Hytera Ordered to Stop Selling Two-Way Radio Technology Worldwide

One of the world's largest two-way radio providers, Hytera, has been ordered by a US federal court "until further notice" to stop selling them and "pay a daily fine to the Court of USD 1 million."

The criminally-indicted manufacturer, which is scheduled to show at ISC West, the US's largest security conference, this week, sought and lost an emergency appeal.

In this report, we examine what happened, why Hytera is being fined $1 million per day for it, how it impacts Hytera at ISC West, and what happens next for Hytera.

US Judge Issues Injunction Against Hytera Worldwide Sales

On April 2, 2024, a US federal judge found Hytera in contempt over a case it filed in Shenzhen court seeking a judgement that it did not violate Motorola's intellectual property, an attempt to re-litigate the $630 million US verdict that Hytera stole Motorola's intellectual property.

The contempt order imposed a series of sanctions on Hytera until it complies with the court's order to "refrain from further pursuing or enforcing its China action" and to withdraw it.

This includes an injunction banning Hytera worldwide from selling, importing, or distributing - or even offering to do so - worldwide:

This applies to "Two-Way Radio" technology, which the Court defines as a broad range of products including base stations and cellular products:

A week earlier, the judge issued an Antisuit Injunction ordering Hytera to withdraw its case. According to Motorola, Hytera then "filed an emergency 'anti-anti-suit injunction motion in the China Action to immediately restrain Motorola from pursuing its [anti-suit injunction] motion here."

The judge, at a hearing held prior to imposing the April 2 contempt order, said Hytera's actions were "totally inconsistent" with the anti-suit injunction, "and this just has to stop," according to Law360.

Hytera Displaying Sales Ban on Websites Worldwide

The court also ordered Hytera to place a notice of the sales ban on its websites worldwide, translated into the applicable language.

Hytera appears to have complied. Its main corporate homepage shows the order:

Even Hytera's China page shows the order, translated into Chinese:

However, Hytera's US website has been taken down altogether.

Hytera is also required to "notify in writing all of its agents, affiliates, subsidiaries, distributors, and resellers of any type, customers, and prospective customers of Two-Way Radio Products anywhere in the world of the entry of this injunction, as well as the requirement that those entities and/or individuals comply with the injunction," and provide them with a copy of this order, as well as the below statement:

Hytera issued a press release containing this statement and stating:

Hytera respects the U.S. Court’s decision and is working to achieve full compliance with the U.S. Court’s anti-suit injunction orders.

Fine of $1 Million Per Day

In addition to the worldwide sales ban, Hytera must pay $1 million USD for every day "until Hytera is in full compliance."

Hytera cannot easily avoid paying these fines, as companies must generally pay them immediately or obtain a payment plan in order to stop being held in contempt.

Hytera Emergency Appeal Denied

Within two days of the contempt order, Hytera filed an emergency appeal with the Seventh Circuit of Appeals seeking to suspend the contempt sanctions until it can appeal them. On Saturday, April 7, the Court ruled against Hytera, noting that Hytera's "painfully coercive sanctions" are "self-inflicted wounds."

To the extent that Hytera is now facing painfully coercive sanctions, it is lying in a bed it has crafted for itself over the past seven years, and in particular, over the last two weeks. Self-inflicted wounds are not irreparable injury and do not require much indulgence from a court of equity.

They added that the Contempt measures were justified because, "The district court has made clear, however, that at this stage of the litigation, it simply cannot take Hytera at its word."

Shenzhen Case Now Claimed Withdrawn

In a Sunday, April 7, joint filing from both Hytera and Motorola, Hytera alleged that its case in Shenzhen had finally been withdrawn, raising the possibility that the judge could release Hytera from the contempt injunction and fines.

Motorola advocated against lifting the sanctions, arguing that Hytera's claims raised several concerns. According to both Hytera and Motorola, the Shenzhen court cancelled an April 7 hearing, and later that day asked Hytera's China attorney to come speak to the court privately, not inviting Motorola. During this "formal proceeding" the court purportedly ruled that Hytera could withdraw the case.

Hytera could not produce a written ruling of that order, only producing a brief transcript from the court:

In the same filing, Motorola argued that a written ruling confirming the case's withdrawal should be required, and argued that "sanctions must stay in place to ensure Hytera takes all available measures to effectuate withdrawal," arguing that "If the sanctions are lifted, Hytera will stop cooperating, fight everything every step of the way."

There is no question more can be done. For example, Hytera can urge the Shenzhen court to issue a written ruling expeditiously—something it has not tried to do yet. And, if the Shenzhen court does not respond, sets further hearings on the merits, or denies Hytera’s application, Hytera can seek retrial of its withdrawal application at the intermediate court level.

There is also no question that the present sanctions must stay in place to ensure Hytera takes all available measures to effectuate withdrawal, as well as refrain from taking steps that would delay such withdrawal or otherwise enable the China Action to proceed...If the sanctions are lifted, Hytera will stop cooperating, fight everything every step of the way, and it would not be surprising then to see that the hearings are reinstated and/or an immediate judgment on the merits is issued...Because Hytera has yet to “exhaust[] all efforts” to have the Shenzhen action withdrawn, the sanctions must remain in place. [emphasis added]

Motorola also alleged that Hytera "has not complied with the Court's contempt sanctions order in numerous ways," including that "Hytera's subsidiaries do not appear to have taken any steps to comply," and alleging Hytera has not made sufficient public statements "outside of the notice on its website."

Motorola points to Hytera's website "still allow customers to view Hytera's two-way radio products and submit a request for a quote," [emphasis in original], citing the below page:

Impact on ISC West

Hytera has a large 40' x 40' booth at ISC West, which it promoted prominently on its US website homepage (until they took the whole website down), as shown below:

The official ISC West floorplan still lists Hytera as exhibiting and, if Hytera can resolve this before the show floor opens this Wednesday, it may possibly still attend (though booth setup would have to be ongoing today to set it up, etc.). The injunction does not specifically ban exhibiting at a show, but does cover many activities that would occur at ISC West, such as offering to sell.

Update: Hytera no-showed at ISC West, while the booth was setup, and coffee was being served by show staff, we found no salespeople at the booth, which the show staff confirmed:

We estimate that Hytera spent / will spend a few hundred thousand dollars for the booth, as the bare concrete rental for a 40' x 40' booth retails at ~$160,000.

Outlook

The contempt order against Hytera remains in place, and the judge will likely rule on whether it should remain in place in light of Hytera's attempts to comply, and claimed withdrawal of the Shenzhen case.

A status hearing is scheduled for Monday, April 8, at 2 PM ET for the judge, Motorola, and Hytera, to discuss where things stand.

Update 04/14/24: The worldwide ban remains in place, and Hytera is still being fined $1 million per day. In status hearings each day over the past week, Hytera has repeatedly asked that they be lifted, but remained at an impasse with the US Court over proving it has withdrawn its suit in Shenzhen court.

On April 11, Hytera filed a new emergency motion to stay the sanctions with the Seventh Circuit Court of Appeals, which has not yet ruled but previously rejected such a motion from Hytera.