US Jury Sides with AMSC, Convicts Chinese Company for Intellectual Property Theft

Jury-imageA federal jury in Madison WI deliberated a mere three hours before convicting a manufacturer and exporter of wind turbines based in the People’s Republic of China of stealing trade secrets from AMSC, a US-based company formerly known as American Superconductor Inc. The trial lasted 11 days, during which prosecutors presented evidence against Sinovel Wind Group Co. Ltd. on charges of conspiracy to commit trade secret theft, theft of trade secrets and wire fraud. Sentencing on all three charges is set for June.

“We are truly pleased with the trial’s outcome,” said Daniel McGahn, AMSC’s president and CEO. “The prosecutors presented overwhelming facts and evidence proving Sinovel’s guilt during the trial. The jury quickly rendered guilty verdicts on all counts. With this verdict, Sinovel and its agents have been found guilty of committing intellectual property crimes in Austria and now in America. We believe that Chinese courts should similarly hold Sinovel accountable for its actions in the civil cases with AMSC.”

According to evidence presented at trial, AMSC lost more than $1 billion in shareholder equity and almost 700 employees—over half its global workforce—following the theft in 2011. At the time of the theft, Sinovel had contracted with AMSC for more than $800 million in products and services to be used for wind turbines that Sinovel manufactured, sold and serviced.

“Sinovel nearly destroyed an American company by stealing its intellectual property,” said John Cronan, acting assistant attorney general at the US Justice Department. “As today’s jury verdict demonstrates, this type of conduct, by any corporation—anywhere—is a crime, and won’t be tolerated. The department is dedicated to helping foster innovation and growth in our economy by deterring and punishing intellectual property theft from American companies.”

Sinovel faces a maximum penalty on each count of five years of probation and a fine of twice the gross gain or loss, meaning the court could levy a fine of up to twice the alleged loss of more than $800 million for each of the three counts.

The Justice Department charged Sinovel in 2013, along with Su Liying, the deputy director of Sinovel’s Research and Development Department; Zhao Haichun, a technology manager for Sinovel; and Dejan Karabasevic, a former employee of AMSC Windtec Gmbh, a wholly-owned subsidiary of AMSC that operates in Austria. Su and Zhao are Chinese nationals living in China, and Karabasevic is a Serbian national who lived in Austria but now lives in Serbia.

Evidence presented at trial shows that Sinovel conspired with the other defendants to obtain AMSC’s copyrighted information and trade secrets in order to produce wind turbines and to retrofit existing wind turbines with AMSC technology without paying AMSC the more than $800 million it was owed and promised.

Through Su and Zhao, Sinovel convinced Karabasevic, who was head of AMSC Windtec’s automation engineering department in Klagenfurt, Austria, to leave AMSC Windtec for Sinovel and to steal intellectual property from the AMSC computer system by secretly downloading source code that regulates the flow of electricity from wind turbines to electrical grids.

Court documents show that Karabasevic transferred the code from an AMSC computer in Wisconsin to a computer in Klagenfurt in March 2011. The theft was discovered after Sinovel commissioned several wind turbines in Massachusetts and copied into the turbine’s computers software compiled from the source code stolen from AMSC. The US-based builders of these Massachusetts turbines noticed the code and helped bring Sinovel to justice.

“Today’s verdict sends a strong and clear message that the theft of ideas and ingenuity is not a business dispute; it’s a crime and will be prosecuted as such,” said Scott Blader, US attorney for the Western District of Wisconsin. “I commend the efforts of the investigation and prosecution team, and reaffirm the commitment of this office to protect American commerce and prosecute those who would seek to steal intellectual property.” ■