China's walkie-talkie faucet has been banned globally, and its products have been removed from the shelves on domestic e-commerce platforms, Hytera responded

Titanium Media APP

2024-04-08 12:41Posted on the official account of Beijing Titanium Media APP

China's walkie-talkie faucet has been banned globally, and its products have been removed from the shelves on domestic e-commerce platforms, Hytera responded

(The picture comes from the Internet)

Hytera, the leading walkie-talkie going to sea, was banned from being sold globally by the United States, which caused widespread discussion in China.

Titanium Media App learned that on the morning of April 8, Hytera (002583.SZ) announced to the Shenzhen Stock Exchange that the company recently received an order from a U.S. court, which determined that the company failed to fully comply with its anti-suit order, temporarily prohibited the company from selling two-way radio technology products worldwide, and imposed a fine of $1 million per day until the company fully complied with the anti-suit order. At the same time, the company announced that Chen Qingzhou, the controlling shareholder and actual controller, voluntarily promised not to reduce his shareholding in the company within 6 months from now on.

Hytera pointed out that at present, the company has withdrawn the lawsuit in the Shenzhen case, and at the same time suspended the sale of two-way radio technology products as required, and has applied to the U.S. court to revoke the above order, and is currently undergoing hearings in the U.S. court. The Company will take further countermeasures to revoke the above order in the shortest possible time.

According to the original text of the decree issued by the U.S. District Court for the Northern District of Illinois provided on Hytera's official website, Hytera issued a contempt order for the court to withdraw and withdraw its lawsuit filed with the Shenzhen Intermediate People's Court in June 2022 (which sought a declaratory judgment that its H series products do not infringe Motorola's trade secrets and copyrights). Effective April 2, 2024, the sanction order requires Hytera to stop selling products containing two-way radio communication technology worldwide and pay a daily fine of US$1 million to the court before complying with the relevant anti-suit injunction.

On April 7, Hytera announced on its official website that according to the order of the U.S. court, Hytera is not allowed to sell any products containing walkie-talkie technology anywhere in the world until further notice.

As of the press release of the Titanium Media App, Hytera-related walkie-talkie products have been fully removed from the shelves of domestic e-commerce platforms such as JD.com and Tmall.

With a global share of 12.6%, Hytera has been "entangled" with Motorola in the United States for seven years

Founded in 1993, Hytera is a global dedicated communication and solution provider headquartered in Shenzhen, the world's second largest manufacturer of radio terminals, and a leading company in the field of walkie-talkies. According to public information, Hytera walkie-talkie products account for more than 12.6% of the global market share.

(Image source: Hytera's official website)

Hytera's ban originated in 2017.

In March 2017, Hytera's two wholly-owned subsidiaries, Hytera Inc. (USA) and Hytera (US) and Hytera (US), received a complaint from the Illinois State Court in the United States, in which Motorola Solutions and Motorola Solutions Malaysia filed a lawsuit against Hytera USA and Hytera Malaysia for trade secret infringement, arguing that some of Hytera's products infringed Motorola Solutions' trade secrets.

Motorola alleges that its former employees downloaded thousands of classified documents and brought them out of the company while working at Motorola. During this period, Hytera paid the employee without Motorola's knowledge. During the trial, Motorola claimed that some of Hytera's products infringed Motorola's 21 trade secrets and 4 U.S. copyrights, and demanded that Hytera, the U.S. Company, and the U.S. West Corporation pay corresponding compensation for their infringement. (Note: Lenovo previously acquired Motorola Mobility, Inc., and the Motorola mentioned this time is a solution company, which is still an independent legal entity).

At the same time, Hytera expanded the litigation battle between the two sides to China.

On November 14, 2017, Hytera sued Motorola Solutions (China) Investment Co., Ltd., Motorola Solutions (China) Co., Ltd., and Motorola Solutions (China) Co., Ltd. Beijing Branch ("Motorola") to the Beijing Intellectual Property Court, requesting the court to order Motorola to stop its monopolistic behavior of abusing its dominant market position and compensate for losses of RMB 60 million and reasonable expenses of RMB 500,000.

Accordingly, Hytera requested that Motorola be ordered to cease the above-mentioned monopolistic behavior of abusing its dominant market position, and that Motorola be ordered to compensate for losses of RMB 49,266,000 and reasonable expenses of RMB 1,056,184.

On February 14, 2020, a jury of the Northern District Court for the Northern District of Illinois in the United States ruled that Hytera had infringed one or more of Motorola Solutions' trade secrets and U.S. copyrights, and sentenced it to pay Motorola US$345,761,200 in tort damages and US$418.8 million in punitive damages, totaling US$764,561.2 million (approximately RMB5.334 billion).

On March 5, 2020, the judge of the Northern District Court of Illinois issued a first-instance judgment in the case, upholding the jury's verdict and awarding Hytera, U.S. Inc., and U.S. West Corporation, Inc. to Motorola Solutions $345.7612 million in damages and $418.8 million in punitive damages, totaling $764.5612 million.

Hytera refused to accept the first-instance verdict. On March 8, 2020, in response to the first-instance judgment, Hytera filed an application for a retrial of the case and a motion for the court to change the judgment in accordance with the law with the Northern District of Illinois, and if the court did not support the company's motion, the company will appeal to the appellate court to protect the company's legitimate rights and interests. The appeal process generally lasts 2-3 years. At the same time, after the first-instance judgment, the two parties held a hearing on the payment method of the license fee and related matters, and Hytera provided a guarantee of the license fee in cash to the court-supervised condominium account in accordance with the court's requirements, with a guarantee amount of about US$56 million.

