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Hytera, Motorola’s DMR Patent Fee Dispute Will Be Decided By A US Federal Judge

Date:Mar 01, 2021

(source: urgentcomm.com)

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


Attorneys for Hytera Communications stated that Motorola Solutions tried to increase the patent fee so high that the China-based LMR manufacturer could not maintain a profitable business by selling DMR products, according to the Federal Republic of Illinois on February 17. Document submitted by the District Court, Judge Charles Norgle. In December of last year, Norgle decided that Hytera would pay Motorola Solutions a "reasonable royalty" for the use of stolen trade secrets and software, instead of issuing a global injunction as required by Motorola Solutions.


According to Hytera’s lawyers, if Norgle grants Motorola Solutions the proposed royalties, it will be 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, the royalty rate proposed by Hytera is not only reasonable, but also far exceeding


Hytera said in a briefing on February 17: "Most companies that use Hytera will make recommendations in negotiations." "In contrast, Motorola's proposal, Hytera will pay twice as much as Shanghai Nengda. The profit is on each radio. No reasonable licensee agrees to this arrangement.


"Seeking over Hytera's full potential profit as royalties and forcing Hytera to sell at a loss is not true royalties, and of course it is reasonable. On the contrary, Motorola requires the court to rule that Hytera continues to be awarded purely based on the trial The award of damages (not including the determination of royalties) is actually a de facto injunction or permanent compensation for damages."


Lawyers for 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 while maintaining its current prices for profit.


The lawyer representing Motorola’s solution has been declaring for several months that Hytera Communications does not intend to pay any of the $543.7 million owed by Hytera, because after four months of trial, the jury unanimously ruled that Norgle maintained March 2020 The verdict. Hytera's legal position Motorola Solutions stated in its final briefing on patent royalties released on February 24 that the patent royalties are consistent with this strategy.


Motorola’s solution summary stated: “Hytera’s response is its latest attempt to evade Motorola’s deliberate and malicious thefts with full compensation.” “Hytera seeks compensation based on the revised profit calculation (which is actually lower than Hytera’s trial in the trial). The proposed profit calculation) requires royalties. Hytera tries to prove the rationality of its proposal by claiming that it must be given "reasonable profits." However, if the profit of the pirate does not account for the royalties due, and by reducing Motorola If the price is lowered illegally, the law will not limit the usage fee based on the profit of the pirate.


"In this case, the only royalties close to reasonableness started with Hytera's profits, and increased revenue due to Hytera's relentless deliberate and malicious theft."


Motorola Solutions documents show that Hytera Communications can continue to sell controversial DMR products, and only need to increase its prices from the current low to maintain profits. This has caused Motorola Solutions to lose business to Hytera for more than 10 years.


"Although Hytera complains that'increasing [price] enough to obtain substantial unit profits will ultimately reduce Hytera's overall profit," Hytera has priced its products for the past eleven years, but has not taken into account what it owes Motorola. The Motorola solution document states. "Since it has been discovered, Hytera cannot use its illegally operated business to limit user fees, especially because Hytera often lowers Motorola's prices."


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


"Motorola claims that the royalties are completely reasonable, which will prevent any possible profit (and cause significant losses) because Hytera can choose to stop selling the alleged product or substantially increase its price (during the pandemic)) ," According to a document submitted by Hytera on February 17. "In other words, Motorola readily admits that the real motive of its proposal is not to obtain reasonable royalties, but to impose a de facto injunction.


"However, the court has determined that the global injunction is inappropriate, especially during the ongoing pandemic." Forcing Hytera to stop selling products is not a reasonable royalty proposal, and mocks the hypothetical negotiation analysis.


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


Motorola's solution claims that the royalties should be applied to Hytera DMR sales after July 1, 2019, that is, the sales revenue is included in the second day after the original trial, or at least February 14, 2020, the jury The day when a consensus decision was reached after four rulings. A trial period of months.


Instead, Hytera argued that Motorola Solutions should not collect royalties from the sale of five Hytera products that were not adjudicated during the trial period before Norgle, and that royalties should not be applied on December 17, 2020 (Norgle approves) Any sales at the time. Royalties rather than injunctions.


The 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 by the Chapter 11 bankruptcy of Hytera America and Hytera Communications America (West) is not a party to the litigation and is not responsible for the payment of royalties.


In addition to determining the terms of royalties owed by Hytera, Norgle should also determine the amount of interest Hytera will pay to Motorola Solutions and whether Motorola Solutions can mortgage the initial $543.7 million from Hytera's U.S. bank account. China.


Motorola Solutions is seeking to pay more than $100 million in interest from Hytera, a figure questioned by Hytera. On January 25, Norgle issued an order to approve the turnover of Hytera assets held by the Bank of China in Motorola Solutions, but he withdrew the decision two days later. According to court documents, Hytera determined that the two original lawyers engaged in the matter had conflicts of interest, and therefore delayed the submission of this part of the case.


During the federal court trial that began in November 2019, Hytera lawyers admitted that three former Motorola employees-Samuel Chia, YT Kok, and GS Kok-contacted more than 7,000 Motorola to provide documents before everyone left their job and joined Hytera shortly in 2008 . However, Hytera lawyers described the three engineers as "bad apples." They did not share DMR trade secrets with anyone else in Hytera and the software all came from Motorola.


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