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Practical Lessons from the Recent Jury Verdict in Motorola v. Hytera
作者：Gary Hnath 张婧 Alex Wang（王森）
On March 5, 2020, the US District Court for the Northern District of Illinois entered judgment in favor Motorola and against Hytera based on a February 14, 2020 jury verdict. Dkt. 947. The jury verdict came after a trial that spanned over several months and found Hytera liable for trade secret misappropriation and copyright infringement and awarded Motorola $345.8 million in compensatory damages and $418.8 million in punitive damages, for a total of $764.6 million. Dkts. 894, 898. The jury deliberated for only a little more than two hours before reaching the unanimous verdict and awarded the maximum amount requested by Motorola.
Like many other high-stakes litigations involving intellectual property rights, this case has been hard fought. By the time the parties started jury selection on November 6, 2019, almost two and a half years had passed since Motorola filed its initial trade secret misappropriation claim and fifteen months had gone by since Motorola amended its complaint to also allege copyright infringement. Although the trial transcripts are yet to become available to the public, we can nevertheless get a sense of the parties’ litigation strategies and the reason for the significant amount of total damages awarded based on publicly available documents. We discuss below the global battle between these two major competitors, the facts and strategies relating to the Illinois trade secret case and trial, and some lessons to be learned for Chinese technology companies.
The Global Litigation War Between Motorola and Hytera
The Illinois judgement is the latest chapter in a global war between Motorola and Hytera spanning at least six legal proceedings in theU.S.and Europe over the last four years. This reflects a growing trend where litigation disputes between companies are often not confined to just one case, but become part of a world-wide multi-jurisdictional campaign.
Motorola filed its complaint for trade secret misappropriation against Hytera in Illinois on March 14, 2017. While that case has been pending, Motorola secured wins against Hytera in Germany in two patent infringement actions (one in Mannheim and the other in Düsseldorf) and a partial win in a Section 337 investigation at the U.S. International Trade Commission (Inv. No. 337-TA-1053), each time forcing Hytera to either disable and/or redesign certain features and functionalities in its accused products.
2017年3月14日，摩托罗拉在伊利诺伊州就海能达盗用商业秘密提起诉讼。在该案进行的同时，摩托罗拉分别在两起德国的专利侵权诉讼（曼海姆地方法院和杜塞尔多夫地方法院）中锁定了对海能达的胜局，并在一起美国国际贸易委员会的337调查中取得部分胜利（Inv. No. 337-TA-1053）。这些摩托罗拉先前得到的有利判决迫使海能达在被诉的相关产品中弃用或重新设计某些产品功能或特征。
The legal battle between the parties is far from over. Motorola is also pursuing another patent infringement action against Hytera in the US District Court for the Northern District of Illinois (Case No. 1-17-cv-01972), which involves the same seven patents that were previously in dispute between the parties in the ITC investigation. Fact discovery is scheduled to close on May 18, 2020 with no set trial date.
双方的诉讼大战远未结束。摩托罗拉目前在另一起伊利诺伊州北区联邦地方法院的案件中指控海能达专利侵权（Case No. 1-17-cv-01972），该案涉及与前述美国国际贸易委员会337调查相同的七项专利。该案的事实取证预计在2020年5月18日完成，目前尚未确定庭审日期。
In response to the series of legal actions filed by Motorola around the globe, Hytera has counterattacked. It filed its own patent infringement action against Motorola in the US District Court for the Northern District of Ohio (Case No. 1-17-cv-01794), alleging infringement of Hytera’s patent covering an “Intelligent Audio” feature in certain Motorola two-way communication devices. Expert discovery in that case is scheduled to close on March 24, 2020 and no trial date has been set.
针对摩托罗拉打出的这一系列全球诉讼组合拳，海能达也发起了反击。海能达在美国俄亥俄州北区联邦地方法院对摩托罗拉提起专利侵权诉讼（Case No. 1-17-cv-01794），指控摩托罗拉部分双向通讯设备中的“智能音频”特征侵犯其专利权。该案的专家取证预计在2020年3月24日结束，目前也没有确定庭审日期。
Additionally, Hytera filed an antitrust and unfair competition action against Motorola in the US District Court for the District of New Jersey on December 4, 2017 (Case No. 2-17-cv-12445), which has since been transferred to the Northern District of Illinois at Motorola’s request (Case No. 1:19-cv-00176). However, due to the transfer and multiple reassignments of the case to different judges, no discovery schedule is in place and none will be set until the Court rules on Motorola’s pending motion to dismiss.
