The Predicate-Act Doctrine Meets Mirrored Servers: Motorola Solutions v. Hytera and the Limits of U.S. Copyright Abroad

The Seventh Circuit's July 2024 decision in Motorola Solutions v. Hytera shows how the presumption against extraterritoriality and the predicate-act doctrine cabin recovery of foreign copyright damages — even amid blatant source-code theft — while the Defend Trade Secrets Act reaches worldwide sales.

In Motorola Solutions, Inc. v. Hytera Communications Corp. Ltd., Nos. 22-2370 & 22-2413 (7th Cir. July 2, 2024), the United States Court of Appeals for the Seventh Circuit confronted one of the most consequential and least settled questions in cross-border intellectual property: when may a U.S. copyright owner recover for infringement that culminates abroad? Writing for a panel that also included Judges Brennan and St. Eve, Judge David Hamilton delivered an opinion that simultaneously expanded the global reach of the Defend Trade Secrets Act (DTSA) and sharply curtailed the territorial reach of the Copyright Act — a study in how two federal intellectual-property statutes, applied to the very same theft, can produce opposite extraterritorial results.

At a glance

Case: Motorola Solutions, Inc. v. Hytera Communications Corp. Ltd., Nos. 22-2370 & 22-2413 (7th Cir.)
Decided: July 2, 2024; opinion by Judge Hamilton (with Judges Brennan and St. Eve)
Holding: The DTSA reaches Hytera’s worldwide sales because an act in furtherance of the offense occurred in the United States; the Copyright Act award is remanded for substantial reduction because Motorola never established a domestic predicate act of infringement.
Status: DTSA award ($135.8M compensatory + $271.6M punitive) affirmed; $136.3M copyright award remanded; denial of a permanent injunction reversed.

The facts

Hytera, a Chinese radio manufacturer, poached three engineers from Motorola’s operation in Malaysia. Before leaving, those engineers downloaded thousands of files — including the source code for Motorola’s Digital Mobile Radio (DMR) project — from Motorola’s secure databases. Hytera inserted segments of the stolen code directly into competing radios; the theft was proven in part because minor coding errors in Motorola’s code “appeared in exactly the same spots in Hytera’s code.” Hytera conceded liability and contested only damages. A jury found violations of both the DTSA and the Copyright Act, and the district court ultimately entered an award of $543.7 million.

The presumption against extraterritoriality and the predicate-act doctrine

The opinion’s analytical spine is the two-step framework of RJR Nabisco, Inc. v. European Community, 579 U.S. 325 (2016). Step one asks whether the statute gives a clear, affirmative indication that it applies extraterritorially. Step two asks whether the case nonetheless involves a permissible domestic application of the statute, by reference to the statute’s “focus.” Like all federal statutes, the Copyright Act is presumed to govern “domestically but does not rule the world.”

For copyright, the Seventh Circuit located the relevant conduct at step two through the predicate-act doctrine. As the court framed it, “a copyright owner may recover damages for foreign infringement if two conditions are met: (1) an initial act of copyright infringement occurred in the United States, and (2) the domestic infringement enabled or was otherwise ‘directly linked to’ the foreign infringement for which recovery is sought.” The doctrine’s modern formulation comes from Tire Engineering & Distribution, LLC v. Shandong Linglong Rubber Co., 682 F.3d 292 (4th Cir. 2012), which traced its origins to Judge Learned Hand’s opinion in Sheldon v. Metro-Goldwyn Pictures Corp., 106 F.2d 45 (2d Cir. 1939). The critical doctrinal point — and the one that decided the case — is that the first prong demands “a domestic violation of the Copyright Act.” Foreign damages are parasitic on a completed act of U.S. infringement; without that anchor, the foreign harm is simply beyond the statute’s reach.

The “server theory” and the meaning of a domestic copy

Motorola, as plaintiff, bore the burden of establishing that domestic violation, and on appeal it offered only one theory. Its database had a “main server in Illinois” that was “mirrored” on servers around the world. Motorola argued that the engineers’ unauthorized download therefore necessarily implicated the Illinois copy and constituted a domestic predicate act — its so-called “server theory.”

The factual record undid the theory. Motorola’s own expert “admitted that ‘there’s no evidence of the actual downloads from’ the main … server in Illinois, as opposed to one of the mirrored servers abroad.” The parties agreed the thieves operated in Malaysia. Motorola’s fallback — that “anything that happens on one of [the foreign mirrored servers] goes to Illinois” — could not carry the burden, and the panel rejected the district court’s contrary finding as clear error. Because the copyrighted code was, on the evidence, copied from a server abroad, no act of reproduction occurred in the United States.