On January 19, 2020, the Beijing Intellectual Property Court rendered a first-instance judgment in the above case, finding that although Motorola had a dominant position in some of the relevant markets claimed by Hytera, it did not constitute an abusive act, and rejected all of Hytera's claims. In addition, Hytera also sued Motorola in Guangzhou and Shenzhen, but as of press time, no further information has been disclosed.

On January 12, 2021, Hytera issued another announcement stating that the judge of the Northern District of Illinois recognized Hytera's opinion that the amount of compensation for R&D expenses proposed by Hytera in the post-trial procedure was a duplicate amount of damages, and reduced the amount of compensation previously awarded, of which the amount of damages for trade secrets was reduced by US$73.6 million, the amount of punitive damages for trade secrets was reduced by US$147.2 million, and the overall amount of damages was reduced from US$765 million to US$543 million, a decrease of US$222 million. At the same time, the judge also rejected Motorola Solutions' motion for additional compensation in the post-trial proceedings, but upheld Motorola Solutions' motion for interest compensation, after which the parties should submit their opinions to the court on the amount and manner in which the interest was calculated.

On September 8, 2021, Hytera announced that it had appealed to the U.S. Court of Appeals for the Seventh Circuit the results of the first-instance judgment and the subsequent motion judgment in the trade secret and copyright infringement lawsuit with Motorola Solutions. The scope of appeal includes, but is not limited to, the judgment of the first instance, the judgment on the license fee, the judgment on interest, the judgment on litigation miscellaneous expenses, and the judgment on attorney's fees (the amount to be determined).

On February 7, 2022, the U.S. Department of Justice also announced a criminal indictment against Hytera, accusing it of conspiring with a former employee of Motorola Solutions to steal proprietary business data for its digital mobile radio, known as "walkie-talkie". In response, on the evening of February 8, Hytera responded that the company was deeply disappointed by the accusations and believed that the content of the accusations of the US Department of Justice was not based on facts, and the company should not be included in the accusations. The company strongly opposes the accusations made by the U.S. Department of Justice, and will resolutely respond to this matter with legal means and factual basis, and resolutely safeguard the legitimate rights and interests of the company. However, Hytera also said at the time that "if the charges are ultimately established, the company may be fined no more than three times the value of the trade secrets." ”

In July 2022, the Northern District Court of Illinois also ruled that Hytera should also pay Motorola additional trade secret and copyright infringement royalties since July 2019.

Subsequently, at the request of Motorola, a federal judge initiated contempt proceedings against the Chinese telecommunications company Hytera. The injunction was made because Hytera had not withdrawn its lawsuit in the Chinese courts.

On March 25, 2024, the U.S. District Court for the Northern District of Illinois ordered Hytera to "refrain from continuing to pursue or enforce" its lawsuit in China, and on March 29, 2024, it ordered Hytera to "withdraw the lawsuit...... including the withdrawal of all production materials in the case".

U.S. court: global ban on walkie-talkies, $1 million per day fine

Now, Hytera has directly encountered a U.S. court injunction, and walkie-talkie products have been banned worldwide.

In response to the injunction document released by the U.S. court, there are three main contents:

1. Sales and Distribution Injunctions: Until Hytera fully complies with the Court's anti-suit injunction orders (Documents 1504, 1508), Hytera and all of its officers, agents, employees, affiliates, subsidiaries, distributors, dealers and resellers, as well as all persons who have actual cooperation or involvement with any of the foregoing, are temporarily prohibited from offering to sell, import, export, or distribute any two-way radio product anywhere in the world.

2. Daily Fines Until Hytera Complies with Court Order: Hytera was ordered to pay a fine of US$1,000,000 per day to Hytera until it fully complies with the Court's anti-suit injunction orders (Documents 1504, 1508).

3. Prohibition of Reliance on Any Order or Judgment in the PRC Litigation: Hytera is ordered not to enforce or rely on any order or judgment issued by the Shenzhen Court in the PRC Litigation in relation to the contempt proceedings for H Series products in the PRC Proceedings until the conclusion of the contempt proceedings in the PRC Proceedings. This order was issued on April 2, 2024. The judge was Martha M. Pacold.

Earlier, Chicago-based Motorola claimed that Hytera owed royalties to its radio product line, which was one of many products that infringed Motorola's trade secrets and copyright protections.

The announcement disclosed that according to Hytera's audited financial data in 2022, the company's professional wireless communication equipment manufacturing revenue accounted for 83.31% of operating income, of which two-way radio technology-related products were the main components. Obviously, the ban has a significant impact on Hytera's business.

On April 8, Hytera responded to this announcement.

Hytera emphasized in the announcement that "at present, the company is actively applying for the revocation of the above-mentioned judgment, but there is some uncertainty about the follow-up progress of the case." The company will strictly comply with the requirements of securities laws and regulations, timely fulfill the obligation of information disclosure, please make prudent decisions and pay attention to investment risks. ”

It is worth noting that, as if in order to stabilize the stock price, Hytera also issued the "Announcement on the Voluntary Commitment of the Controlling Shareholder and Actual Controller not to reduce the Company's Shares" at the same time as the above-mentioned response announcement, in which Mr. Chen Qingzhou, the controlling shareholder and actual controller of the Company, voluntarily promised not to reduce his holdings of the Company's shares by centralized bidding and block trading in the next 6 months from now on, including the shares increased by the conversion of capital reserve into share capital, distribution of stock dividends, allotment, additional issuance and other matters during the commitment period.

(This article was first published on the Titanium Media App, author: Lin Zhijia)

View original image 48K