Bookmark and Share

Chinese Kangaroo Courts to be Tested in American Superconductor Wind IP Theft by Sinovel

0 Comment

Chinese Legal System is mostly a joke with the communist party running the world’s most populated country with an iron hand. The courts are mostly for show as dissidence against the Party is not tolerated and human rights are non-existent.Also most of the major companies are run under crony capital rules rather than free markets. Most of the rulings are done which favor the ruling party mandarins with little respect to whatever Communist Party laws are. IP Theft has been a big problem for overseas companies operating in China with Google existing the country sometime ago after it was hacked. With the world’s largest Internet companies having to run because of IP theft, smaller companies have no chance.Sinovel is the biggest wind company in the world right now because of Chinese government support and policies. It commands huge influence in the corridors of power as it is unlikely to have become this big without major government and bank support.

American Superconductor’s Tragic Story

American Superconductor (AMSC) which is one of the top rated wind stock in the US crashed by more than 40% as its largest customer AMSC is mainly a seller wind turbine core electrical components and full wind turbine electrical control systems (ECS).It has also made pilot sales of high capacity super conducting equipment to some customer like TresAmigas.Sinovel refused to take contracted shipments of wind turbine core electrical components and spare parts.The reason given was high inventory levels but the company failed to explain why Sinovel which is a multi billion dollar company has refused  to pay AMSC for certain contracted shipments made in fiscal year 2010.Note $56 million in payments related to Fiscal 2010 quarters have been not paid to AMSC ( which would have been recognized as revenue).None of this was disclosed till now leading to a class action shareholder lawsuit against the company.It is quite perplexing why your largest customer will not pay you for past shipments and then cancel shipments as well.Is it because of some acrimony or is just Sinovel using its massive size to squash a small supplier.

American Superconductor has filed  3 cases against the biggest wind energy company in the world Sinovel for stealing its software and not honouring its contracts. One of its employees was arrested for corporate espionage while passing secrets to Sinovel. Note Sinovel was the biggest customer for AMSC’s wind power systems and software before abrutply terminating its contract. This led to a meltdown of AMSC stock and business. Now AMSC is trying to get back $1.2 billion from Sinovel. Given the quality of the Chinese legal system this looks unlikely.

US wind energy company AMSC said Monday it had filed three civil lawsuits in Chinese courts against rival Sinovel Wind Group Co., which it accused of stealing industrial secrets.

“AMSC is seeking to recover more than $1.2 billion for contracted shipments and damages from Sinovel in these cases, which stem from Sinovel’s contractual breaches in March 2011 and AMSC’s discovery of intellectual property theft by Sinovel employees in June 2011,” the company said in a statement.

AMSC said it believed the former employee illegally used source code to develop for Sinovel a software modification to circumvent the encryption and remove technical protection measures for the technology.

The US company said that because Chinese equipment is being used in wind turbines containing its wind turbine control software, “we believe that our copyrighted software is being infringed.”

PG

Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to greensneha@yahoo.in

No Responses so far | Have Your Say!