108 F.4th 458
7th Cir.2024Background
- Motorola developed proprietary DMR (digital mobile radio) technology and source code after years of investment; Hytera competed in the same professional-tier DMR market.
- Hytera recruited three Motorola engineers in Malaysia who, before leaving, downloaded thousands of Motorola documents and source-code files and brought them to Hytera.
- Hytera used the stolen materials to develop and sell professional DMR radios (2010–2014 and beyond) that competed globally and in the U.S.
- Motorola sued (DTSA and Illinois trade-secret law; later added Copyright Act claims). A jury found liability on trade-secret and copyright claims and awarded large compensatory and punitive damages.
- The district court reduced some amounts, treated disgorgement issues as equitable (judge-made findings), denied a permanent injunction, and set a post-judgment royalty; both parties appealed (Hytera primarily on damages; Motorola on injunctive relief denial).
Issues
| Issue | Plaintiff's Argument (Motorola) | Defendant's Argument (Hytera) | Held |
|---|---|---|---|
| Copyright extraterritoriality — may Motorola recover Hytera’s foreign profits under the Copyright Act? | Server-theory: downloads of source code hit Motorola’s Illinois ClearCase main server (mirrors exist), so a domestic predicate act permits recovery for foreign sales. | Copyright recovery must be limited to U.S. sales; Motorola failed to prove downloads came from a U.S. server. | Reversed as to foreign copyright damages: Motorola failed to prove a domestic predicate act (no evidence the downloads were from Illinois server); copyright award must be limited to U.S. sales. |
| Copyright apportionment — may Hytera obtain apportionment of domestic disgorgement? | Motorola argued but‑for causation: Hytera’s products would not exist without Motorola’s code, so no apportionment. | Hytera urged proximate‑cause apportionment: its own features, dealer network, pricing, and design contributed to profits and should be credited. | Remanded: district court erred by blocking proximate‑cause apportionment; Hytera gets chance to prove apportionment under proximate‑cause standard. |
| Copyright statute of limitations — whether accrual uses discovery rule? | Motorola: accrual follows the Seventh Circuit’s long-standing discovery rule, so recover damages for infringements discovered within three years before claim added. | Hytera urged narrower limits (relying on other circuits) to cap damages. | Affirmed discovery-rule approach; Supreme Court decision cited (Nealy) rejected Sohm’s separate damage-limit rule; Seventh Circuit discovery rule remains binding. |
| DTSA extraterritoriality — may Motorola recover Hytera’s foreign profits under DTSA? | DTSA (as an amendment to chapter 90) is rebuttal to presumption against extraterritoriality; §1837 of chapter 90 applies to the DTSA and allows foreign conduct to be remedied when an act in furtherance occurred in U.S.; Hytera used/staged U.S. trade-show marketing (a domestic “use”/act in furtherance). | Hytera argued §1837 should not be read to cover civil DTSA claims and that U.S. trade-show activity was not an act in furtherance of foreign sales. | Affirmed: DTSA rebuts the presumption; §1837 applies to section 1836(b); Hytera committed domestic acts in furtherance (and domestic use) sufficient to allow recovery of foreign profits under DTSA. |
| DTSA apportionment — may Hytera apportion unjust-enrichment award? | Motorola argued court’s error harmless because alternative DTSA measure (Motorola’s proven lost profits + Hytera’s avoided R&D) exceeds disgorgement and is not subject to apportionment. | Hytera sought apportionment under proximate-cause theory and argued the jury should have decided legal damages. | Affirmed compensatory award ($135.8M disgorgement) and punitive award; district court’s failure to permit proximate-cause apportionment was harmless because Motorola had alternative damages (lost profits + avoided R&D = larger) and Hytera forfeited challenging the court’s factual finding on lost profits in its opening brief. |
| DTSA punitive damages — due process challenge to $271.6M (2× compensatory) | Motorola: punitive award within DTSA’s statutory cap (not more than 2× compensatory) and supported by reprehensibility and measurable harm. | Hytera: award excessive under due process (citing Epic Systems and Gore factors). | Affirmed: DTSA’s willfulness standard and 2:1 statutory cap are consistent with due process; Epic Systems (state-law setting) is distinguishable; awards here supported by reprehensible, willful misconduct and quantifiable harms. |
| Permanent injunction / Rule 60(b) — whether denial of permanent injunction should be reconsidered given post-judgment facts | Motorola: district court should reconsider injunction (Rule 60(b) relief) because subsequent conduct shows Hytera may be unable/unwilling to comply with money remedy; court should have issued an indicative ruling under Rule 62.1. | Hytera: appeal divested district court jurisdiction; Rule 60(b) motion should be denied for lack of jurisdiction. | Reversed as to procedure: district court erred by refusing to consider or issue an indicative ruling on Rule 60(b); remanded to permit reconsideration of injunctive relief in light of post-judgment developments (and Hytera’s subsequent conduct). |
Key Cases Cited
- RJR Nabisco v. European Community, 579 U.S. 325 (framework for presumption against extraterritoriality and two‑step inquiry)
- Microsoft Corp. v. AT&T Corp., 550 U.S. 437 (context on extraterritoriality principles)
- Impression Prods., Inc. v. Lexmark Int’l, Inc., 581 U.S. 360 (limits on certain territorial theories referenced in statutory context)
- Tire Engineering & Distrib. v. Shandong Linglong Rubber Co., 682 F.3d 292 (4th Cir. 2012) (predicate‑act doctrine for copyright extraterritoriality)
- Sheldon v. Metro‑Goldwyn Pictures Corp., 309 U.S. 390 (copyright disgorgement/apportionment doctrine)
- BMW of N. Am. v. Gore, 517 U.S. 559 (guideposts for due‑process review of punitive damages)
- State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (application of Gore guideposts and ratio analysis)
- Cooper Indus. v. Leatherman Tool Grp., 532 U.S. 424 (standards for appellate review of punitive damages)
- ASARCO LLC v. Am. Recovery Corp., 773 F.3d 1050 (9th Cir.) (deference to congressional punitive‑damages scheme; statutory caps relevant to Gore analysis)
- Epic Sys. Corp. v. Tata Consultancy Servs. Ltd., 980 F.3d 1117 (7th Cir.) (trade‑secret punitive‑damages analysis under state law; distinguished here)
- Authors Guild, Inc. v. HathiTrust, 755 F.3d 87 (2d Cir.) (treatment of mirrored/back‐up copyrighted data in extraterritorial contexts)