relevant quarter stands.”

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