Judge Hamilton’s reasoning rejects a “data-presence” theory of domestic infringement. The mere existence of copyrighted material on a U.S. server does not convert a foreign copying into a domestic act. The court illustrated the principle with a memorable hypothetical: a publisher distributes identical books in the United States and abroad; if a foreign competitor obtains a copy distributed abroad, “reproduces it abroad, and sells it abroad, no domestic act of copyright infringement has occurred.” The U.S. copy “makes no difference.” The corollary is a pointed warning to multinational rights holders: “by choosing to store copies of their copyrighted data abroad in mirrored servers, U.S. copyright owners take the risk that illicit copying will be beyond the reach of U.S. copyright law.” Architecture is now a litigation risk; where a company replicates its data determines where its copyright remedies run.

Two statutes, two answers: why the DTSA reached the world

The opinion’s most striking feature is the divergence between its copyright and trade-secret analyses. The DTSA contains an explicit extraterritoriality provision: 18 U.S.C. § 1837 (inherited from the Economic Espionage Act) applies the chapter to “conduct occurring outside the United States if … an act in furtherance of the offense was committed in the United States.” That express text satisfied RJR Nabisco step one. The court found the in-furtherance requirement met by Hytera’s domestic conduct — including marketing and promotion of the offending radios within the United States — which sufficed to support disgorgement of profits on worldwide sales.

The Copyright Act, by contrast, contains no comparable extraterritoriality clause, so recovery had to be justified as a domestic application at step two — and that is precisely where the absent predicate act proved fatal. The juxtaposition is instructive: identical misconduct, identical foreign sales, yet only the statute with an express extraterritorial command reached the global revenue. The lesson for litigants is to plead trade-secret and copyright theories in tandem, recognizing that they answer to entirely different extraterritoriality regimes. Even on remand, the surviving domestic copyright recovery faces a second constraint: the court directed the district court to revisit apportionment under 17 U.S.C. § 504(b) and apply a proper proximate-cause standard.

Open questions

What proof of “domestic copying” suffices in a distributed-computing world? How plaintiffs will marshal server-log forensics — and whether transient caching or routing through U.S. infrastructure can ever anchor a predicate act — remains unsettled.
Does the predicate act require a completed act or merely the right kind of act? The opinion treats reproduction abroad as dispositive but leaves open how the doctrine maps onto the distinct § 106 rights when conduct straddles borders.
Will the Supreme Court weigh in? Hytera sought certiorari (No. 24-725). Any review could illuminate the predicate-act doctrine’s relationship to the Court’s broader extraterritoriality jurisprudence, including Abitron Austria GmbH v. Hetronic International (2023).

Implications

Place your data deliberately. Multinationals that mirror source code and other copyrighted assets on foreign servers may forfeit U.S. copyright remedies for foreign exploitation; where the infringing copy is made governs whether the Copyright Act applies.
Plead in parallel. The DTSA’s express extraterritoriality can capture worldwide sales that the Copyright Act cannot; trade-secret theories may be the stronger vehicle for global damages.
Build the forensic record early. Plaintiffs must prove that copying actually occurred on a U.S. server, not merely that U.S. copies existed — server logs and download forensics are now outcome-determinative.
Expect apportionment fights. Even a valid domestic predicate act yields damages subject to § 504(b) apportionment and proximate-cause limits.

Frequently asked questions

What is the predicate-act doctrine? It is the rule that a copyright owner may recover for foreign infringement only if an initial, completed act of copyright infringement occurred in the United States and that domestic infringement enabled or was directly linked to the foreign infringement.

Why did Motorola lose its foreign copyright damages despite winning on trade secrets? The Copyright Act lacks an express extraterritoriality provision, so Motorola needed a domestic predicate act. Its only theory — that downloads implicated an Illinois “main server” — failed because the code was mirrored abroad and there was no evidence it was actually downloaded from the U.S. server. The DTSA, by contrast, expressly reaches foreign conduct when an act in furtherance occurs in the United States, which Hytera’s domestic marketing satisfied.

What practical lesson should companies take from the decision? Where you store and replicate copyrighted data has legal consequences. Mirroring assets on foreign servers can place foreign copying beyond U.S. copyright law; rights holders should preserve forensic proof of domestic copying while also pleading trade-secret claims, which enjoy broader extraterritorial reach.