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Sinovel found guilty in AMSC case

UNITED STATES: Sinovel has been convicted of stealing trade secrets from AMSC at a federal court in Wisconsin.

Sinovel used stolen AMSC software in its 1.5MW turbines
Sinovel used stolen AMSC software in its 1.5MW turbines

The former second-largest turbine manufacturer stole proprietary turbine technology from AMSC to use in its own turbines.

Sinovel poached a former chief engineer at AMSC-subsidiary AMSC Windtec GmbH, Dejan Karabasevic, while senior management figures at Sinovel also convinced him to secretly download source code to be copied into turbine software.

Following the theft, AMSC suffered severe financial hardship, losing more than $1 billion in shareholder equity and nearly 700 jobs from its global workforce, the US Justice department said. 

The trial in Wisconsin lasted 11 days. The Chinese firm will be sentenced on 4 June 2018.

"Sinovel nearly destroyed an American company by stealing its intellectual property," said acting assistant attorney general John Cronan of the justice department’s criminal division.

"This type of conduct, by any corporation — anywhere — is a crime, and won’t be tolerated."

AMSC had developed software that regulates the flow of electricity from wind turbines to electrical grids, the Western District Court of Wisconsin had heard.

At the time of the theft in March 2011, Sinovel had a contract with AMSC for more than $800 million in products and services to be used for turbines that the Chinese company manufactured, sold and serviced.

But the company — as well as Su Liying, the deputy director of Sinovel’s research and development department, Zhao Haichun, a technology manager for Sinovel, and Karabasevic — conspired to steal the copyrighted information and trade secrets to produce wind turbines and refit existing machines with AMSC technology without paying the American company fees.

Su and Zhao convinced Karabasevic, who was head of AMSC Windtec’s automation engineering department in Klagenfurt, Austria, to leave AMSC and persuaded him to secretly download source code from an AMSC computer in Wisconsin to a computer in Klagenfurt, in March 2011.

Sinovel then commissioned several wind turbines in Massachusetts, US, using software compiled from the stolen source code.

Several regional courts in Sinovel’s native China had previously rejected AMSC’s copyright infringement claim while the case was pursued in the US.

US attorney for the Western District of Wisconsin, Scott Blader added: "The theft of ideas and ingenuity is not a business dispute — it’s a crime, and will be prosecuted as such. Sinovel’s illegal actions caused devastating harm to AMSC."

In 2013, the year it was charged in the US, Sinovel posted a loss of CNY 3.45 billion (then $551 million) for the year — compared with a CNY 583 million loss in 2012. Sinovel returned to profit the following year, posting a net gain of CNY 80.73 million for 2014.

The company’s conviction comes in the same week that the US imposed a 30% tariff on imported solar panels — a move criticised by both the US solar industry and the Chinese foreign ministry.

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