此外，海能达于2017年12月4日在美国新泽西州联邦地区法院对摩托罗拉提起了反垄断和反不正当竞争诉讼（Case No. 2-17-cv-12445），在摩托罗拉的请求下，该案随后被转移到伊利诺伊州北区联邦地方法院（Case No. 1:19-cv-00176）。但是由于管辖法院的改变以及数次重新指派法官，该案的取证日程尚未确定，并且法院会先就摩托罗拉提交的驳回起诉的申请作出裁定 （如法院批准该申请则该案终止，无后续程序）。
Factual Background of the Illinois Trade Secret Case
The most important chapter of this global battle began with Motorola’s complaint in Illinois in 2017. Motorola and Hytera are competitors in the digital two-way radio market. As the parties stipulated in jury instructions filed in the case, Motorola launched its MotoTRBO professional digital radios in 2006 and first sold them in early 2007. Hytera then launched its DMR professional radios in early 2010. Dkt. 895. Motorola’s complaint in this case revolved around the activities of three former Motorola employees Gee Siong Kok (“G.S. Kok”), Yih Tzye Kok (“Y.T. Kok”), and Samuel Chia (“Chia”), who joined Hytera and subsequently worked on Hytera’s competing DMR products.
摩托罗拉2017年在美国伊利诺伊州提交的起诉书，如一纸檄文吹响了这场全球诉讼中最重要一战的号角。在数码双向音频市场中，摩托罗拉和海能达是主要竞争对手。该案法官给陪审团的指示中包含了诉讼双方无争议的部分事实，即摩托罗拉在2006年推出MotoTRBO专业对讲机，并在2007年开始销售，海能达则在2010年初推出了与其竞争的DMR专业对讲机。（案卷文件第895号）摩托罗拉的起诉书围绕三名前雇员Gee Siong Kok (“G.S. Kok”), Yih Tzye Kok (“Y.T. Kok”), 和Samuel Chia (“Chia”) 的活动展开。此三人先后加入海能达，并参与了海能达与摩托罗拉竞争的DMR产品的相关工作。
The parties agreed that at the time they left Motorola to join Hytera, G.S. Kok was a Senior Engineering Manager, Y.T. Kok was a Senior Software Engineer, and Sam Chia was an Engineering Section Manager. Dkt. 895. Motorola alleged that given their senior positions at the time, each of them worked on developing DMR products for Motorola and worked extensively with Motorola’s proprietary and confidential information related to MotoTRBO products. Dkt. 435. Despite each signing two Non-Disclosure Agreements (“NDA”) that specifically prohibited disclosure of any confidential information of Motorola—one as part of Motorola’s Employment Agreement and the other as part of their exit materials—Motorola alleged that each of them secretly accessed and downloaded thousands of Motorola’s confidential technical documents that contained Motorola’s trade secrets shortly before their departure from Motorola in 2008, including Motorola’s source code for its DMR products, and that these trade secrets were later incorporated into Hytera’s products and business strategies. Dkt. 435.
双方同意，上述三人从摩托罗拉离开时，G.S. Kok是一名高级项目经理，Y.T. Kok是一名高级软件工程师，Sam Chia是一名工程项目分部经理。（案卷文件第895号）摩托罗拉称，三人在当时职位资深，并在摩托罗拉DMR产品研发组工作，全方位接触到摩托罗拉公司有关MotoTRBO产品的专有保密信息。（案卷文件第435号）摩托罗拉还指出，虽然他们每人签署的两份保密协议（“NDA”）——包含在入职时的劳动合同和离职材料中——都明确禁止披露摩托罗拉的任何保密信息，但是他们每个人仍然在2008年离开摩托罗拉前，秘密登入并下载了数千份含有摩托罗拉商业秘密的保密技术文件，摩托罗拉DMR产品的源代码也在其中。（案卷文件第435号）随后，这些商业秘密被吸收进海能达的产品和商业战略中。（案卷文件第435号）
In addition to the downloading of Motorola’s confidential information, Motorola alleged that one of these individuals, Y.T. Kok, started working for Hytera on June 10, 2008 even before his official departure from Motorola on October 3, 2008, and that he downloaded, copied, and/or transmitted Motorola documents at some point during this almost four-month period of double employment. Dkt. 878. As for Sam Chia, Motorola alleged that he spent a day at Hytera while still employed at Motorola and met with G.S. Kok, before downloading a massive amount of documents. Dkt. 878.
