Dispute Erupts Over Radios Utility Workers Use in California Wildfires

(Bloomberg) -- Radio technology that's critical to helping utility workers deal with California wildfires is at the heart of a trial that pits an iconic American brand against a Chinese firm accused of corporate espionage.

Motorola Solutions Inc. wants a federal jury in Chicago to order its Chinese rival Hytera Communications Corp. to pay hundreds of millions of dollars in damages over what it claims was stolen know-how related to two-way radios used by utility workers, construction crews, school officials and others.

The case is the latest instance of an American company accusing a Chinese firm of stealing ideas or acting on behalf of China's communist leaders. Huawei Technologies Co. is facing criminal charges that it stole phone-testing information from T-Mobile US Inc..

Complaints about theft of intellectual property have been a key issue in President Donald Trump's trade war with China. Congress has placed limits on the Defense Department's use of components from Chinese companies including Huawei and Hytera.

Motorola Solutions, based in Chicago, contends that Hytera, its former distributor, hired away workers as part of a plan to steal technology and compete in the market for digital radios. The systems enable two-way communications even in dire situations like the wildfires in California or other disasters where radio towers are not working properly.

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“We believe that Hytera's unlawful acts create an unfair playing field and threaten the industry's ability to innovate, ultimately hurting customers,” said Motorola Solutions General Counsel Mark Hacker.

Hytera in turn has accused Motorola Solutions of abusing its superior market power to hobble competition, and has an antitrust lawsuit pending against the bigger company.

“While Hytera seeks only fair competition based on innovation, Motorola Solutions continues to try only to drive out competitors, doing everything from forcing radio dealers to drop competitors' products, to emailing our dealers and customers with blatant misinformation,” the company said in a statement.

The dispute is over commercially-available radios, not those used by firefighters and police.

Hytera, founded in 1993, was a distributor of Motorola products until 2001 when it began selling its own analog radios. According to Motorola Solutions, the analog products “faced extinction” with a U.S. Federal Communications Commission regulation regarding radio systems used by businesses that forced a switch to digital technology.

Digital Radio

Motorola Solutions introduced its digital radios in 2006, with features like hands-free communications, location functionality, emergency alarms for workers in distress and the ability to connect a phone user with a group of radio users.

In 2008, Hytera hired three Motorola Solutions engineers who had worked at the company's Malaysia facility. Hytera contends it didn't know the three men had downloaded thousands of pages of internal Motorola Solutions documents until after the suit was filed. The men left Hytera last year.

Hytera said the supposed secrets Motorola Solutions says were stolen were publicly known and were just part of the Digital Mobile Radio standard. Hytera conceded certain lines of source code were copied, but says it was so little that it didn't amount to an infringement.

Three Weeks

Since Hytera's radios first came out in 2010, Motorola Solutions waited far too long to bring suit on the trade secrets claims, the Chinese company said. Motorola Solutions said it sued in 2017 as soon as it figured out what had happened.

The trial before District Judge Charles Norgle is expected to last at least three weeks.

The Chinese government has focused efforts on transforming the Asian nation into a global leader in technology, investing billions of dollars in research in key industries. The past two U.S. administrations have said that push encouraged Chinese companies to steal American and European ideas to meet those goals.

Read More: Motorola Solutions Says It's Winning Radio Battle With Hytera

The fight between Motorola Solutions and Hytera spans the globe, with legal cases in the U.S., China, Germany and Australia. Motorola Solutions won an order that limited imports of some Hytera radios, though it didn't affect current models.

The case is Motorola Solutions Inc. v. Hytera Communications Corp., 17-1973, U.S. District Court for the Northern District of Illinois (Chicago).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, John Harney

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