Motorola v Hytera: judge purges contempt finding

Thursday, 14 September, 2023

Motorola v Hytera: judge purges contempt finding

A US federal judge has purged a recent contempt-of-court finding against China’s Hytera Communications and removed the threat of a proposed global injunction, after Hytera made a royalty payment to an escrow account for Motorola Solutions totalling over US$56 million.

US District Judge Martha M Pacold initially ruled on 26 August that Hytera Communications was in contempt of court for failing to make a US$49 million royalty payment owed to Motorola Solutions, due in July 2022, for sales of DMR products using intellectual property that was stolen from Motorola. In addition, Pacold indicated that she would issue an injunction prohibiting Hytera from selling any two-way radio products anywhere in the world until the LMR company made the royalty payment.

In a legal filing that was posted publicly on 1 September, Hytera Communications revealed that it had since wired funds totalling US$56.3 million to the escrow account, representing the original US$49 million royalty as well as 1% interest for each of 13 months that the payment was late. In making the payment, Hytera asked Pacold to purge her finding that the company was in contempt of court and to drop the proposed global injunction.

In a legal brief, Motorola Solutions argued that Hytera should pay an additional US$403,000, as it believed the court order called for the late-fee interest to be compounded each month, not calculated as simple interest as Hytera did. Hytera disputed this claim and indicated that it will appeal the matter, but agreed to pay the additional US$403,000 for the moment. As a result, Hytera’s payment for the royalties on its DMR sales between July 2019 and June 2022 totalled US$56.7 million. This is in addition to around $2 million from ongoing quarterly royalties paid by Hytera to the escrow account during the past year.

“Hytera has purged the civil contempt found in the court’s contempt order, and the court will not enter the civil contempt injunction described in that order,” Pacold said in her ruling.

The contents of the escrow account are not immediately available to Motorola Solutions, as the funds will only be released to Motorola — or returned to Hytera — once all appeals in the civil case between the companies have been resolved. Hytera has already indicated its plans to appeal the royalty order, which was established after it was found guilty in a 2020 civil cast of using stolen Motorola trade secrets and copyrighted software in its DMR products. Hytera has appealed that case to the Seventh Circuit Court of Appeals.

In light of Hytera’s full compliance with the royalty order, Motorola Solutions agreed that Pacold’s contempt-of-court finding and proposed global injunction should be dropped. However, Motorola could seek other sanctions from the court related to Hytera’s actions during the past year and half, during which Hytera attorneys repeatedly claimed that it was unable to pay even a portion of the three-year royalty.

Pacold has directed representatives of Hytera Communications and Motorola Solutions to meet in an effort to reach mutual agreement on any remaining disputed matters and report back to her by 5 October.

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