Hytera Lawsuit Against Motorola Moves Forward
Tuesday, August 30, 2022 | Comments

An Illinois judge denied most of a Motorola Solutions petition to dismiss a Hytera Communications lawsuit alleging anticompetitive behavior against it. The judge also partially dismissed two claims in the suit and fully dismissed one claim.

Since 2017, Motorola and Hytera have been involved in a wide range of legal battles across the world. That year, Motorola filed a lawsuit against Hytera in the U.S. District Court for the Northern District of Illinois alleging theft of trade secrets and with the U.S. International Trade Commission (ITC) alleging patent infringement. Motorola also sued Hytera in two German courts. At the end of 2017, Hytera filed its own lawsuit alleging anticompetitive behavior by Motorola.

In the time since, the ITC released a decision determining Hytera had infringed Motorola patents. Additionally, a jury for the Northern District of Illinois awarded Motorola more than $600 million in damages after finding that Hytera had stolen Motorola trade secrets and used them in its products. Hytera is currently appealing that decision.

Hytera’s lawsuit against Motorola over anticompetitive practices was originally filed in New Jersey but moved to Illinois following a Motorola motion in 2018. The case alleges a variety of anticompetitive behavior against Motorola. These include monopolization and attempted monopolization that violates the Sherman Act, false advertising under the Lanham Act and unlawful exclusionary arrangements and violations of California, New Jersey and Florida laws.

Motorola filed a motion to fully dismiss the lawsuit. After considering Motorola’s arguments, District Judge Steven Seeger denied most of Motorola’s petition to dismiss but fully dismissed one claim and partially dismissed two other claims.

Counts one and two of the complaint allege that Motorola monopolized and attempted to monopolize in violation of the Sherman Act in the public-safety, utility, transportation and business critical markets. In its petition to dismiss, Motorola argued that Hytera had failed to state a claim for any of the markets.

Specifically for the public-safety market, Hytera argued that Motorola engaged in monopolistic activity by attempting to prevent the growth of the TETRA standard in the U.S. This included petitioning the FCC to repeal its allowance of TETRA in the U.S. and protests of awards to companies for TETRA equipment.

Motorola argued that the Noerr Pennington doctrine barred Hytera’s claims of monopolization in the public-safety market. Motorola argued that petitions or appeals to governments are immune from antitrust attacks under the doctrine. The company argued that under the doctrine, federal antitrust laws have been interpreted to protect First Amendment rights by protecting the right to petition the government.

In response, Hytera agreed the doctrine does protect legitimate activities but argued that Motorola’s actions were not legitimate but sham petitions, which is not protected by the doctrine.

Seeger noted that the exception to Noerr Pennington for sham petitioning is narrow and must meet several requirements but ruled that at this point in the case, Hytera had shown enough for the counts to move forward.

“In most cases, the Noerr-Pennington doctrine protects this exact petitioning behavior from an antitrust challenge,” Seeger wrote. “But Hytera also alleged facts, which the court must assume are true, to suggest that the sham exception applies to the alleged petitioning activity. For now, that is enough. At this early stage, Hytera’s complaint survives the Noerr-Pennington bar. For each of these actions, Hytera alleged that the sham exception applies. Hytera alleges that the petitions were objectively baseless and unreasonable on the merits.”

Seeger ruled that the facts Hytera alleged about each of the petitions Motorola submitted regarding the petitions were sufficient at this point in the case and the merits of those allegations would be determined later on in the case.

“Motorola’s actions may ultimately be protected by the Noerr-Pennington doctrine, but in the meantime, Hytera has alleged sufficient facts to withstand the motion to dismiss,” Seeger’s order said. “Overcoming Noerr-Pennington is a steep climb and a tall order. But for now, the complaint alleges enough to give plaintiff a chance to embark on that effort. Time will tell if the claim survives.”

For the business critical and utility markets, Hytera argued that Motorola had monopolized the markets by creating exclusive agreements with dealers that penalizes dealers for doing business with other radio manufacturers. Given Motorola’s share of the market and the importance of dealers to the radio market, Hytera argued that this behavior precludes others from participating in the markets.

Motorola argued that the exclusive dealing agreements are allowed under antitrust laws and that any alleged threats or penalties to dealers were not enough to prove exclusive dealing agreement.

“Ultimately, Hytera’s allegations paint a picture of an anticompetitive market that is no accident,” the judge’s order said. “Hytera alleges that Motorola’s actions led to a lower supply of mission-critical solutions for all of its customers, and limited business-critical solutions for its commercial and industrial customers, with Motorola ‘reducing market output below what would have prevailed’ without its anticompetitive conduct.”

The judge noted that while the legal proceedings may eventually show that Motorola’s actions were not part of a monopolization scheme, it was too early in the case to determine that.

“Even if some alleged actions … are innocent standing alone, it would be inappropriate to ignore the bigger picture at this stage,” the judge wrote. “Motorola’s piecemeal attacks on Hytera’s section 2 claims might prove meritorious someday. But for now, there is more than enough to put Motorola on notice of Hytera’s claim and it passes the plausibility test based on the rest of the complaint.”

Another claim in the lawsuit alleges that Motorola violated the Clayton Act through the use of the exclusive dealing agreements. On that claim, the judge also determined that Motorola had not proven enough to dismiss it at this point and allowed it to move forward.

Hytera also alleged a claim of violation of the Lanham Act, arguing that Motorola had engaged in false advertising that hurt it. Hytera alleged that Motorola employees told dealers false information about Hytera’s products and the other litigation at tradeshows, damaging its reputation.

Motorola argued that these actions were not a violation of the Lanham Act because they were person-to-person communications and not advertising communications. Seeger agreed.

“These allegations don’t rise to the level of commercial advertising or promotion,” the judge wrote. “Hytera fails to allege that these statements went beyond person-to-person communications. True, Hytera alleges that the dealers in the industry are often ones promoting the product and Motorola allegedly made false statements to the dealers that dealers turned around and repeated to the customers. As Hytera sees it, this ‘rebroadcasting’ is more effective than general advertising ‘because the dealers’ purported independence adds a veneer of credibility to the false statements.’ But the allegations on their face still only amount to person-to-person statements. These person-to-person comments aren’t advertising.”

The judge dismissed that claim against Motorola.

Finally, the judge addressed several state law claims that Hytera made against Motorola. The first of these was a claim that Motorola violated California’s Unfair Competition Law (UCL). For that claim, Seeger determined that one of Hytera’s subsidiaries, Hytera Communications America (West) had standing to bring the claim because it is located in California. However, the judge determined Hytera and the rest of its subsidiaries did not have standing to bring the claim because none of the alleged actions took place in California.

So the judge determined Hytera Communications America (West) could bring the claim but the claims were dismissed for all of Hytera’s other subsidiaries.

The judge made a similar decision on a claim Hytera made under the Florida Deceptive Practices Act (FDUPTA). The judge ruled that because Hytera America has its principal place of business in Florida, it could bring the claim but other subsidiaries could not.

The court allowed a claim Hytera brought against Motorola under the New Jersey Antitrust Act.




 
 
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