Sun, Jul 08, 2018 - Page 16 News List

Chinese firm fined for software theft

SNEAKY SOURCING:Sinovel contracted US company AMSC to purchase software for its wind turbines and continued to use it after ending payments, court documents said

AP, MADISON, Wisconsin

A federal judge in Wisconsin on Friday fined Chinese wind turbine manufacturer Sinovel Wind Group Co (華銳風電) for stealing trade secrets from a Massachusetts-based American Superconductor (AMSC), wrapping up an investigation that spanned three countries.

US District Judge James Peterson fined Sinovel US$1.5 million and placed the company on probation for a year.

Prosecutors in 2013 charged the company with conspiracy, theft of trade secrets and wire fraud.

A jury in Madison, Wisconsin, in January convicted Sinovel following an 11-day trial. The US$1.5 million fine is the maximum amount that Peterson could have levied.

“This case is about protecting American ideas and ingenuity,” US Attorney for the Western District of Wisconsin Scott Blader said. “The devastation Sinovel’s illegal actions caused to AMSC and its employees will not be tolerated.”

Sinovel attorney Alex Akerman did not immediately reply to an e-mail seeking comment.

Sinovel contracted AMSC, an energy technology company in Ayer, Massachusetts, to purchase software regulating the flow of electricity from turbines to the electricity grid for more than US$800 million, court documents said.

The Chinese firm wanted to use the software to retrofit existing turbines in China to comply with grid requirements and make new turbines more efficient.

Sinovel stopped paying for the software in March 2011. AMSC field workers in China discovered unauthorized versions of the software on Sinovel turbines three months later.

The source code was stored on a computer in AMSC’s office in Middleton, Wisconsin.

Investigators uncovered e-mail and Skype conversations that show that Austria-based AMSC employee Dejan Karabasevic downloaded the source code from the Middleton office in March 2011, provided it to Sinovel and traveled to China to adapt the software for use in Sinovel turbines.

Sinovel offered Karabasevic a six-year contract worth US$1.7 million days before he downloaded the code, court documents said.

As a result of the theft, AMSC’s revenues fell, its market value dropped from about US$1.6 billion to about US$200 million and the company was forced to eliminate nearly 700 jobs, more than half of its global workforce, prosecutors said in a news release.

Peterson said that AMSC’s losses from the theft exceeded US$550 million.

Sinovel has agreed to pay AMSC US$57.5 million in restitution.

The US and China imposed tens of billions of dollars in tariffs on each other’s goods on Friday.

In announcing the US tariffs, US President Donald Trump said that he was fulfilling a campaign pledge to crack down on what he said are China’s unfair trade practices and its efforts to undermine US technology and intellectual property.

The Sinovel case began more than three years before Trump took office in January last year.

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