Motorola Solutions (MSI) has won a major decision against China based Hytera Communications, but the legal battle between the two companies continues. Almost three years after Motorola’s initial complaint against their Chinese counterpart, a federal court in Chicago has awarded Motorola almost $765 million.
The award is a combination of compensatory damages, at $345.8 million, and punitive damages, at $418.8 million. Hytera has complained that the large sum has the potential to financially cripple the company, and may result in bankruptcy.
Motorola CEO Greg Brown, commenting on the verdict, stated, “The jury’s verdict validates our global litigation against Hytera by definitively affirming that stealing trade secrets and source code will not be tolerated.”
Over the course of the trial, Motorola accused Hytera of stealing over 10,000 Motorola Solutions confidential documents, and millions of lines of proprietary and highly confidential source code. Hytera was also accused of attempting to hide the theft of intellectual property from Motorola.
Hytera announced they were disappointed by the verdict, and that they were in the process of preparing an appeal to the court’s decision. The company stated they were prepared for several more years of litigation if necessary, in order to reverse the adverse action.
Hytera also put forth that they have revamped their corporate governance policies and procedures, and are training current and new employees on laws governing intellectual property and its use.
On top of the awarded damages, Motorola has filed for an injunction against Hytera, that would prevent the company from selling a variety of products that may be using Motorola code illegally. Their strategy is to achieve a temporary restraining order (TRO) against Hytera for these products, while working to enforce a permanent order against Hytera for selling the products in question.
If Motorola succeeds, Hytera has claimed this will give the company a monopoly in certain markets, allowing MSI to raise prices. Whether Motorola raises prices or not, removing a major competitor from certain product lines should positively impact Motorola Solutions stock, and be a boost to earnings.
In an amicus (friend of the court) brief, filed by Hytera dealers in the U.S., they stated an injunction against Hytera products “…simply acts to prevent competition in the marketplace, reducing the choices afforded the ultimate clients and customers to select between competing products.”
It is unclear exactly when
the court will announce a decision regarding the latest confrontation between
the two companies, and exactly what impact a ruling in Motorola’s favor would
have on earnings forecasts.
Adams’s personal position in Motorola Solutions: none.
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