U.S. prices China’s Hytera with conspiring with ex-Motorola employees to steal expertise By Reuters
©Reuters. FILE PHOTO: Signage is seen at the US Department of Justice headquarters in Washington, DC, U.S. August 29, 2020. REUTERS/Andrew Kelly/File Photo
By Sarah N Lynch
WASHINGTON (Reuters) – The U.S. Department of Justice said on Monday it had filed criminal charges against China-based telecommunications company Hytera, accusing it of conspiring with employees of Motorola Solutions Inc (NYSE:) to exploit the American company’s digital cellular technology to steal.
In a partially redacted indictment unsealed in Chicago, the government said Shenzhen-based Hytera Communications Corp recruited Motorola employees in Malaysia to steal proprietary trading data on the two-way radios known as walkie-talkies.
The indictment accused Hytera by name but blacked out the names of other co-defendants in the case, at least some of whom are the now-ex-Motorola employees the Chinese company is accused of recruiting. The indictment states that Hytera recruited Motorola employees from 2007 to 2020 and that those workers received higher salaries and benefits than Motorola in exchange for stealing the trade secrets.
Hytera was charged with 21 felonies, including conspiracy to steal trade secrets. Hytera and the unidentified other defendants were also charged with possession or attempted possession of stolen trade secrets. If convicted, Hytera would face a fine of three times the value of the stolen trade secrets.
In a statement from its attorneys, Hytera said it was “disappointed” by the allegations and “respectfully disagrees with the allegations.”
“The indictment is said to describe activities by former Motorola employees that took place in Malaysia more than a decade ago. Hytera looks forward to pleading not guilty and to presenting its side of the story in court,” the company said.
Hytera added that it “is committed to respecting the intellectual property rights of others.”
Motorola executive vice president and general counsel Mark Hacker said in a statement the charges against Hytera “underscore the calculated and premeditated nature” of the Chinese company’s illegal conduct.
“We will continue our civil actions against Hytera in jurisdictions around the world to prevent Hytera’s serial rights infringement and recover the hundreds of millions of dollars in damages owed to Motorola Solutions,” added Hacker.
The former Motorola employees signed all non-disclosure agreements at the time of their hire and later non-disclosure agreements after they left the company, the indictment said. It cited evidence that certain employees gained access to trade secrets through a Motorola database that they had never used in the past.
In a February 2008 email, an unidentified employee emailed another person to ask, “Are we going to ‘reuse’ as much as possible, or do we have to redesign most of them from scratch in order to do that.” to avoid patent infringements?”
Hytera is a former distributor of Motorola Solutions products.
Motorola Solutions won a $764.6 million jury verdict in February 2020 in a trade secret theft and copyright infringement case against Hytera. A federal jury in Chicago found that Hytera used Motorola Solutions’ confidential documents and proprietary source code to compete in the two-way wireless communications market. Hytera told jurors it designed its own radios.
Hytera later said the amount awarded to Motorola in the case was reduced by $221 million.
The civil suit between Hytera and Motorola is mentioned in the indictment. Prosecutors said that in 2017, an unidentified person emailed Hytera’s CEO to “reconcile” his story with the civil lawsuit.
The indictment notes that a Hytera employee who lied under oath in that civil lawsuit, alleging that an employee at the Chinese company was fired in the fall of 2018 for failing to cooperate with an internal company investigation, even though that employee actually worked for Hytera from December 2018 until at least June 2020.
The criminal case against the company marks the latest blow to Hytera in the United States.
In November, President Joe Biden signed legislation to prevent Hytera and other Chinese companies like Huawei Technologies Co, considered a security threat, from receiving new device licenses from US regulators.
Under former President Donald Trump, recipients of federal funds were also banned from using Hytera telecommunications equipment.