Trial of U.S. tech stolen in China slowly proceeding

AMSC2 300x183Commercial arbitration between AMSC (American Superconductor Corporation) and Sinovel Wind Group Co., Ltd will begin on Monday, January 9. This hearing with the Beijing Arbitration Commission is the first in a series of cases, which includes the biggest intellectual property claim ever made in Chinese courts.

AMSC has filed civil lawsuits and an arbitration case in the Chinese courts valued at more than $1.2 billion. These cases stem from Sinovel’s contractual breaches in March 2011 and AMSC’s discovery of intellectual property theft in June 2011.

Background

Dejan Karabasevic, a former AMSC employee, has already been imprisoned in Austria for intellectual property theft. Karabasevic has admitted to colluding with Sinovel to steal important intellectual property related to AMSC’s wind turbine control systems.

The Cases

The following four cases (3 civil suits and 1 arbitration case) are now in motion in Beijing and Hainan:

1.      In a case with the Beijing Arbitration Commission, AMSC is seeking US$70 million for past product shipments and is seeking enforcement of its contracts with Sinovel, which are valued at approximately $700 million. The Beijing Arbitration Commission has set its first hearing for January 9, 2012.

2.      AMSC is seeking approximately $450 million in a trade secret case that was accepted by the Beijing Higher Court on November 9, 2012.  This is the largest intellectual property case ever undertaken in China.

3.      AMSC has filed a copyright infringement case against Sinovel with the Beijing Number 1 Intermediate Court.  AMSC is seeking approximately US$6 million in compensation and has asked for a cease and desist order on infringing intellectual property.

4.      AMSC has filed a copyright case against Sinovel and Guotong Electric with the Hainan Number 1 Intermediate Court.  In this case, AMSC has asked for a cease and desist order on infringing intellectual property.

The Evidence

AMSC’s cases are supported by a significant amount of evidence that has been obtained through an international investigation. The evidence includes:

  • The confession of AMSC’s former employee in Austria
  • Hundreds of emails and messages between senior-level Sinovel staff members and a former AMSC employee
  • Emails containing the actual IP transfer
  • Contracts that were signed by the former AMSC employee with Sinovel and parties related to Sinovel – promising to pay him in excess of $1.5 million
  • Evidence from wind farms in China demonstrating that Sinovel has been utilizing this stolen IP to upgrade its wind turbines in the field

Criminal charges

In addition to the contractual and civil cases described above, AMSC also has provided Beijing law enforcement with substantial evidence proving the criminal conduct of Sinovel employees and has requested that police take criminal action.

International impact

Sinovel’s international business has been significantly affected by this ongoing dispute.  In late November, it was reported that Mainstream Renewable Power of Ireland had halted its 1 gigawatt (roughly US$1 billion) wind turbine framework agreement with Sinovel as a direct result of the intellectual property theft.

“Based on the preponderance of evidence supporting our claims, ours will serve as a litmus test for China’s handling of intellectual property cases,” says AMSC CEO Daniel McGahn. “We believe that the actions we are taking in our arbitration and civil proceedings will lead to a positive outcome for AMSC. We have been a key contributor to China’s renewable energy market for many years, and while we are successfully diversifying our business, we are committed to growing our presence in the Chinese market and providing strong support for our Chinese customers.”

AMSC
www.amsc.com

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