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Intellectual property rights in China

AMSC vs. Sinovel

In a trade secret theft and commercial arbitration dispute between US electronic component supplier AMSC and its former customer, Chinese wind turbine manufacturer Sinovel, the US firm says it has made an important step forwards. At the end of last month, the Supreme People's Court invited the two parties to a hearing.

 -  China's Supreme People's Court
China's Supreme People's Court
Wikimedia Commons/CPC

AMSC's says that every decision that keeps the case in the court system is an important signal for the future of intellectual property in China. The outcome of the hearing will not, however, be known for a few months. But the news is nonetheless interesting because the lower courts in Beijing already ruled out Sinovel's application to have the entire matter settled in arbitration financial negotiations, while the lower courts in Hainan ruled that the case does not belong in the court system. China’s Supreme People’s Court will make the jurisdictional decision. The cases in question are two copyright infringement cases with damages totally 6.2 million U.S. dollars.

Sinovel was a customer of AMSC up to 2011. At the time, the US firm it gave its Chinese client, which was the leading turbine manufacturer in the country, electronics for a 1.5 megawatt turbine. Then, the Chinese refused shipment canceled the orders, saying that it had too much inventory. AMSC later discovered that Sinovel had bribed an AMSC employee to steal its intellectual property. The IP that was stolen ensures that power is exported to the grid at the right quality, on its own. AMSC has filed four suits against Sinovel: a trade secrets case, two copyright infringement cases and commercial arbitration. In the spring of 2012, the two copyright infringement cases were brought to the Supreme Court after a series of appeals of lower court decisions. AMSC now says the former AMSC employee confessed to colluding with Sinovel to steal AMSC’s intellectual property. The employee has been convicted and jailed in Austria.

AMSC puts the damages at 1.2 billion U.S. dollars. The firm says it nonetheless wants to remain on the Chinese market and expand business there. Over the past few months, it has announced supplies to network service provider Xiamen Red Phase Instruments. AMSC also says its Gridtec Solutions remain well positioned on the market. AMSC's partners in the wind turbine sector in China reportedly planned to roll out the latest powerful, grid-friendly wind turbines soon. (Tilman Weber / Craig Morris)

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