US wind power AMSC presses theft charge against China rival

"AMSC is seeking to recover more than $1.2 billion for contracted shipments and damages from Sinovel in these cases, which stem from Sinovel’s contractual breaches in March 2011 and AMSC’s discovery of intellectual property theft by Sinovel employees in June 2011," the company said in a statement.

The two firms have been in legal wrangling since last year when the US group accused its Chinese partner of intellectual property theft. AMSC has accused Sinovel of breaching its contract in March 2011 by refusing to accept delivery of equipment or to pay for items previously delivered.

After a former AMSC subsidiary employee was arrested in Austria on charges of economic espionage and fraudulent manipulation of data, the US firm said the person "improperly obtained and transferred to Sinovel portions of our wind turbine control software source code."

AMSC said it believed the former employee illegally used source code to develop for Sinovel a software modification to circumvent the encryption and remove technical protection measures for the technology.

The US company said that because Chinese equipment is being used in wind turbines containing its wind turbine control software, "we believe that our copyrighted software is being infringed." AMSC president and chief executive Daniel McGahn said one case dismissed in a Chinese court was "not altogether unexpected," and that the company was appealing the ruling.

"We continue to have confidence in all of our cases and expect that our legal actions will yield a positive outcome," he said. "We are starting to see motion from the Chinese courts, and proceedings are getting underway as expected," he added.

AMSC reported a sharp drop in revenues for its second quarter of fiscal 2011 "due primarily to a lack of revenue from AMSC’s former customer, Sinovel Wind Group Co."

Beijing last year stopped offering subsidies to the country’s wind power sector six months after the United States lodged a complaint with the World Trade Organization claiming this was an unfair trade practice.

The United States had accused China of providing several hundred million dollars in illegal grants since 2008 to wind turbine makers for using Chinese components. Beijing had insisted its policies complied with WTO rules.