Archive for October, 2011

In Changing Chinese Wind Market AMSC-Sinovel Dispute Will Test IP Enforcement

October 7th, 2011


In what is emerging as a major green IP story, not just of technology but of international intrigue, American Superconductor (AMSC) recently filed two lawsuits against its erstwhile customer, Chinese wind energy system maker Sinovel.

Both cases involve allegations that a former AMSC employee who was arrested in Austria in July was indirectly paid by Sinovel for portions of AMSC’s wind turbine control software source code.  The control software was developed by AMSC for use with Sinovel’s 1.5MW wind turbines.

The employee later pled guilty to charges of passing the code to Sinovel.

AMSC accuses Sinovel of unauthorized use of the turbine control software source code and the binary code, or upper layer, of its software for the PM3000 power converters in the 1.5 MW turbines.

AMSC also believes the former employee illegally used the source code to develop a software modification so Sinovel could circumvent the encryption and remove technical protection measures on certain power converters used with the turbines.

Wind technology and wind patent expert Philip Totaro, principal at Totaro & Associates, said the disputed technology relates to “the low-voltage ride through (LVRT) capability, which provides stability of the wind turbine/farm in case of voltage fluctuation or drop-out on the grid.”

Totaro had this to add about the significance of the technology at issue to Sinovel in the context of an evolving Chinese wind industry:

The Chinese grid requirements related to LVRT capability have evolved due to the large-scale deployment of wind turbines on their grid, and stability has become an increasing issue.  Anyone who cannot meet the new grid requirements will not receive permits/approval to deploy their turbines.  With the size of a company like Sinovel (named #2 in market share globally based on 2010 sales volume) and the ongoing capital and operating revenue required to sustain their business, they are obligated to maintain their sales volumes or be forced into massive layoffs and downsizing.  This challenge was made even more difficult since the Chinese market demand has decreased in the past 10 months and [Sinovel] had a volume supply contract with AMSC for converters with the LVRT capability.

According to a recent AMSC SEC filing, the allegations are the basis of two IP actions AMSC is seeking to file against Sinovel in China.  AMSC submitted a first civil action application to the Beijing No. 1 Intermediate People’s Court for copyright infringement and a second civil action application to the Beijing Higher People’s Court for trade secret infringement.

However, in a reflection of the uncertainty surrounding enforcement of intellectual property rights in China, the SEC filing indicates that in each case the court must accept AMSC’s application for the case to proceed, “and there can be no assurance that the court will do so.”

In a related case, AMSC filed a copyright infringement complaint in the Hainan Province No. 1 Intermediate People’s Court against Dalian Guotong Electric (Guotong) and wind farm operator Huaneng Hainan Power. 

According to the SEC filing, this complaint alleges that the defendants replaced AMSC”s PM1000 converters in certain Sinovel wind turbines with converters produced by Guotong and are using the replacement converters in conjunction with AMSC’s control software.

In light of the volume of clean tech business, technology transfer, and IP licensing done in China, these will be important cases to watch as barometers of IP enforcement there. 

U.S. Treasury Secretary Timothy Geithner made a recent statement about IP theft in China, expressing the importance of the issue and the U.S.’s frustration with this trend.

Plastic Bag Makers Do a Reversal in Reverse Greenwash Suit

October 4th, 2011


In previous posts here and here I wrote about a lawsuit in which plastic bag manufacturers Hilex Poly Company (Hilex), Superbag, and API Enterprises took issue with certain statements made by ChicoBag, the popular reusable bag maker.

The accusations could be called reverse greenwashing, as they involved allegedly false or misleading statements not about environmental benefits, but about the negative environmental impact of certain products. 

Specifically, the plastic bag makers alleged that ChicoBag made false or deceptive claims about the consumption, recycling, and negative environmental impact of plastic bags and has falsely indicated that the claims are substantiated.

ChicoBag countered that the statements at issue were made by third party sources such as the Environmental Protection Agency, National Geographic, and the Los Angeles Times, and simply repeated by ChicoBag, with attribution, on its web site.

In what ChicoBag and some in the eco-blogosphere are calling victory, Superbag and API agreed to dismiss the case (Superbag-API-Dismissal), and the remaining plaintiff, Hilex, settled with ChicoBag (HilexPoly-Dismissal).

According to ChicoBag’s press release, Hilex has agreed to properly cite recycling statistics and undertake certain measures to reduce windblown litter, and both parties will be more careful and even-handed in their marketing statements. 

Some of the settlement terms are:

Both parties will provide citations and dates for all facts and statistics on any web page or advertising;

Hilex will include a statement on its products “Tie Bag in Knot Before Disposal” and statements on its web site about ways to prevent windblown litter;

ChicoBag will keep updates about some of the statements at issue in the suit up on its web site;

ChicoBag will not cite any archived EPA web sites; and

ChicoBag will inform visitors to its Learn the Facts web page that plastic retail carryout bags are only a subset of plastic bags in ocean debris reports.

ChicoBag’s President Andy Keller said the settlement marks two wins for the environment:  “First, Hilex Poly can no longer inflate plastic bag recycling numbers by including non-bag wrap and plastic film.  And they have also agreed to acknowledge that plastic bags can become windblown litter despite proper disposal and to better educate the public.”