US court imposes maximum fine for Chinese IP theft
A US court has imposed a maximum statutory fine of $1.5 million on a Chinese wind turbine maker, after it was convicted of stealing trade secrets from an American company earlier this year.
The US Department of Justice announced the fine on Friday, July 6.
China-based Sinovel Wind Group, a manufacturer and exporter of wind turbines, was charged with stealing trade secrets from AMSC, an American wind turbine technology company, in 2013.
The deputy director of Sinovel’s research and development team, a technology manager for Sinovel and a former employee of AMSC Windtech (a subsidiary of AMSC) were also charged.
After an 11-day trial at the US District Court for the Western District of Wisconsin in January this year, the company and the three individuals were convicted of conspiracy to commit trade secrets theft, the theft of trade secrets, and wire-fraud.
The US Department of Justice said: “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.”
At trial, the evidence showed that the defendants had conspired to obtain AMSC’s copyrighted information and trade secrets. They “hatched a scheme to brazenly steal AMSC’s proprietary wind turbine technology”, said acting assistant attorney general John Cronan of the Justice Department’s criminal division.
The software developed by AMSC regulates the flow of electricity from wind turbines to electrical grids.
Sinovel orchestrated the theft by persuading a former employee of AMSC Windtech to “secretly” download AMSC’s source code. Sinovel then copied software, which was compiled from the stolen source code, and commissioned several wind turbines in Massachusetts.
AMSC’s losses following the theft included more than $1 billion in shareholder equity and almost 700 jobs, equating to more than half of its global workforce.
The court said the parties settled the restitution amount which was shared by AMSC last week. The court imposed a year of probation until Sinovel pays the amount in full and added that Sinovel will also pay $850,000 to “additional victims” of the theft.
Sinovel paid $32.5 million to AMSC as part of a deal to pay a total of $57.5 million in damages over the next ten months, which AMSC said resolves “all existing commercial disputes between the parties”.
In addition, AMSC said it has granted Sinovel a non-exclusive licence for certain IP.
“IP theft poses a serious threat to American companies,” Cronan said. “The Department of Justice is committed to aggressively investigating and prosecuting individuals and corporations who undermine American competitiveness by stealing what they did not themselves create.”
The US and China are currently imposing tariffs on each other. A 25% tariff on $50 billion worth of goods from China was announced in June, “in light of China’s theft of IP and technology and its other unfair trade practices”.
Last week, US President Donald Trump said that tariffs could be applied to more than $500 billion worth of Chinese goods.
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