USA: Hytera sues Motorola Solutions under Sherman Antitrust Act, alleges anticompetitive practices

Hytera filed suit in federal district court in New Jersey on 4 December against Motorola Solutions, alleging that Motorola Solutions is engaging in anticompetitive practices that are unlawful under the Sherman and Clayton Acts “by deliberately and actively foreclosing competition in land mobile radio (LMR) communications systems, to reap billions of dollars on sales at inflated prices to US customers”.

The Chinese-based LMR manufacturer alleges that Motorola Solutions is preventing it from competing in the US marketplace with its critical communications products and is maintaining a monopoly and inflated prices through “forcing LMR dealers to drop Hytera's products, leveraging its dominance of the US public safety market to impede adoption of newer, less expensive technologies… in the US, and engaging in a serial pattern of sham litigation to impede Hytera and interfere with its relationships with dealers and customers.”

Hytera Communications Corp., Ltd., et al. v. Motorola Solutions, Inc., 2:17-cv-12445 (D.N.J.) alleges that Motorola Solutions has violated federal and state antitrust law by violating Sections 1 and 2 of the Sherman Antitrust Act and Section 3 of the Clayton Act, and the unfair competition and intentional interference laws of the states of New Jersey, California and Florida. Hytera is seeking damages and injunctive relief.

"Motorola Solutions is forcing US customers to pay artificially high prices for critical communications. It can do this because of its long-standing monopoly," said Tom Wineland, Director of Sales for Hytera Communications America (West), Inc. "Motorola Solutions is doing this as security risks in the US are increasing, with a growing need for mission-critical communications solutions that help organisations to protect important utilities, provide safety and services for public transportation systems, and respond to threats at events such as concerts, festivals, and sports events, even in our nation's schools. All these demands put pressure on organisational budgets, and in turn are costing taxpayers and the American public."

Hytera and its US-based subsidiaries, PowerTrunk, Hytera America, Hytera Communications America (West), together with its UK-based subsidiary Sepura PLC are alleging that “by foreclosing competition from Hytera’s DMR and TETRA solutions, Motorola Solutions is able to maintain inflated pricing in the US on its P25-compliant products.”

P25 is a technology standard for public safety LMR in the US. TETRA, used by public safety organizations and commercial businesses worldwide, offers similar functionality and features to P25 equipment and can be significantly less expensive, which Hytera says, makes it a compelling option for utilities and transportation organisations and other commercial users in the US.

Hytera’s complaint provides the example of two competing professional DMR handsets with similar features and functionality: it states that Motorola Solutions’ suggested retail price (MSRP) is as much as $738, nearly twice Hytera’s MSRP of $440.

Hytera further alleges that Motorola Solutions is charging US customers more than it charges customers in competitive markets outside the US. Hytera claims that after Motorola Solutions applied discounts to its list after Motorola Solutions applied discounts to its list price, it charged the City of Chandler, Arizona, $5,290 for a P25-compliant radio – nearly five times what it asserts a customer in the UK could pay at retail for a comparable TETRA product. Hytera says that US customers and American taxpayers could realise significant savings from competition from more cost-effective TETRA and DMR solutions that are just as robust.

"The only thing this pricing adds up to is more profit for Motorola Solutions -- with taxpayers on the hook," Wineland said. "Customers want a choice, as reflected by the demand by public safety customers and other US customers for DMR, a robust LMR alternative at a fraction of the cost of P25."

Hytera also asserts that “Motorola Solutions has built a moat around the US public safety market” and that it is engaged in “continuous efforts to stall acceptance in the US of TETRA-compliant LMR”.

Hytera claims that Motorola Solutions has engaged in a pattern of intimidation of LMR dealers. "Motorola Solutions brow-beats dealers into dropping Hytera's products or face losing the ability to sell Motorola Solutions' products and service lucrative maintenance contracts," notes Andrew Yuan, Hytera's president of North and South America.

"Hytera provides feature-rich, high-quality solutions at a competitive price. Motorola Solutions is a monopolist charging US businesses a surcharge for safety, and those costs are passed on to taxpayers and the general public," said Mark Jordan, regional sales manager for Hytera Communications America (West). "Motorola Solutions is badgering dealers to drop Hytera, preventing adoption of standards that would lower prices for customers, and using courts to damage Hytera's relationships with LMR dealers and customers and raise our cost of doing business."

Hytera alleges that Motorola Solutions “has engaged in a pattern of sham litigation and regulatory actions to raise costs for Hytera and sow anxiety in the market, diminishing competition. This includes suing Hytera for patent infringement on a set of standard essential technologies that industry users have agreed to license on fair, reasonable, and non-discriminatory (FRAND) terms, and for which Hytera has already been paying Motorola Solutions to license.”

"Customers in the US deserve the best critical communications equipment and technology at the best prices," adds Wineland. "Customers love Hytera's products—and the value they receive. American customers are paying far more to Motorola Solutions and getting less, and Motorola Solutions is working hard to maintain that unfair pricing regime here."

A Motorola Solutions spokesperson said: "We believe Hytera's complaint is without merit and a clear attempt to shift attention away from the heart of the dispute – Hytera's brazen theft of our trade secrets and wilful infringement of our patents. We will continue to vigorously pursue our ongoing global efforts to stop Hytera's egregious behaviour and protect our intellectual property."

Prior to this new legal action, Hytera lodged a patent infringement suit against Motorola Solutions in August.

Motorola Solutions initiated the legal battle between the two vendors back in March by filling complaints in the US District Court for the Northern District of Illinois against Hytera, alleging that Hytera’s DMR two-way radios, base stations, repeaters and dispatch systems, as well as its related commercialisation and sales activities, are infringing its patents and using “stolen Motorola Solutions trade secrets”. Motorola Solutions then filed more patent infringement complaints against Hytera with the US International Trade Commission on 29 March and with the Regional Court of Düsseldorf in Germany, in April.

Motorola Solutions then filed patent infringement complaints against Hytera in July, with the Regional Court of Mannheim in Germany, this time focusing on acoustic performance. The complaints assert that Hytera’s two-way wireless communication devices featuring ‘improved squelch functionality’ infringe Motorola Solutions’s patent EP 1 139 562 B1.