China’s Sinovel Convicted in U.S. of Trade-Secret Theft

Nate Raymond, Reuters, January 24, 2018

Chinese wind turbine maker Sinovel Wind Group Co was convicted on Wednesday of U.S. charges that it stole trade secrets from AMSC, causing the Massachusetts-based company to lose more than $800 million.

A federal jury in Madison, Wisconsin, found Sinovel, once AMSC’s largest customer, guilty on all charges it faced, including conspiracy, trade-secret theft and wire fraud, the U.S. Justice Department said.

The conviction exposes Beijing-based Sinovel to hundreds of millions of dollars in potential fines, according to the Justice Department. It is scheduled to be sentenced on June 4.

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The charges were announced amid heightened concern about Chinese theft of U.S. trade secrets and a legal battle in the Chinese courts pitting Devens, Massachusetts-based AMSC against Sinovel, one of the world’s largest turbine makers.

The conviction also comes as the United States studies possible intellectual property action against China. U.S. Commerce Secretary Wilbur Ross said on Wednesday China’s tech ambitions represent a direct threat that is being implemented by disrespect for “intellectual property rights, by commercial espionage.”

The case centered on technology that AMSC, formerly known as American Superconductor Inc, developed to regulate the flow of electricity from wind turbines to electrical grids that Sinovel purchased for its products.

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But prosecutors said that Sinovel conspired beginning in 2011 to obtain AMSC’s copyrighted information and trade secrets so that it could make wind turbines and retrofit existing ones in order to avoid having to pay AMSC.

An indictment said Sinovel recruited Dejan Karabasevic, an employee of an AMSC subsidiary, to join the Chinese company and to secretly copy information from AMSC’s computer system, including the source code for the PM3000, part of its wind turbine control system.

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“Sinovel nearly destroyed an American company by stealing its intellectual property,” Acting Assistant Attorney General John Cronan said in a statement.

Charges are pending against Karabasevic, who lives in Serbia, and two individuals who live in China and worked for Sinovel at the time, Su Liying, the deputy director of its research and development department, and Zhao Haichun, a technology manager, according to court records.

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