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Chinese Firm Accused Of Stealing Secrets From Devens Company

By Kyle Alspach, Boston Business Journal
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BOSTON (CBS) – American Superconductor Corp. said it has evidence that senior-level employees at its former top customer, Sinovel Wind Group Co. of China, “engaged and paid” an American Superconductor employee to obtain company intellectual property and give it to Sinovel.

On Wednesday, the Devens, Mass.-based power technologies firm had issued a statement accusing Sinovel of illegally obtaining American Superconductor IP related to wind turbines.

The company specified in a regulatory filing Thursday that a former employee, who worked for the company in Austria, is accused of taking the IP and giving it to Sinovel.

In a conference call Thursday, CEO Daniel McGahn said the employee was one of the few with access to the information.

American Superconductor has declined to identify the employee, who it says has been arrested in Austria on charges of economic espionage and fraudulent manipulation of data.

A company spokesman said the arrest was related to the Sinovel case.

During the conference call, McGahn painted the IP theft scheme as coming from the top at Sinovel. Though Sinovel is China’s largest wind turbine maker and one of the biggest players globally, the company’s financial performance has weakened of late, he said.

“The China wind market has slowed, and it’s clear that Sinovel’s businesses’ have also slowed,” McGahn said.

Sinovel was unable to break through American Superconductor’s encryption and protection measures on its technology, and so “outright theft was necessary,” he said.

American Superconductor has said the IP theft may be behind Sinovel’s ability to operate independently of American Superconductor – helping to explain why Sinovel suddenly stopped doing business with the company earlier this year.

Sinovel produces wind turbines using proprietary designs from American Superconductor, and has historically been dependent on American Superconductor for the accompanying wind turbine control software and components.

The company said it plans to file criminal and civil suits seeking to force Sinovel to halt the use of the IP, along with paying monetary damages.

In a statement provided to the Business Journal Thursday, U.S. Sen. John Kerry pledged to work with American Superconductor, and with both the U.S. and Chinese governments, “toward a just resolution.”

“When someone steals our intellectual property, they’re stealing Massachusetts jobs,” Kerry said in the statement.

Sinovel on Thursday reportedly rejected the charges raised by American Superconductor.

“We stopped taking shipments from American Superconductor because their products had a very high failure rate and did not conform with Chinese regulations,” said spokesman Tao Gang in a statement, reported by the Financial Times.

Kyle Alspach of the Boston Business Journal reports

He denied that Sinovel had stolen intellectual property from American Superconductor.

American Superconductor has said it expects to report a “significant net loss” for the quarter ended June 30, with revenue expected to be less than $10 million. The company had previously been enjoying profitable quarters with more than $100 million in revenue a quarter. American Superconductor announced 150 job cuts, or 20 percent of its staff, last month.

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