China-US relations

Chinese wind turbine maker Sinovel ‘fully prepared’ as software theft trial opens in US

Case highlights escalating US-China dispute over intellectual property after Trump administration takes tougher trade stance

PUBLISHED : Tuesday, 09 January, 2018, 5:42pm
UPDATED : Tuesday, 09 January, 2018, 11:21pm

Sinovel Wind Group, one of China’s biggest wind-turbine manufacturers, said that it is fully prepared for a courtroom battle with US prosecutors, over an alleged theft of software from American Superconductor, highlighting the escalating dispute between the two countries over intellectual property rights.

“The company will use the weapon of law to firmly defend its legal rights,” Sinovel said on Tuesday, after the case began in the US District Court of Wisconsin on Monday.

“The company will make timely disclosure about the progress according to rules.”

Still, its stock plunged 4.9 per cent on Tuesday to 1.56 yuan on the Shanghai Stock Exchange, wiping out 482 million yuan (US$74 million) in market value.

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The US Department of Justice in 2013 filed criminal charges against Sinovel and three individuals for theft of trade secrets, criminal copyright infringement, wire fraud and conspiracy.

Prosecutors accused Sinovel of stealing software that controls wind turbines from AMSC, formerly known as American Superconductor, and then sold to customers in the US turbines equipped with the stolen software code. Sinovel was once the company’s largest customer.

The charges allege that Sinovel had bribed Dejan Karabasevic, who was employed with AMSC’s Austrian unit, to leave and join Sinovel and secretly copy the software in exchange for US$1.7 million.

It alleged the theft had cost AMSC more than US$800 million in losses.

Sinovel could face fines of up to US$4.8 billion if it loses the case.

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“This charged IP theft caused significant harm to a domestic company that develops cutting edge technology and employs Americans throughout the country,” the indictment said.

“Stamping out intellectual property theft is a top priority for this administration, and we will continue to work with our IP Task Force partners to ensure that American ingenuity is protected.”

Karabasevic pleaded guilty in late 2011 in an Austrian court to stealing the trade secrets and was sentenced to one year in jail and two years probation.

AMSC has also filed legal action against Sinovel in the Chinese courts, seeking more than US$1 billion in deliveries and damages. Sinovel has previously denied these allegations.

Last August, US President Donald Trump ordered an investigation into China’s alleged theft of IP, the first direct measure by the administration against China’s trade practices.