除了下载摩托罗拉的保密信息，摩托罗拉还指控Y.T. Kok自2008年6月10日便开始为海能达工作，远远早于他从摩托罗拉正式离职的2008年10月3日，并在这将近四个月的“双雇佣”时间里，下载、复制、传输了摩托罗拉的资料。（案卷文件第878号）摩托罗拉同时指控，另一人Sam Chia在尚在摩托罗拉任职期间，有一天时间在海能达并与G.S. Kok会面。（案卷文件第878号）并在其后下载了大批量文件档案。
Motorola’s Trial Strategy
The case was bitterly contested, as evidenced by the more than nine hundred docket entries, numerous motions to compel, multiple extensions of the case schedule, and the voluminous documents produced. After two and a half years, the case finally proceeded to a trial before an Illinois jury. The trial was an unusually lengthy one—the jury heard evidence and arguments on November 6, 7, 12-14, 18-21, 25-27, 2019, December 2-5, 9-12, 16-19, 2019, January 13, 21-23, 27-29, and February 3-5, 10-14, 2020.
Motorola’s trial strategy was to tell the jury a story about a competitor company building its business on valuable proprietary information stolen from it, through (1) damaging internal communications from the defendants, (2) key individuals’ refusals to answer questions based on their constitutional rights against self-incrimination, and (3) circumstantial evidence and testimony suggesting potential evidence destruction by the defendants. In support of its punitive damages claim, Motorola focused, among other things, on the alleged involvement of Hytera’s senior management members in the misappropriation scheme and again, the alleged intentional destruction of relevant evidence.
At trial, Motorola presented evidence that Hytera used more than 10,000 confidential technical documents and millions of lines of source code that had been lifted from Motorola’s databases. Further, documents produced by Hytera containing internal communications between Hytera employees, including the former Motorola Employees, showed concerns about “using a lot of Moto[rola’s] code” and the need to “re-write softwares [sic] to look different from Motorola.” There was also another Hytera document created by Sam Chia on August 1, 2008 stating that “[O]ption 2 is the best...[it] also had a low chance of detection if the code was dissembled by Moto[rola].” Dkt. 435.
庭审中，摩托罗拉出示证据证明海能达使用了从摩托罗拉数据库中窃取的超过10000份技术秘密文件和数百万行源代码。而且，海能达在案件取证过程中提供的文件囊括了其员工的内部沟通，包括涉及前摩托罗拉雇员的沟通，表达（1）对“使用大量摩托[罗拉]的源代码”的担忧和 (2) “重写软件以使代码与摩托罗拉的有所差异”的需要。另一份由Sam Chia在2008年8月1日所起草的海能达文件提到“2号[方]案是最好的……如果代码被摩托[罗拉]解析，[它]被检测到的概率很低”。（案卷文件第435号）
The jury was also permitted (although not required) to draw adverse inferences based on the fact that G.S. Kok, Y.T. Kok, and Sam Chia declined to answer dozens of questions concerning how they shared Motorola’s confidential information with other Hytera employees and the involvement of other senior managers at the company with the theft, citing their Fifth Amendment right to decline to respond to questions that could incriminate them. The jury was also allowed to draw adverse inferences from the fact that Peiyi Huang and Sam Chia “lost” three laptops that undisputedly contained thousands of confidential Motorola documents and source code files. Dkt. 878. Motorola further pointed out that “Hytera’s expert Mr. Grimmett admitted that Hytera employees ‘either deleted the records of [using Motorola’s RAF concept document] or they went to a lot of trouble to make sure there wasn’t a record showing how they were passing these things back and forth.’” Dkt. 827.
