US court lifts global ban on Hytera Communications

Shares of Hytera Communications Corp. surged for the second day Thursday after the walkie-talkie maker said a day ago that a United States court temporarily lifted an injunction that barred it from selling its devices globally.

Hytera Communications has been locked in a years-long trade-secrets dispute with rival Motorola Solutions Inc., with the U.S. firm accusing the Chinese supplier of professional mobile radio systems, also known as walkie-talkies, of conspiring with former Motorola Solutions employees to steal the American company's digital mobile radio technology.

Hytera Communications’ Shenzhen-listed shares closed up 6.47% on top of a 10% daily trading limit up a day ago.

A stock graphic shows Hytera Communications’ Shenzhen-listed shares closed up 6.47% today. Courtesy of Eastmoney.com

Shenzhen-based Hytera Communications said yesterday that the U.S. Court of Appeals for the Seventh Circuit on Tuesday suspended the global ban on two-way-radio sales by Hytera, worldwide notice requirement and further accumulation of US$1-million-per-day fine against Hytera that was ordered by the U.S. District Court for the Northern District of Illinois Judge Martha Pacold earlier this month.

These sanctions are halted pending appeal, according to the U.S. appeals court order. That proceeding will begin with Hytera Communications filing its opening brief within 28 days, followed by Motorola Solutions filing an opposing brief within 28 days later, according to the order.

Hytera Communications' headquarters building in Shenzhen's Longgang District. Courtesy of Hytera's official website

“The company will work closely with global partners to immediately resume normal business activities and initiate the sale of related products,” Hytera Communications said in a filing with the Shenzhen Stock Exchange.

But it warned that there are potential uncertainties in the development of the case. “The case is still in the appeal stage and the company will take various countermeasures and make its best efforts to revoke the ban,” it said.

Pacold on April 2 temporarily enjoined Hytera from the global sales and distribution of any products containing two-way radio technology anywhere in the world , pending the Chinese firm’s full compliance with the U.S. court’s anti-suit injunction orders.

This came after Hytera Communications participated in two days of proceedings before the Shenzhen Intermediate People’s Court, which Pacold deemed to be a violation of her anti-suit injunction issued March 25.

Hytera Communications said April 7 that it had complied with the sanctions and suspended the sales of these products.

A Hytera booth at a previous fair. File photo

The sanctions follow a years-long trade secrets and copyright infringement dispute between Hytera Communications and Motorola Solutions, an independent firm from smartphone maker Motorola Mobility, which was acquired by Lenovo Group in 2014.

Motorola Solutions filed a complaint against Hytera Communications in 2017, accusing it of infringing on the U.S. firm’s trade secrets.

The U.S. Justice Department in February 2022 brought criminal charges against Hytera Communications over the alleged theft of trade secrets from 2007 to 2020.

The Chinese firm denied stealing technology and said it developed its products on its own.

In a statement sent by its attorneys in response to the U.S. justice department charges, Hytera Communications said it is "disappointed" by the charges, "respectfully disagrees with the allegations" and “looks forward to pleading not guilty.”

It has appealed the verdict and accused Motorola of abusing its superior market power to hobble competition.

In the global walkie-talkie market, Hytera Communications and Motorola Solutions have long been locked in intense competition.

According to statistics from the Yubo Intelligence Industry Research Center, Motorola Solutions held a global market share of up to 58.57% last year, while Hytera Communications commanded 11.41% to hold the first and second positions in the market respectively.

After it was charged by the U.S. justice department in 2022, Hytera Communications filed a case with the Shenzhen Intermediate People’s Court in June in 2022. The firm sought a judgment that its new H-series products do not infringe upon Motorola Solutions’ trade secrets and copyrights, so sales of the new products should not be subject to the royalty payments outlined by the U.S. district court.

The U.S. district court in March this year ruled that Hytera Communications’ litigation in Shenzhen was in contempt of its sanctions and issued anti-suit injunction orders to force Hytera to drop that lawsuit.

Hytera Communications said April 8 that it had dropped its case with the Shenzhen court.

Two-way radio products make up most of Hytera Communications’ sales of professional wireless communications equipment, accounting for more than 83% of its revenue in 2022.

Two-way radio products include portables and mobiles, known as walkie-talkies, as well as base stations and repeaters that implement two-way communication protocols.