By Sarah N. Lynch

WASHINGTON (Reuters) – The U.S. Justice Department said on Monday it has brought criminal charges against China-based telecommunications company Hytera, accusing it of conspiring with Motorola Solutions Inc employees to steal the American company’s digital mobile radio technology.

In a partially redacted indictment unsealed in Chicago, the government said Shenzhen-based Hytera Communications Corp recruited Motorola employees in Malaysia to steal proprietary trade data about the radios, known as walkie-talkies.

The indictment charges Hytera by name, but it redacts the names of other co-defendants in the case, at least some of whom are the now-former Motorola employees who the Chinese company is accused of recruiting. The indictment said Hytera recruited Motorola employees from 2007 through 2020, and that these workers received higher salaries and benefits than what they received at Motorola in exchange for stealing the trade secrets.

Hytera was charged 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 sent by its attorneys, Hytera’s 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,” the company said.

Hytera added that it is “committed to honoring the intellectual property rights of others.”

Mark Hacker, Motorola’s executive vice president and general counsel, said in a statement 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,” Hacker added.

The former Motorola employees all signed confidentiality agreements at the time they were hired and later signed non-disclosure agreements after they left the company, the indictment said. It cited evidence that certain employees gained access to trade secrets through a Motorola database that they never had used in the past.

In one February 2008 email, an unidentified employee emailed another person to ask: “Are we going to ‘reuse’ as much as possible or we need to develop most of them from scratch to avoid patent infringement?”

Hytera is a former distributor of Motorola Solutions products.

Motorola Solutions in February 2020 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.

Hytera later said the amount Motorola was awarded in the case was cut down by $221 million.

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 criminal case against the company marks the latest blow for Hytera in the United States.

In November, President Joe Biden signed legislation to prevent Hytera and other Chinese companies such as Huawei Technologies Co that have been deemed security threats from receiving new equipment licenses from U.S. regulators.

Under former President Donald Trump, recipients of federal funding were also banned from using telecommunications equipment made by Hytera.

(Reporting by Sarah N. Lynch; Additional reporting by Chris Sanders; Editing by Will Dunham, Angus MacSwan and Mark Potter)

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