法庭还允许（但未要求）陪审团可以根据某些事实作出对海能达不利的推论。这些事实包括在被问及他们是如何向海能达员工泄露摩托罗拉的秘密信息，以及海能达的高级经理们是否参与了窃取行动时，G.S. Kok, Y.T. Kok, 和Sam Chia三人援引美国宪法第五修正案关于任何人不得自证其罪的条款，拒绝回答与之相关的数十条提问。此类事实还包括，Peiyi Huang 和Sam Chia “遗失”了三部明确载有数千份摩托罗拉保密文件和源代码文件夹的笔记本电脑。（案卷文件第878号）。摩托罗拉还进一步指出，“海能达的专家Grimmett先生承认，海能达员工‘或是删除了[使用摩托罗拉RAF概念文件]的记录，或是他们大费周章，从而确保他们传递这些信息没有留下任何记录’”。（案卷文件第878号）
To support its punitive damages claim at trial, Motorola argued that Hytera engaged in “willful and malicious misappropriation” of trade secrets, which included “an intentional misappropriation as well as a misappropriation resulting from the conscious disregard of the rights of another.” Dkt. 878. Motorola alleged that Hytera’s President and CEO Mr. Chen—along with multiple Hytera engineers—knew of and participated in the misappropriation of Motorola’s trade secrets, and Hytera then “attempted to cover up the theft by intentionally destroying evidence, including Motorola source code and documents.” Dkt. 878. Motorola further argued that “Hytera is vicariously liable for the misappropriation of its employees and agents” because “Hytera ratified and approved of G.S. Kok, Y.T. Kok, Sam Chia, and Peiyi Huang’s conduct by retaining the benefit of the misappropriation and continuing to sell the accused products that admittedly have Motorola’s source code in them, attempting to delete or failing to produce evidence of the theft, and denying Motorola’s claims through this litigation—until trial started in November 2019.” Dkt. 878.
庭审中，为支持其惩罚性赔偿请求，摩托罗拉指控海能达“故意且恶意地盗用”了其商业秘密，这其中既包括“主观上有意的盗用也包括故意无视他方所有权的盗用”。（案卷文件第878号）摩托罗拉称，海能达总裁兼首席执行官陈先生及属下多名工程师在明确知晓的情况下参与了对摩托罗拉商业秘密的盗用，并且海能达随后“试图通过故意损毁证据掩盖窃取行为，而这些被损毁的证据恰恰包含摩托罗拉的源代码和文件”。（案卷文件第878号）摩托罗拉继而表示，由于“海能达享受了盗用行为的带来的收益，并继续销售其承认使用了摩托罗拉源代码的产品，加之其试图删除或不提供盗用的相关证据，且在2019年11月庭审之前的诉讼过程中一直否认摩托罗拉的指控，以上种种都说明海能达认可并批准了G.S. Kok,、Y.T. Kok、 Sam Chia、和Peiyi Huang的不法行为”，“所以海能达应对其员工和代理人的盗用行为承担替代责任”。（案卷文件第878号）
Hytera’s Key Defenses at Trial
Hytera mounted several defenses in this case. Dkt. 762. For example, although Hytera did not deny that the former Motorola employees stole confidential documents from the plaintiff, during trial it rejected Motorola’s claim that the improperly obtained information had spread beyond those individuals and disputed the significance of the information to the development of Hytera’s products. Hytera argued before the jury that Motorola was attempting to hold the entire company responsible for the bad acts of only a few employees and intentionally delayed bringing the case in order to reap a large profit from Hytera’s commercial success. Hytera’s lawyer was quoted as arguing that Motorola “want every single dollar that Hytera has earned” from the sales of its radios “going back to 2010, plus more.”
Another key issue in this case is that, in view of Motorola’s significant damages claims, Hytera moved during trial to “preclude Motorola from relying on extraterritorial damages.” Dkt. 834. This was a legal issue to be decided by the Court. Although the Court agreed with Hytera that the Illinois Trade Secrets Act does not have extraterritorial reach, it ruled in favor of Motorola that the federal Defend Trade Secrets Act can apply extraterritorially if the requirements of 18 U.S.C. § 1837 are met and that Motorola was entitled to recover damages flowing from exploitation abroad of the domestic acts of copyright infringement committed by Defendants. Dkt. 834.
海能达因面临摩托罗拉巨额赔偿要求在审判中提出动议，请求法庭“禁止摩托罗拉依据域外损害”要求赔偿，这成为本案的另一个关键问题。（案卷文件第834号）该问题为法律问题因而法院（而非陪审团）拥有决定权。虽然在《伊利诺伊州商业秘密法案》无境外适用这一点上，法庭同意海能达的意见，但是法庭在另一关键点上作出了对摩托罗拉有利的决定，即当18 U.S.C. § 1837所要求的条件均被满足时，美国联邦《商业秘密保护法》可有境外适用，因此对于被告通过境内的著作权侵权而在境外获利的行为，摩托罗拉有权主张损失赔偿。（案卷文件第834号）
The Jury Instructions and Verdict
While Motorola also claimed copyright infringement, the core of its case was based on alleged trade secret misappropriation. As explained in the jury instructions in this case, Motorola claimed trade secret misappropriation under both the Illinois Trade Secrets Act (“ITSA”) and the federal Defend Trade Secrets Act (“DTSA”), which share several common elements. Under the Illinois Trade Secrets Act, in order to establish a claim for misappropriation of trade secrets, Motorola has the burden of proving: (1) Motorola owned the information at issue; (2) the information at issue is a trade secret; (3) the information at issue was misappropriated by Hytera in Illinois; and (4) the information was used by Hytera in its business. Similarly, under the federal Defend Trade Secrets Act, in order to establish a claim for misappropriation of a trade secret, Motorola has the burden of proving: (1) Motorola owned the information at issue; (2) the information at issue is a trade secret; (3) the information at issue was misappropriated by Hytera; and (4) the trade secret is related to a product used in, or intended for use in, interstate or foreign commerce. Dkt. 895.
