China’s biggest wind turbine maker was convicted Wednesday by a federal jury of nearly destroying an American company by stealing its trade secrets.
Sinovel Wind Group Co. Ltd. was found guilty after an 11-day trial in Madison, Wisconsin of conspiracy to commit trade secret theft, theft of trade secrets, and wire fraud.
Sentencing is set for June 4. In addition to criminal fines, Sinovel could face restution claims from Massachusetts-based AMSC.
At the trial, prosecutors said AMSC — formerly known as American Superconductor Inc. — lost more than $1 billion in shareholder equity and shrunk by almost 700 employees, about half its global workforce, because of the theft.
Sinovel signed an $800 million contract with Nasdaq-listed AMSC in 2011 to buy products and services for wind turbines that Sinovel would make and sell.
Two executives at Sinovel then convinced the head of AMSC’s automation engineering department in Klagenfurt, Austria, to leave the company and join Sinovel, and to bring with him stolen AMSC source codes.
The stolen technology included AMSC’s proprietary software that regulates the flow of electricity from wind turbines to electrical grids.
After the theft, Sinovel cancelled the AMSC contract and didn’t make any payments. By then it owed AMSC $100 million for equipment already delivered.
“Sinovel then commissioned several wind turbines in Massachusetts and copied into the turbines software compiled from the source code stolen from AMSC,” the DOJ said.
Two Chinese executives from Sinovel and the former AMSC engineer in Austria, who’s a Serbian citizen, have also been charged.
“Sinovel nearly destroyed an American company by stealing its intellectual property,” the DOJ’s John Cronan said.
Several regional courts in China had rejected AMSC’s $1.2 billion infringement claims against Sinovel, according to Windpower Monthly.
Sinovel stock on the Shanghai exchange has dropped 46 percent since the DOJ charged the company in 2013, reducing the company’s market cap to about $1.4 billion.
Richard L. Cassin is the publisher and editor of the FCPA Blog.