26 Mar 2019 Cases

Compass Lexecon Client Motorola Prevails in ITC Proceedings

3 minute read


Compass Lexecon Senior Consultant Dr. Jonathan Arnold Testifies Successfully and is Cited Favorably Multiple Times in Opinion

In this matter, Compass Lexecon's client, Motorola Solutions claimed that certain Hytera products infringed Motorola's patents, and sought (i) a determination from the U.S. International Trade Commission that certain products exported to the U.S. from China should be subject to exclusion and cease and desist orders and (ii) a bond from respondent Hytera to compensate for any further economic injury caused by importation during the "presidential review period." Hytera sought to avoid such a determination by arguing, among other things, that no "domestic industry" was implicated by the products in dispute.

At the hearing, Dr. Arnold testified at length on economic aspects of the domestic industry, including the nature, extent, sales shares in the two-way radio industry, and the nature and availability of noninfringing alternatives. Dr. Arnold also testified extensively on the economically appropriate size of the bond Motorola Solutions requested that Hytera post.

In November 2018, the International Trade Commission issued a Notice of Final Determination confirming that certain Hytera products infringe four Motorola Solutions U.S. patents, and issued exclusion and cease-and-desist orders for three of those patents. In its Notice of Final Determination, the ITC made repeated references to Dr. Arnold's testimony relating to the existence of a Domestic Industry in the course of determining it appropriate to impose both an exclusion order and cease and desist order directed at Hytera.

Motorola also sought a substantial bond sufficient to protect it from any injury arising from continued importation during the 60-day presidential review period. Dr. Arnold testified that such a bond should be set at 44 percent (based on a certain measure of Motorola's profitability) of the value of estimated imports (based on Hytera's recent historical sales). The Commission rejected Hytera's argument that a lost profits analysis was an inappropriate approach to an ITC bond. In particular, the Commission stated:

Before the ALJ, Motorola argued for a 44 percent bond, providing well-supported expert testimony and documentary evidence to support a "lost profits" analysis that accurately captures the injury caused to Motorola by Hytera's importation of infringing products. See Tr (Arnold) ...the "lost profit" analysis that the Commission has used in bond forfeiture proceedings is equally applicable to the remedy determination here because, in both cases, the bond amount seeks to protect the complainant from injury.

Hytera unsuccessfully attacked Dr. Arnold's estimate of Hytera's likely imports during the presidential review period. The Commission wrote:

Although Hytera submits that "irrelevant products" are captured by [Dr. Arnold's] analysis, respondent (1) did not dispute the sales figures before the ALJ; and (2) made no attempt to provide modified sales numbers to the Commission that exclude the "irrelevant" product sales despite Motorola's expert's [i.e., Dr. Arnold's] statement that "if Hytera sales are known or better estimable at the time the presidential review period commences, then I recommend that the bond be 44 percent of the [better] estimate of Hytera's sales during the presidential review period." See Tr. (Arnold) at 7891-5.

The presidential review period ended in mid-January 2019 and the exclusion and cease and desist orders are now in effect through 2026, 2027 and 2030, depending on the patent.

Motorola Solutions was successfully represented by Adam R. Alper, Michael W. De Vries, Anders P. Fjellstedt, Jonathan Jones and Justin Singh of Kirkland & Ellis LLP and Mark S. Hacker, General Counsel of Motorola Solutions.

The Compass Lexecon team supporting Dr. Arnold was led by Dzmitry Asinski with assistance from Joseph Dykstra, Ameesha Jones and Cirina Nevarez from Compass Lexecon's Chicago office.

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