Chinese Wind Company Faces Allegations of Trade Secret Theft

As officials from the United States and China gather for annual economic talks, the theft of U.S. intellectual property is sure to be a hot button topic. Chinese IP theft cost U.S. companies nearly $50 billion in 2009, according to the U.S. International Trade Commission.

In both rhetoric and legal action, the U.S. government appears to be adopting a stronger stance against IP theft by China. Late last month, the Department of Justice charged Chinese wind turbine maker Sinovel Wind Group Co. and two of its employees with stealing trade secrets from a U.S. company, American Superconductor Corp. (AMSC).

According to the Department of Justice, AMSC developed and sold software and equipment to regulate the flow of electricity from wind turbines to electrical grids, and it considered the software and equipment to be trade secrets and proprietary information. Meanwhile, Sinovel purchased software and equipment from AMSC for the wind turbines that Sinovel manufactured, sold and serviced.

In 2011, Sinovel recruited AMSC employee, Dejan Karabasevic, to leave the company and join Sinovel. The Chinese company also allegedly offered him $1.7 million to secretly copy intellectual property from the AMSC computer system. Using the stolen computer code, Sinovel sold four pirated turbines to customers in the U.S., “cheating AMSC out of more than $800 million,” according to the indictment.

If convicted, Sinovel faces a maximum penalty on each count of five years of probation and a fine of twice the gross gain or loss, which would $1.6 billion.

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