American Superconductor Corporation (NASDAQ: AMSC) announced that it is taking a series of legal actions against China’s largest wind turbine producer Sinovel Wind Group Co. Ltd.
AMSC is filing criminal and civil complaints in China against Sinovel and other parties alleging the illegal use of AMSC’s intellectual property. The case highlights an ongoing concern of US firms who fear Chinese companies will co-opt their technological developments without contracts and compensation.
AMSC says based on an investigation conducted by both AMSC and law enforcement, it believes that Sinovel illegally obtained and used AMSC’s intellectual property to upgrade its 1.5 megawatt wind turbines in the field to meet proposed Chinese grid codes and to potentially allow for the use of core electrical components from other manufacturers.
AMSC licenses wind turbine designs and sells the components used to make them. Sinovel was AMSC’s biggest customer until April 2011, when the company refused shipments, sending AMSC’s shares plunging 45%.
AMSC says it is seeking to compel Sinovel and the other parties to cease and desist from infringing its intellectual property and is also seeking monetary damages to compensate AMSC for its economic losses resulting from the infringement.
AMSC also has filed a claim for arbitration to compel Sinovel to pay AMSC for past product shipments and to accept all contracted but not yet delivered core electrical components and spare parts under existing contracts.
The arbitration claim was filed with the Beijing Arbitration Commission in accordance with the terms of AMSC’s supply contracts with Sinovel.
AMSC says it is now operating its business based on the assumption that Sinovel will not be a customer.
"We are taking legal action against Sinovel based on its contractual breaches and strong evidence of its criminal misconduct," says AMSC President and CEO Daniel McGahn. "These actions send a clear message that AMSC is enforcing its intellectual property and commercial contracts."