POLICE RAID LINKED TO ALLEGATIONS OF SPYING; German company accuses US competitor of industrial espionage

Police in Germany may charge employees of US company, Kenetech Windpower, with industrial espionage following allegations by Germany's Enercon GmbH that two Kenetech employees and an independent German consultant illegally obtained information about the Enercon E40 wind turbine. Last year, Kenetech made allegations of a patent infringement by Enercon and New World Power Corp, now the subject of a probe by the US government's International Trade Commission (ITC) and of a lawsuit filed in federal court by Kenetech in January 1995.

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A criminal investigation in Germany lasting several weeks has led police in Germany to consider charging employees of Kenetech Windpower of the United States with industrial espionage. The investigation followed allegations made by Germany's leading wind company, Enercon GmbH, that two Kenetech employees and an independent German consultant illegally obtained information about the Enercon E40 wind turbine.

The matter is now with the Oldenburg office of the German director of public prosecutions. It is considering whether to bring the three suspects before the industrial criminal court in Oldenburg. Currently it says there are "reasonable" grounds to believe that a crime of industrial espionage has been committed based in part on evidence obtained during a police raid of the Oldenburg offices of the German consultant.

Specifically the allegations are that two Kenetech employees and a Kenetech consultant halted an Enercon 500 kW E40 on March 21, 1994, and conducted a thorough, hands-on inspection that included taking photographs and accessing information from the machine's control system. The inspection was allegedly carried out by Kenetech engineer Ruth Heffernan and Kenetech's marketing director in Holland, Bob Jans, together with Ubbo de Witt, an engineer in Oldenburg.

Own goal

The reported inspection became known to Enercon when Kenetech presented evidence at a US government probe into allegations the California company made last year of patent infringement by Enercon and Enercon's American business partner, wind power developer New World Power Corp (Windpower Monthly, March 1995). The US government's International Trade Commission (ITC) began evidentiary hearings in January and February this year. The alleged patent infringement is also the subject of a lawsuit filed in federal court by Kenetech in January 1995.

During the ITC hearings, says Enercon, Kenetech produced a memorandum, stamped exhibit X174C and dated March 28, 1994. In it Ruth Heffernan details her inspection of the E40 and names those who helped her. Enercon demanded a copy of the exhibit, a request granted by the ITC, says Stefan Knotterus-Meyer of Enercon's legal department.

"The memorandum says that the generator was locked in a stationary position to allow the Kenetech employees access to the pitch control electronics in the rotor hub. Locking the rotor requires detailed knowledge of the turbine technology," says Knotterus-Meyer. The control unit was opened and photographed and information obtained from it with the help of secret codes, he adds, pointing out that the memorandum also contained details of Enercon's ring generator, the first on the market in the wind business.

Knotterus-Meyer draws particular attention to a sentence in the memorandum which, he says, reveals the intention of the visit. Ruth Heffernan writes: "Ubbo has contacts within Enercon. He can answer, or find answers to any further questions we may have regarding the E40." She also wrote: "Ubo joined me up tower and we spent about 60 minutes discussing the machine and taking pictures."

According to the memorandum, the wind turbine in question, one of the first E40 units, is sited at Hooksei and owned by Peter Ahmels. He was absent while the inspection took place on March 21, 1995, but left the keys for the visitors, states Heffernan. Enercon adds that at that time the E40 was a novel technology. The inspected turbine was the third of that model installed, states the memorandum.

In its application to the ITC and in its court case, Kenetech is seeking a permanent injunction on the import of the German variable speed turbine and a ban on its sale in the US. The E40 is slated for a 40 MW wind station to be built by New World Power at Big Springs in Texas. Until the patent case is settled by both the ITC and the courts, Enercon machines are banned from the US. A preliminary ruling from the commission is expected by May 30 while the court case has yet to start.

An ITC investigation is relatively rare. Only ten patent infringement cases were investigated under the 1930 Tariff Act last year by the ITC, and only 16 during the year before. Once the ITC's preliminary ruling or "initial determination" is issued by the administrative law judge, the six members of the commission -- who are appointed by the president and confirmed by the US Senate -- are expected to issue a final decision by August 30. The commissioners may agree with the judge's preliminary ruling, or issue a modified ruling. Once that happens, any remedial steps recommended become final 60 days later -- unless vetoed for policy reasons by President Bill Clinton.

According to Enercon, the ITC became involved after Kenetech alleged that Enercon turbines had been imported into the US despite the pending court case. Enercon flatly denies any such imports. The ITC, based in Washington DC, is a federal agency that oversees various international trade matters including unfair trade practices, such as patent or copyright infringement, dumping of foreign goods in the US market, studying trade and tariff issues and acting as the government's think tank on international trade issues.

Enercon chief Aloys Wobben says he is disbelieving and exasperated and finds it hard to believe the US wants to keep out a company which has set up a subsidiary in America with the intention of using local labour -- even though the US wind market has ground to a halt. "Clearly it is not ready for the E40 yet," he comments, with more than a touch of irony. Enercon is now concentrating on other markets. Kenetech declines to comment.

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