In a significant development, the U.S. Justice Department has charged Chinese telecommunications company Hytera of stealing mobile radio technology of an American company.
The DOJ has charged Hytera of conspiring to steal US intellectual property of Motorola Solutions Inc.
In a partially redacted indictment unsealed in Chicago, the DOJ said, Shenzhen, China-based Hytera Communications Corp recruited Motorola employees in Malaysia to steal proprietary trade data about the radios, that are known as walkie-talkies.
Although the indictment charges Hytera by name, it has redacted the names of other co-defendants in the case; at least some of the accused are former employees of Motorola who have been recruited by the Chinese company.
According to the indictment, Hytera recruited Motorola employees from 2007 through 2020. These recruited employees received higher salaries and benefits than what they received at Motorola in exchange for stealing the trade secrets.
The DOJ has charged Hytera with 21 criminal counts including conspiracy to commit theft of trade secrets. Hytera and the unidentified other defendants were also charged with possessing or attempting to possess stolen trade secrets. If convicted, Hytera would face a criminal fine of three times the value of the stolen trade secrets.
In a statement, Hytera’s attorneys said it is “disappointed” by the charges and “respectfully disagrees with the allegations.”
“The indictment purports to describe activities by former Motorola employees that occurred in Malaysia more than a decade ago. Hytera looks forward to pleading not guilty and telling its side of the story in court”.
In a statement Mark Hacker, Motorola’s executive vice president and general counsel, said the charges against Hytera “underscore the calculated and deliberate character” of the Chinese company’s illegal conduct.
“We will continue our civil litigation against Hytera in jurisdictions around the world to prevent Hytera’s serial infringement and to collect the hundreds of millions of dollars in damages it owes to Motorola Solutions,” said Hacker.
At the time of hiring by Hytera, the former Motorola employees all signed confidentiality agreements and later signed non-disclosure agreements after they left the company, states the indictment.
The indictment also cited evidence that certain employees gained access to trade secrets through a Motorola database that they never had used in the past.
Case in point, in an email dated February 2008, an unidentified employee emailed another asking, “Are we going to ‘reuse’ as much as possible or we need to develop most of them from scratch to avoid patent infringement?”
Incidentally, Hytera is a former distributor of Motorola Solutions products.
In February 2020, Motorola Solutions won a $764.6 million jury verdict in a trade secret theft and copyright infringement case against Hytera.
A federal jury in Chicago found Hytera used Motorola Solutions’ confidential documents and copyright-protected source code to compete in the market for two-way radio communications. Hytera told jurors it had developed its radios on its own.
The civil litigation between Hytera and Motorola is mentioned in the indictment.
Prosecutors said that in 2017 an unidentified person emailed Hytera’s CEO about “aligning” his story with the civil lawsuit.
The indictment indicates that a Hytera employee who testified in that civil trial lied under oath by claiming an employee of the Chinese company was fired in the fall of 2018 for failing to cooperate with an internal company investigation, when in fact this employee worked for Hytera from December 2018 through at least June 2020.
The development marks the latest blow to the Chinese company in the United States.
In November 2021, US President Joe Biden had signed legislation to prevent Hytera and other Chinese companies including Huawei Technologies Co that have been deemed as being security threats, from receiving new equipment licenses from U.S. regulators.
Former US President Donald Trump, had initiated the ban of federal funding against Chinese companies deemed to be a threat to the United States. Trump had also banned US companies from using telecommunications equipment made by Hytera.