Motorola Solutions, Inc. v. Hytera Commc'ns Corp.

• Decision Date: 31 January 2020
• Docket Number: Civil Action No. 1:17-cv-1973
• Citation: 436 F.Supp.3d 1150
• Parties: MOTOROLA SOLUTIONS, INC., et al., Plaintiffs, v. HYTERA COMMUNICATIONS CORP. LTD., et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

436 F.Supp.3d 1150

MOTOROLA SOLUTIONS, INC., et al., Plaintiffs,

v.HYTERA COMMUNICATIONS CORP. LTD., et al., Defendants.

Civil Action No. 1:17-cv-1973

United States District Court, N.D. Illinois, Eastern Division.

Signed January 31, 2020

Benjamin A. Herbert, Ali-Reza Boloori, Benjamin Aaron Yaghoubian, Christopher Lawless, Justin Singh, Michael W. De Vries, Kirkland & Ellis LLP, Los Angeles, CA, Brandon Hugh Brown, Adam R. Alper, Akshay S. Deoras, Barbara Nora Barath, Natalie Flechsig, Reza Dokhanchy, Kirkland & Ellis LLP, San Francisco, CA, Joshua L. Simmons, Leslie M. Schmidt, Kirkland & Ellis LLP, New York, NY, Amir Freund, Kirkland & Ellis LLP, Palo Alto, CA, David Rokach, Megan Margaret New, Kirkland & Ellis LLP, Chicago, IL, Joseph Kuan Liu, One LLP, Newport Beach, CA, for Plaintiffs.

Boyd T. Cloern, Brian Peter Johnson, Christopher Alan Suarez, David Shea Bettwy, Jessica Ilana Rothschild, John William Toth, Kassandra Michele Officer, Li Guo, Scott M. Richey, William G. Pecau, Alice Elizabeth Loughran, Michael J. Allan, Steptoe & Johnson LLP, Washington, DC, Daniel Steven Stringfield, Tron Yue Fu, Steptoe & Johnson LLP, Chicago, IL, Joshua M. Ryland, Mark Wallace McDougall, Todd R. Tucker, Calfee, Halter & Griswold LLP, Cleveland, OH, for Defendants.

ORDER

CHARLES RONALD NORGE, Judge

Defendants' motion to preclude Motorola from relying on extraterritorial damages [758] is granted in part and denied in part.

STATEMENT

On Monday, December 2, 2019, more than two years after this case was initially filed, Hytera Communications Corporation Ltd., Hytera America, Inc., and Hytera Communications America (West), Inc. (collectively, "Defendants,") filed a motion "to preclude Motorola from relying on extraterritorial damages." Dkt. 758. The motion was filed shortly after midnight, only hours before the thirteenth day of the ongoing jury trial. On that same day, Motorola Solutions, Inc. and Motorola Solutions Malaysia Sdn. Bhd. (collectively, "Plaintiffs") intended to call an expert to testify on damages, including extraterritorial damages. The Court, after a brief colloquy with defense counsel, exercised its discretion to provisionally allow testimony regarding extraterritorial damages, subject to the understanding that after the Court analyzed the motion and issued a ruling the jury would be instructed as to what damages it could properly consider or a limiting instruction if the Court ruled in Defendants' favor.

For the following reasons, Defendants' motion is granted in part and denied in part.

I. BACKGROUND

By way of brief background, Plaintiffs have brought three claims against Defendants: trade secret misappropriation under the recently enacted Defend Trade Secrets Act of 2016, 18 U.S.C. §§ 1836(b), 1839 et seq. , trade secret misappropriation under the Illinois Trade Secret Act, 765 ILCS 1065 et seq. , and copyright infringement under the Copyright Act, 17 U.S.C. §§ 106, 501 et seq. In essence, Plaintiffs allege that Defendants hired three engineers away from Plaintiffs' Malaysian office, that those engineers stole and brought with them thousands of Plaintiffs' technical, confidential documents, and that Defendants used those documents, which contained trade secrets and lines of source code, to develop a state-of-the-art digital radio that is functionally indistinguishable from Plaintiffs' radios. Defendants then sold those radios all around the world, including in the United States.

Put simplistically, Defendants argue that none of these three statutes have extraterritorial effect and all damages should be limited only to domestic applications of the respective statutes. Plaintiffs respond by arguing that Defendants have waived this challenge, and even if they have not, the statutes should reach extraterritorially in this case—either because the statutes apply extraterritorially or because the conduct being regulated by the statutes was domestic in this case and thus this case represents a proper domestic application of the statutes, which in turn allows Plaintiffs also to recover for damages extraterritorially.

This issue of what the statutes authorize, in the Court's view, is not a defense and has not been waived by Defendants. The Court exercises its discretion to reach the merits of the motion rather than to hold that this important issue has been waived. No prejudice will accrue to Plaintiffs and an instruction on what damages may properly be considered will not destroy Plaintiffs' credibility with the jury. The Court thus turns to each statute in turn.

