Motorola Solutions, Inc. v Hytera Communications Corporation Ltd
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Jacobs,Mr Justice Jacobs |
| Judgment Date | 24 April 2020 |
| Neutral Citation | [2020] EWHC 980 (Comm) |
| Date | 24 April 2020 |
| Docket Number | Case No: CL-2020-000164 |
| Court | Queen's Bench Division (Commercial Court) |
On an application
[2020] EWHC 980 (Comm)
Mr Justice Jacobs
Case No: CL-2020-000164
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Thomas K. Sprange QC and Gayatri Sarathy (instructed by King & Spalding LLP) for the Applicant
Stephen Rubin QC and Alexander Milner (instructed by Steptoe & Johnson UK LLP) for the First to Fourth Respondent.
Paul Downes QC (instructed by Eversheds Sutherland LLP) for the Fifth Respondent.
Hearing dates: 7 th April 2020.
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
A: Introduction
The Claimants (“Motorola”) apply, against five Respondents, for a domestic freezing order and orders for the provision of information about their assets. Three of these Respondents – (1) Hytera Communications Corporation Ltd., (2) Hytera America, Inc. and (3) Hytera Communications America (West) Inc. – are companies against which Motorola has recently obtained a substantial judgment in proceedings in the USA. I shall refer to these Respondents collectively as “Hytera”, and to the first Respondent as “Hytera China”.
Hytera China is the main company in a large multinational group. It has shareholdings in various subsidiaries. Its assets include shareholdings held, indirectly via other companies, in two English subsidiaries: Project Shortway Limited (“Shortway”) and Sepura Limited (“Sepura”). There are two other companies in the ownership chain between Hytera China and the two English companies, namely Hytera Communications (Hong Kong) Co. Ltd. (“Hytera Hong Kong”) and Project Shortway (Jersey) Ltd. (“Shortway Jersey”). There is therefore a complete chain comprising 100% shareholdings from Hytera China to Sepura via (i) Hytera Hong Kong, (ii) Shortway Jersey, and (iii) Shortway. Sepura in turn owns, directly or indirectly, 20 further subsidiaries. Hytera China also owns a direct 100% shareholding in another English subsidiary, Hytera Communications UK Ltd. (“Hytera UK”). Both Hytera UK and Sepura actively carry out business in the telecommunications sector. The business of Sepura (2018 revenue of EUR 93 million) is more substantial than that of Hytera UK (2018 revenue of £ 10.2 million).
Both Shortway and Sepura are additional Respondents to the present application. This arises from the fact that both companies are English companies, and accordingly there is no dispute that the 100% shareholdings in those companies are assets within the jurisdiction which would in principle come within the scope of a domestic freezing order. Neither Shortway nor Sepura was party to the US Proceedings which have given rise to the judgment against Hytera. The Claimants therefore have no substantive cause of action against either of these companies, but claim relief (in the form of a domestic freezing order and an order to provide information) on what is sometimes known as the Chabra basis following the decision in TSB Private Bank v Chabra [1992] 1 WLR 231.
The application is made pursuant to CPR 25.4 (1) and the Civil Jurisdiction and Judgments Act 1982 (“CJJA 1982”) s.25. It was issued on 19 March 2020 after Hytera had refused to provide undertakings, equivalent to the orders now sought, in response to a request made by Motorola's solicitors (King & Spalding) on 16 March 2020. The application was made on notice to the various Respondents, who were served with Motorola's evidence in support of the application on 19 March 2020. On 24 March 2020, I ordered that the hearing of Motorola's application should be expedited so as to be heard on 7 April 2020. The parties thereafter agreed on a timetable for the provision of further evidence and skeleton arguments. The evidential timetable was significantly shortened from that which would usually apply in the case of a 1-day application. On 1 April 2020, evidence on behalf of the Respondents was served, and responsive evidence was served by Motorola on 2 and 3 April 2020.
Shortly before the hearing, which took place by video on 7 April 2020, Sepura conditionally agreed to provide certain undertakings, and these were acceptable to Motorola. The condition was that relief in the form of a freezing order was granted in favour of Motorola in respect of any of the three Hytera respondents. This meant that Mr. Downes QC, who was instructed on behalf of Sepura, did not need to make any detailed submissions at the hearing. I therefore heard oral submissions from Mr. Sprange QC on behalf of Motorola and Mr. Rubin QC on behalf of Hytera and Shortway.
