The AMSC- Sinovel copyright and trade secret dispute involving wind turbine control systems has been big news (see, e.g., previous posts here, here, here and here), but legally speaking, mostly civil.
That changed recently when the U.S. Department of Justice filed an indictment in federal court in Wisconsin alleging that Sinovel, two of its employees, and a former AMSC employee conspired to commit trade secret theft and criminal copyright infringement.
The technology involved is AMSC’s source code, software, equipment designs and technical drawings that relate to regulating the flow of electricity from wind turbines to the electricity grid. More particularly, the electrical control system includes the Power Module 3000 (PM3000) and the Programmable Logic Controller (PLC), both of which use AMSC’s proprietaryLow Voltage Ride Through (LVRT) sofware to keep wind turbines operational during temporary dips in electricity flow in the electric grid.
According to the indictment, AMSC took reasonable measures to maintain the confidentiality of its trade secrets and proprietary information such as restricting access to authorized personnel only, requiring a unique password to enter the computer system, and requiring employee certification of ethics and confidentiality rules.
The 11-page indictment states that the purpose of the alleged conspiracy was to:
obtain AMSC’s copyrighted information and trade secrets in order to produce LVRT compliant wind turbines, and to retrofit existing wind turbines with LVRT technology, without having to pay AMSC for previously-delievered AMSC software, products, and service or for AMSC’s trade secrets and intellectual property, thereby cheating AMSC out of more than $800,000,000 USD.
The remainder of the indictment lays out the details of the alleged conspiracy, which it says took place from about January 1, 2011 to about December 20, 2012. The former AMSC employee allegedly copied or downloaded the PM3000 and PLC source code, adapted it for unlicensed use within Sinovel’s turbines, and emailed the modified software to one of the Sinovel employees.
In exchange, Sinovel allegedly offered the former AMSC employee an employment contract worth about double what he was being paid at AMSC, but the contract made it appear that he would be working for a different company – a Chinese wind turbine blade manufacturer - for a period of time.
The former AMSC employee allegedly traveled to China to work on adapting the proprietary and trade secret information for use in Sinovel wind turbines, and Sinovel allegedly conducted a successful “voltage sag” test using the updated LVRT technology. One of the Sinovel employees allegedly wrote in a Skype chat with the former AMSC employee that the success was “all because of you.”
Sinovel also allegedly copied the AMSC PM3000 source code into some wind turbines commissioned in Massachusetts in 2011 and 2012.
There are so many things that could be said about this case, which began with several civil infringement and contract suits in China. I will offer just a couple of observations.
First, it seems an excellent case for the feds to pursue criminal charges because it represents the nexus of two of the Obama administration’s policy goals: supporting the U.S. clean tech industry and dealing with IP theft in China.
Second, as eloquently explained by wind patent and technology expert Philip Totaro in this prior post, the case points up the critical importance of LVRT technology for the stability of wind energy in China and the economic viability of Chinese wind turbine manufacturers.