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AMSC posts update on Sinovel legal battle

UNITED STATES: AMSC has claimed progress has been made this month in the trade secret and copyright infringement cases against Sinovel in the US and China.

The code is alleged to have been used in Sinovel's 1.5MW turbine
The code is alleged to have been used in Sinovel's 1.5MW turbine

Since 2011, Sinovel has been caught up in legal battles with AMSC over issues stemming from its alleged theft of intellectual property relating to turbine control codes. Sinovel was AMSC's biggest customer, using its control system technology.

The cases have proceeded slowly, but signs of movement in both the US and China in September have been highlighted by AMSC. "Substantive court hearings" have now begun over the copyright case in Beijing and procedural rulings have been made in favour of AMSC in the Beijing trade secrets case.

Additionally a judge has upheld an earlier ruling dismissing a Sinovel appeal in a US Department of Justice case centring around a theft of trade secrets. Sinovel had claimed that the US government department lacked jurisdiction over the case.

The AMSC-Sinovel battle now appears to be centred around three separate court cases:

Chinese trade secret infringement case

AMSC filed a trade secret infringement case in 2011, alleging that Sinovel engaged in unauthorised use of parts of the company's source code. In reaction, Sinovel petitioned to remove the case from the Beijing Intermediate People's Court and to transfer the matter to arbitration. This was finally dismissed by the court in January this year. Sinovel appealed this decision, but this appeal has now also been dismissed, allowing the case to progress.

AMSC is claiming $450 million in damages.

Chinese copyright cases

AMSC's copyright infringement cases, in Beijing and Hainan were similarly challenged by Sinovel, with moves to have the cases moved to arbitration. But in February, China's Supreme People's Court ruled that the cases must be heard separately. Hearings have now begun at the Beijing Intermediate People's Court. Both sides have presented evidence, reviewed claims and answered questions from the court.

AMSC said it also expects the Hainan case to be heard soon. The company is seeking $6 million in damages in the Beijing case and $200,000 in the Hainan case.

US Department of Justice case

In 2013, the US Department of Justice indicted Sinovel and members of its senior management team, as well as a former AMSC employee. Sinovel challenged this by arguing that its subsidiary, Sinovel USA, was responsible for its activities in the US. In July, magistrate judge Stephen Crocker ruled that this claim was unfounded and that Sinovel must face the charges. This was appealed by Sinovel, which was again struck down by a district judge earlier this month.

However, Sinovel has appealed to the Court of Appeals over the ruling.

Sinovel response

Sinovel has not responded to the latest occurences. However, it sounded a note of concern about the AMSC-battle in its interim results. The company warned it  in September that it was "unable to predict" the likely impact on its profits from its legal battles with AMSC.

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