Sinovel Wind Group Hit With Maximum Fine For Theft Of Trade Secrets

On Friday, a manufacturer and exporter of wind turbines based in the People’s Republic of China was sentenced for stealing trade secrets from AMSC, a U.S.-based company formerly known as American Superconductor Inc. The Court found that AMSC’s losses from the theft exceeded $550 million, and imposed the maximum statutory fine in the amount of $1.5 million on Sinovel Wind Group LLC.

The Court found that the parties settled the restitution amount, and imposed a year of probation until Sinovel pays the full restitution amount. Sinovel has paid $32.5 million to AMSC this week and will pay $25 million within its year of probation. Sinovel will also pay $850,000 to additional victims within its year of probation. Sinovel was convicted of conspiracy to commit trade secret theft, theft of trade secrets, and wire fraud on Jan. 24 following an 11-day jury trial in Madison, Wisconsin.

As proven at trial, Sinovel stole proprietary wind turbine technology from AMSC in order to produce its own turbines powered by the stolen intellectual property. AMSC developed the technology – software that regulates the flow of electricity from wind turbines to electrical grids – in Wisconsin and elsewhere. At the time of the theft in March 2011, Sinovel had contracted with AMSC for more than $800 million in products and services to be used for the wind turbines that Sinovel manufactured, sold, and serviced.

Sinovel was charged on June 27, 2013, along with Su Liying, the deputy director of Sinovel’s Research and Development Department; Zhao Haichun, a technology manager for Sinovel; and Dejan Karabasevic, a former employee of AMSC Windtec Gmbh, a wholly-owned subsidiary of AMSC. The evidence presented at trial showed that Sinovel conspired with the other defendants to obtain AMSC’s copyrighted information and trade secrets in order to produce wind turbines and to retrofit existing wind turbines with AMSC technology without paying AMSC the more than $800 million it was owed and promised. Through Su and Zhao, Sinovel convinced Karabasevic, who was head of AMSC Windtec’s automation engineering department in Klagenfurt, Austria, to leave AMSC Windtec, to join Sinovel, and to steal intellectual property from the AMSC computer system by secretly downloading source code on March 7, 2011, from an AMSC computer in Wisconsin to a computer in Klagenfurt. Sinovel then commissioned several wind turbines in Massachusetts and copied into the turbines software compiled from the source code stolen from AMSC. The U.S.-based builders of these Massachusetts turbines helped bring Sinovel to justice. Su and Zhao are Chinese nationals living in China, and Karabasevic is a Serbian national who lived in Austria, but now lives in Serbia.

According to evidence presented at trial, following the theft, AMSC suffered severe financial hardship. It lost more than $1 billion in shareholder equity and almost 700 jobs, over half its global workforce.