Further, both the ITSA and DTSA make available exemplary/punitive damages in an amount not more than twice the amount of the compensatory damages if the misappropriation is “willful and malicious.” According to the jury instructions, the jury was to assess exemplary damages only if it found that Hytera’s conduct was malicious or in reckless disregard of Motorola’s rights. Dkt. 895. Specifically, Hytera’s conduct would be “malicious if it is accompanied by ill will or spite, or it is done for the purpose of injuring Motorola” and Hytera’s conduct is “in reckless disregard of Motorola’s rights if, under the circumstances, it reflects complete indifference to Motorola’s rights, and not simply that Hytera was aware that the information was a trade secret.” Dkt. 895.
After instructions and closing arguments by Motorola and Hytera, the jury started its deliberations. As noted above, the jury deliberated for only a little more than two hours before rendering its unanimous verdict, finding Hytera liable for trade secret misappropriation and copyright infringement and awarded Motorola the maximum it sought, $345.8 million in compensatory damages and $418.8 million in punitive damages, for a total of $764.6 million. The short deliberation by the jury in combination with the substantial damages award suggest that the jurors found Motorola’s evidence at trial overwhelming. However, during trial, both sides moved for judgment as a matter of law which the Court took under advisement. In other words, Hytera in particular is arguing that the evidence presented by Motorola was insufficient and the case should not have gone to a jury verdict. Thus, we can expect that barring a post-trial settlement, the battle is almost guaranteed to continue in the court of appeals. In addition, as of the writing of this article, the Court has not ruled on Motorola’s post-verdict motion for preliminary injunction.
Advice for Chinese Companies
This case suggests many lessons to be learned and practical considerations for Chinese technology companies:
Employee hiring and training.
Given the front-and-center role of the activities of former Motorola employees in this case, companies should pay extra attention to the hiring process and regular training of new employees, especially those hired from a competitor. It is common nowadays to include provisions in both the employment agreement and the employee’s handbook prohibiting the new hire from using any confidential and/or propriety information from his/her prior employer or any other third parties. But companies should not stop there. Technology companies in particular should also implement regular training programs emphasizing an employee’s confidentiality obligation to all former and current employers to protect its confidential and/or propriety information and reduce or eliminate potential exposure to third party claims.
If the company discovers any misappropriation or misuse of any third party trade secrets or proprietary information by an employee, it should immediately contact the legal department or outside counsel to evaluate its options to remedy the situation. Any failure to take appropriate remedial measures can potentially lead to claims that the employer ratified or approved the employee’s wrongful acts.
Preservation of documents and files.
The failure to preserve potentially relevant documents can be extremely damaging to a party’s position inU.S.litigation. Even inadvertent deletion or destruction of evidence might give rise to adverse inferences that the deleted or destroyed evidence would have been harmful to a party’s position. As soon as litigation begins, or even the possibility of a claim arises, steps should be taken to ensure relevant evidence is not lost or destroyed. Litigation holds are routinely sent out by counsel during a pending litigation or sometimes in anticipation of a potential litigation to ensure that all employees who may possess relevant evidence are aware of their obligations. It is paramount for all company personnel to follow the instructions in the litigation hold and make sure that any potentially discoverable materials are preserved.
Extraterritorial Reach of Defend Trade Secrets Act and the Copyright Act.
In view of the Illinois Court’s holding that the DTSA and the Copyright Act may allow a plaintiff to recover damages for extraterritorial acts that occur outside of theUnited States, Chinese companies withU.S.subsidiaries or commercial activities in theU.S.should be mindful of potentially broadened damages exposure. On the other hand, the extraterritorial reach of these statues could be extremely valuable for a Chinese company seeking to enforce its rights under these statutes through litigation in theU.S.courts.