Sinovel loses appeal in US in AMSC trade secrets theft case
Sep 17, 2014 - Chinese turbine maker Sinovel Wind Group Ltd (SHA:601558) lost another appeal in the US in a trade secrets theft case related to the proprietary wind turbine technology of US firm AMSC (NASDAQ:AMSC), but the battle continues.
In June 2013, a federal grand jury in Wisconsin returned an indictment charging Sinovel, certain company executives and also a former AMSC employee with stealing AMSC technology back in 2011 for use in Sinovel’s own machines. The alleged loss to AMSC was estimated at above USD 800 million (EUR 618m), the US Department of Justice (DOJ) said at the time.
Sinovel argued that the US government lacked jurisdiction to proceed, but this May a magistrate judge rejected the challenge. After an appeal by Sinovel, this month the District Judge upheld the magistrate judge’s decision, AMSC said in an update yesterday on the prolonged litigation. Sinovel appealed the latest ruling to the United States Court of Appeals for the Seventh Circuit.
Also yesterday, AMSC announced a small victory in its trade secret infringement case against Sinovel in China, in which it is seeking some USD 450 million in monetary damages. The US company is accusing Sinovel and certain employees in unauthorised use of portions of AMSC's turbine control software source code. In July 2012, Sinovel filed a motion for the removal of the case from the Beijing No. 1 Intermediate People's Court, demanding its transfer to the Beijing Arbitration Commission. The Court in February rejected the motion and Sinovel appealed the decision to the Beijing Higher People's Court this March. AMSC said yesterday that the latter court has upheld the previous ruling.
Once a major player in the wind turbine sector, Sinovel has been struggling on several fronts for many months now. Apart from the legal battles with AMSC, the company is also under investigation by the China Securities Regulatory Commission (CSRC) for suspected securities laws breaches. Its bonds were suspended from trading on the Shanghai bourse after it closed 2013 with a net loss of CNY 3.45 billion (USD 562m/EUR 434m), its second consecutive annual loss.
Sinovel narrowed its net loss to CNY 285.7 million in the first half of 2014 from CNY 457.8 million a year ago.