Chinese walkie-talkie maker Hytera to appeal against US global sales ban, sanctions seen as 'harsher' than action against Huawei

Chinese walkie-talkie maker Hytera is appealing against United States sanctions that bar it from selling two-way radio products globally as part of a years-long trade secrets dispute with Lenovo-backed US smartphone maker Motorola.

The Shenzhen-based firm has complied with the sanctions and suspended the sales of these products, it said in a filing with the Shenzhen exchange on Monday.

"The company will take measures to lift the injunction orders as soon as possible," Hytera said in the filing, adding that there might be "some uncertainties" in the development of the case.

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The firm was on April 2 ordered by the District Court for the Northern District of Illinois to halt the sales and distribution of any products containing two-way radio technology anywhere in the world, according to a statement on Hytera's website.

The fact that a Chinese company has been banned from sales globally by a US court has triggered another heated debate on Chinese social media, with some calling the sanctions against Hytera "harsher" than the US action against Huawei Technologies.

The sanctions follow a years-long trade secrets and copyright infringement dispute between Hytera and Motorola, which was acquired by Chinese consumer electronics giant Lenovo in 2014.

Illinois-based Motorola filed a complaint against Hytera in 2017, accusing it of infringing on the US firm's trade secrets. The US justice department announced charges against Hytera over the alleged theft of trade secrets from Motorola in February 2022.

Hytera denied the allegations at the time and said it "respectfully disagrees with the allegations" and "looks forward to pleading not guilty".

Motorola and Hytera did not immediately respond to a request for comment.

The sanctions represent a significant blow to Hytera's business, as the firm makes a large chunk of its revenue from developing and selling two-way radio products.

Two-way radio products include portables and mobiles, known as walkie-talkies, as well as base stations and repeaters that implement two-way communication protocols. The sales of such products make up most of Hytera's sales of professional wireless communications equipment, accounting for more than 83 per cent of its revenue in 2022, according to its financials from that year.

After it was charged by the US justice department in early 2022, Hytera filed a case with the Shenzhen Intermediate People's Court mid-2022 and sought a judgment that its new H-series products do not infringe Motorola's trade secrets and copyrights.

The US court in March this year ordered that Hytera's litigation in the Shenzhen court was in contempt of its sanctions, and issued anti-suit injunction orders to force the Chinese company into dropping that lawsuit.

It also ordered the company to pay a daily fine of US$1 million until it is in full compliance with the anti-suit injunction orders, which are typically used by a court to prevent an opposing party from shifting legal proceedings to another jurisdiction.

Hytera said on Monday that it had dropped its case with the Shenzhen court. Its stock fell by the daily maximum limit of 10 per cent in Shenzhen on Monday.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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