At the conclusion of the hearing, I indicated to the parties that I would provide my decision, if possible, during the course of the week, with full reasons to follow. I did so on Thursday 9 April 2020 in a written document which set out my conclusions and brief reasons. I invited the parties to agree an order which was to remain in place pending a further hearing to be held after my full reasons became available, at which point any appropriate amendments to the order could be made in the light of my full judgment. The parties thereafter reached substantial agreement, and the order was sealed on Tuesday 14 April 2020.
B: Factual background
The application is in support of proceedings brought by Motorola against Hytera in the US District Court for the Northern District of Illinois, Eastern Division (the “Illinois Court”) (the “US Proceedings”).
Motorola is a leading developer and manufacturer of two-way digital radio products and provides proprietary digital radio technology and features under the brand name “MotoTRBO”. It is headquartered in Illinois in the United States. The 1 st Claimant is incorporated in Delaware. The 2 nd Claimant is incorporated in Malaysia.
Hytera China, the principal company in the group, is incorporated and headquartered in the People's Republic of China (“PRC”). Hytera China was founded in 1993 by its current chairman Chen Qingzhou (“Mr. Chen”) in Shenzhen. It is listed on the Shenzhen Stock Exchange, and Mr. Chen has a majority stake of 51.65% of its shares. On the Claimants' evidence (which was not disputed in this regard) Mr. Chen also acts as the CEO of Hytera China. The balance of shares are held by institutional investors. From 1993 to 2001, Hytera served as a distributor for Motorola products. Since then, it has operated as a supplier of analogue and digital radio products.
The Second Defendant/Respondent is incorporated in Florida; and the Third Defendant/Respondent is incorporated in California.
On 14 March 2017, Motorola commenced proceedings in the Illinois Court against Hytera for theft of intellectual property in respect of its two-way Digital Mobile Radio (“DMR”) product. The claims arose from serious allegations that Hytera infringed Motorola's copyright and misappropriated its confidential trade secrets to build competing DMR two-way radio products.
Motorola's case was that there had been an unlawful scheme which involved Hytera recruiting, in or around 2008, three of Motorola's senior engineers, namely: Gee Siong Kok, Samuel Chia and Yih Tzye Kok (the “Hytera Recruits”). It was alleged that these Hytera Recruits stole highly confidential and proprietary documents and source code related to Motorola's digital radio and infrastructure products, which were subsequently used by Hytera in developing its current DMR two-way radio products. Each of the Hytera Recruits remained employed by Hytera for around 18 months after the commencement of the US Proceedings. On leaving Hytera in late 2018, each was then paid substantial sums of money as part of termination agreements; Mr. G.S. Kok received at least US$ 300,000, Mr. Chia at least US$ 330,000 and Mr. Y.T. Kok at least US$ 184,000. Motorola adduced expert evidence in the US Proceedings to the effect that such payments were “completely atypical” in the context of employees who are fired for stealing a competitor's confidential and proprietary information. The termination agreements also contained provisions which prevented the Hytera Recruits from disclosing information about ongoing litigation or other information that may cause loss to Hytera.
During the US Proceedings, Hytera made admissions including that: four Motorola former employees came to Hytera with confidential information; Hytera was currently in possession of nearly all of 71 documents representative of trade secrets; the Hytera Recruits had stolen “a huge amount of documents”; and that a good portion of Motorola's code was in the possession of two of the Hytera Recruits.
Each of the Hytera Recruits invoked their right not to incriminate themselves under the Fifth Amendment to the US Constitution and therefore refused to give evidence on critical issues which were detrimental to Hytera.
Because this was a U.S. jury trial rather than a “bench” trial, there is no detailed judgment setting out the decision-maker's findings of fact. The jury were, however, given very detailed written jury instructions. These identified the legal principles and tests which they needed to apply when considering their verdict.
On 14 February 2020, the jury returned a verdict in the Illinois Court in favour of Motorola in respect of its...
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