A federal judge is expected to determine the ongoing compensation that Hytera Communications must pay for the use of trade secrets and copyrighted software stolen from Motorola Solutions-a decision that may affect the competitive landscape in the DMR market.

There are no specific details on the royalties amount proposed by the lawyers representing China Hytera Communications and Motorola Solutions, because the royalties data for each radio and each repeater have been deleted from the public court documents . However, considering that the two companies have not reached an agreement so far, and there are obvious differences in the legal interpretation of the documents submitted recently on the subject of royalties, the fact that there are major differences in the royalty proposal is obvious.

According to a document submitted to the Federal District Court of Illinois on February 17, Hytera Communications’ lawyers claimed that Motorola Solutions was trying to make royalties so expensive that it would prevent the China-based LMR manufacturer from passing Judge Charles Nogle sells its DMR products to maintain a profitable business. In December of last year, Norgle decided that Hytera should pay Motorola Solutions "reasonable royalties" because it used stolen trade secrets and software instead of approving the global ban required by Motorola Solutions.

According to Hytera’s lawyers, if Norgle grants Motorola Solutions’ royalties, it is equivalent to granting an injunction, because Hytera will not have the opportunity to profit from the sale of its DMR products.

"In order to reach a compromise, Hytera put forward a proposal that is not only reasonable but far more than

Hytera stated in its February 17 briefing that most companies like Hytera will make recommendations during negotiations. "In contrast, according to Motorola's proposal, Hytera will pay more than twice the profit of Hytera for each radio. No reasonable licensee would agree to such an arrangement.

“Seeking to exceed all potential profits of Hytera as the'bottom line' of royalties — and forcing Hytera to sell at a loss — is not a real royalties, and certainly not a reasonable royalty. Instead, Motorola The request for a court ruling is actually a de facto injunction-or permanent supplementary damages-requiring Hytera to continue to turn in all profits based purely on the damages awarded in the trial, which does not include the determination of royalties. "

Lawyers from Motorola Solutions expressed a completely different view, claiming that the Federal Court is not responsible for ensuring that Hytera can continue to sell DMR products and make a profit while maintaining current pricing.

Lawyers representing Motorola Solutions have been claiming for months that after a four-month trial, the jury unanimously ruled that Norgle upheld the verdict in March 2020 and Hytera Communications does not intend to pay any of the $543.7 million owed by Hytera . Motorola Solutions claimed in its final briefing on royalties on February 24 that royalties are consistent with this strategy.

"Hytera’s response is its latest attempt to evade full compensation for Motorola’s intentional and malicious theft," Motorola Solutions’ briefing stated. "Hytera seeks to regroup and claim royalties based on the revised profit calculation, which is actually lower than the amount proposed by Hytera in the trial. Hytera tried to prove by arguing that it must leave "reasonable profits." The reasonableness of its proposal. However, if the profit does not include the royalties owed and is illegally reduced by weakening Motorola in price, the law will not limit the royalties to the profit of the pirate.

"In this case, the only royalties that are close to reasonable start with Hytera's profits, and have been increasing due to Hytera's deliberate and malicious theft."

According to Motorola Solutions’ documents, Hytera Communications can continue to sell controversial DMR products and maintain profits by increasing the price from the current low level that has caused Motorola Solutions to lose business to Hytera for more than a decade.

“Although Hytera complained that'increasing [its] prices sufficient to obtain material profits per unit will ultimately reduce Hytera’s overall profit,' Hytera has set prices for its products in the past 11 years without considering that it owes it. Motorola caused its theft," Motorola Solutions' documents stated. "Since it has been caught, Hytera cannot use its illegally established business to limit royalties, especially because Hytera is often lower in price than Motorola."

Not surprisingly, Hytera’s lawyers disagree with this argument, claim that special circumstances need to be considered, and point out the impact of the COVID-19 pandemic.

"Motorola claims that the levy of royalties that would prevent any possible profit (and cause significant losses) is completely reasonable, because Hytera can simply choose to stop selling the alleged product or substantially increase the price (during the pandemic) )," according to Hytera's filing on February 17. "In other words, Motorola readily admits that the real motive of its proposal is not to achieve reasonable royalties, but to implement a de facto ban.

"But this court has determined that the global ban is inappropriate, especially during the pandemic." Forcing Hytera to stop selling products is not a reasonable royalty proposal, but a mockery of hypothetical negotiation analysis.

Attorneys at Hytera Communications and Motorola also disagree on other aspects of the royalty issue, such as which sales the royalties apply to.

Motorola Solutions claims that royalties should apply to most Hytera DMR sales after July 1, 2019—that is, the day when sales are included in the initial trial—or at least February 14, 2020— -The day-month trial when the jury reached a consensus decision after four deliberations.

In contrast, Hytera argued that Motorola’s solution should not receive royalties from the sale of five Hytera products that were not awarded during Norgle’s trial, and that royalties should not be applied on December 17, 2020. For any previous sales, Norgle made a favorable ruling on royalties rather than injunctions.

An obvious consensus between the two companies is that Hytera Communications (the parent company of Hytera, headquartered in China) will be responsible for all royalties. The new Hytera US entity-established under the Chapter 11 Bankruptcy Law of Hytera America and Hytera America (Western)-is not a party to the litigation and is not responsible for paying royalties.

In addition to determining the terms of the royalties owed by Hytera, Norgle is expected to determine the amount of interest Hytera will pay to Motorola Solutions and whether Motorola Solutions can receive the original $543.7 million in payment from Hytera's bank account. China.

Motorola Systems is seeking Hytera to pay more than $100 million in interest-Hytera disputes this. On January 25, Norgle issued an order approving the transfer of Hytera assets held by Bank of China to Motorola Solutions, but he withdrew the decision two days later. According to court documents, the timetable for submission of this part of the case has been postponed because Hytera determined that the two original lawyers who dealt with the matter had conflicts of interest.

During the federal court trial that began in November 2019, Hytera’s lawyers admitted that three former Motorola (the company had not yet been renamed Motorola Solutions) employees-Samuel Chia, YT Kok and GS Kok-visited more than 7,000 Motorola provided documents before each of them left in 2008 and soon joined Hytera. However, Hytera’s lawyers described the three engineers as "bad apples" and they did not share DMR trade secrets with anyone else at Hytera and the software was stolen from Motorola.

Hytera successfully argued that the compensation to Motorola should be reduced, resulting in a reduction of US$220.9 million from the original US$764.6 million in compensation to US$543.7 million. Hytera officials also stated that the company plans to appeal the Federal Court’s decision.

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