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Illustration by Security Management 

U.S. Charges Chinese Firm with Walkie-Talkie Technology Theft

The U.S. Department of Justice unsealed an indictment charging Chinese telecommunications company Hytera with conspiring to steal intellectual property from Motorola Solutions Inc. The indictment introduced a criminal component to a case that has already made its way through U.S. civil courts in Illinois.

Both cases are based on incidents from 2007 to 2020. Motorola says Hytera recruited Motorola employees in Malaysia by offering higher salaries and benefits, and used the employees to steal digital mobile radio technology—used to create walkie-talkie radios. Further, Motorola says Hytera used the stolen technology to develop, market, and sell products around the world.

The new criminal indictment, which was partially redacted, included 21 counts related to theft of trade secrets.

“The indictment purports to describe activities by former Motorola employees that occurred in Malaysia more than a decade ago," Reuters reported that Hytera responded via a statement. "Hytera looks forward to pleading not guilty and telling its side of the story in court.”

The indictment noted that while employed with Motorola, the employees signed confidentiality agreements when they were hired and nondisclosure agreements when their employment ended.

One email unsealed as evidence in the indictment said, “Are we going to 'reuse' as much as possible or we need to develop most of them from scratch to avoid patent infringement?" Reuters reported.

A jury in the civil case, which is being appealed by Hytera, found that Hytera stole Motorola trade secrets and used them to develop products. A U.S. District Court judge reduced the original damage award from $764 million to $544 million in January 2021. Motorola also asked that Hytera be barred from selling products that incorporate the stolen technology. The judge denied this request, and instead awarded Motorola royalty payments at a rate that has not yet been set.

The civil case is important in intellectual property circles because it was the first application of the Defend Trade Secrets Act of 2016 for incidents of theft that occurred outside of the United States.

The criminal indictment also touches on some matters related directly to the civil case. It alleged that a Hytera employee gave false testimony at the civil proceeding, and cited as evidence some internal correspondence at Hytera on how it planned to approach civil trial testimony.

If found criminally guilty, Hytera faces a fine of three times the value of the allegedly stolen trade secrets, including expenses for research, design, and other costs.

In addition to the civil case brought in the United States, Motorola filed lawsuits against Hytera in Australia, Germany, and the United Kingdom.

“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,” said Motorola General Counsel Mark Hacker in a Reuters report.

In other Chinese-U.S. telecommunications news, the U.S. Federal Communications Commission (FCC) said on Friday that U.S. companies applied for $5.6 billion in funding to rip-and-replace communications components made by Chinese companies.

The Secure and Trusted Communications Reimbursement Program set aside $1.9 billion to reimburse carriers with less than 10 million subscribers to replace Huawei and ZTE technology, meaning applications outpaced the allotted amount by 295 percent.

The FCC revealed the shortfall in a letter to Congress from FCC Chair Jessica Rosenworcel.

“We’ve received over 181 applications from carriers who have developed plans to remove and replace equipment in their networks that pose a national security threat," she wrote. "While we have more work to do to review these applications, I look forward to working with Congress to ensure that there is enough funding available for this program to advance Congress’s security goals and ensure that the U.S. will continue to lead the way on 5G security.”

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