II. ANALYSIS

A. The Federal Claims under the Defend Trade Secrets Act and the Copyright Act

1. The Extraterritoriality Analysis, Generally

The Supreme Court has promulgated a two-step framework for analyzing extraterritoriality issues,¹ discussed in depth below. At the first step, a court asks whether the presumption against extraterritoriality "has been rebutted—that is, whether the statute gives a clear, affirmative indication that it applies extraterritorially." RJR Nabisco, Inc., v. European Cmty., ––– U.S. ––––, 136 S. Ct. 2090, 2101, 195 L. Ed. 2d 476 (2016). If no clear, affirmative indication exists, the statute is not extraterritorial and the court proceeds to a second step, in which it determines whether the case involves "a domestic application of the statute." Id. This determination is made by determining the statute's focus. "If the conduct relevant to the statute's focus occurred in the United States, then the case involves a permissible domestic application even if other conduct occurred abroad; but if the conduct relevant to the focus occurred in a foreign country, then the case involves an impermissible extraterritorial application regardless of any other conduct that occurred in U.S. territory." Id.

a. The Presumption Against Extraterritoriality

The first step of the extraterritoriality analysis deals with the presumption against extraterritoriality. The baseline principles underlying this canon of statutory construction are well developed by the Supreme Court. To begin, it is a "basic premise" of our legal system that, in general, United States law "governs domestically but does not rule the world." RJR Nabisco, Inc., 136 S. Ct. at 2101 (citing Microsoft Corp. v. AT & T Corn., 550 U.S. 437, 454, 127 S. Ct. 1746, 167 L. Ed.2d 737 (2007) ) (internal quotations omitted). This principle is expressed as the "presumption against extraterritoriality," which governs a court's interpretation of whether a statute reaches beyond the United States. Id. Specifically, "[a]bsent clearly expressed congressional intent to the contrary, federal laws will be construed to have only domestic application." Id. (citing Morrison v. National Australia Bank Ltd., 561 U.S. 247, 255, 130 S. Ct. 2869, 177 L. Ed.2d 535 (2010) ). This presumption rests on the "commonsense notion that Congress generally legislates with domestic concerns in mind.... And it prevents unintended clashes between our laws and those of other nations which could result in international discord." WesternGeco LLC v. ION Geophysical Corp., ––– U.S. ––––, 138 S. Ct. 2129, 2136, 201 L. Ed. 2d 584 (2018) (internal citations and quotations omitted).

As to this first step of the extraterritorial analysis, RJR Nabisco cautions that "[t]he question is not whether we think Congress would have wanted a statute to apply to foreign conduct if it had thought of the situation before the court, but whether Congress has affirmatively and unmistakably instructed that the statute will do so." Id. (internal quotations omitted). When interpreting a statute, a court thus looks for a "clear indication" of extraterritorial application; if none is found, the statute applies only domestically, and the analysis shifts to the second step. See Morrison, 561 U.S. at 255, 130 S.Ct. 2869.

In determining whether a "clear indication" exists, courts use traditional tools of statutory interpretation. Specifically, courts analyze the plain language of the statute and the statutory provisions at issue, e.g. Morrison, 561 U.S. at 261, 130 S.Ct. 2869, the surrounding context, Morrison, 561 U.S. at 265, 130 S.Ct. 2869 ("[a]ssuredly context can be consulted as well[ ]"), and, relatedly, how that plain language interacts with the general statutory structure, RJR Nabisco, 136 S. Ct. at 2101-03 (holding that, because certain predicate acts incorporated by reference into the RICO statute criminalized conduct occurring abroad, the criminal RICO provisions based on those violations had extraterritorial reach as well). The Supreme Court has cautioned, however, that the presumption against extraterritoriality is not a "clear statement rule" if "by that it is meant a requirement that a statute say ‘this law applies abroad.’ " Id.

In the wake of RJR Nabisco, it is clear that just because a federal statute establishes extraterritorial reach in a criminal context, a private right of action based on similar acts does not necessarily also have extraterritorial reach. In RJR Nabisco, the Court found that although certain criminal RICO actions could be applied extraterritorially (where the underlying predicate acts clearly incorporated extraterritorial-reaching crimes), the private right of action did not extend extraterritorially, even when based on the same predicates. This holding was based on what the Court held to be limiting language in the provision creating the private right of action, bolstered by the idea that:

The creation of a private right of action raises issues beyond the mere consideration whether underlying primary conduct should be allowed or not, entailing, for example, a decision to permit enforcement without the check imposed by prosecutorial discretion. Sosa v. Alvarez-Machain, 542 U.S. 692, 727, 124 S. Ct. 2739, 159 L. Ed.2d 718 (2004). It is not enough to say that a private right of action must reach abroad because the underlying law governs conduct in foreign countries. Something more is needed[.]

RJR Nabisco, 136 S. Ct....