AMSC has announced that the first substantive hearing of its $450 million trade secret case against Chinese manufacturer Sinovel is expected to be heard in the Beijing No. 1 Intermediate People's Court on or about 11th May this year.
However, AMSC's $6 million software copyright infringement case has been dismissed by the Beijing No. 1 Intermediate People's Court. AMSC will immediately appeal the case to the Beijing Higher People's Court. This case, along with the $200 000 software copyright infringement case in the Hainan No. 1 Intermediate People's Court had previously been appealed up to China's Supreme People's Court on jurisdictional issues. In February 2014, the China's Supreme People's Court found in AMSC's favour.
"Given the time elapsed, lack of demonstrable progress, and that previous decisions have had to be made by the higher courts, this ruling by the Beijing No. 1 Intermediate People's Court is not unexpected. We intend to appeal this decision. The jurisdiction of this case was favourably decided by China's Supreme People's Court and we anticipate that ultimately [that court] may have to rule on the merits of the copyright infringement case as well," said Daniel P. McGahn, ANSC president and CEO. "Given the importance of protecting the intellectual property of U.S. companies, we look forward to continuing to work with the US government to protect our interests."
McGahn commented: "In Europe, a former employee confessed, was tried, convicted, and jailed for the theft of our intellectual property. Here in the United States, in June 2013 the Department of Justice indicted Sinovel and two of its employees with the theft of our intellectual property. While we believe the evidence of these cases is overwhelming, our business strategy is not dependent upon the outcome of these cases. We hope that the Chinese government will show that intellectual property should be protected in China."
Background
The trade secret infringement case, filed in September 2011, alleges Sinovel's and certain of its employees' unauthorised use of portions of the company's wind turbine control software source code developed for Sinovel's 1.5 MW wind turbines. In July 2012, Sinovel filed a jurisdiction opposition motion to remove this case from the Beijing No. 1 Intermediate People's Court and to transfer the matter to the Beijing Arbitration Commission. In February 2014, the Beijing No.1 Intermediate People's Court rejected Sinovel's motion in light of China Supreme People's Court January 2014 rulings in favour of AMSC on similar jurisdictional issues in the two civil copyright infringement cases discussed below. Sinovel appealed the Beijing No. 1 Intermediate People's Court decision to the Beijing Higher People's Court in March 2014. That court upheld the Beijing No. 1 Intermediate People's Court's ruling that the dispute will be heard by the Beijing courts separate from the commercial arbitration claims. It is that hearing that is scheduled for 11 May. AMSC is seeking approximately US$450 million in damages.
AMSC's two software copyright infringement cases, one in Beijing and one in Hainan, went through comparable appeals on similar jurisdictional grounds to the trade secret infringement case. AMSC's case in Beijing is against Sinovel; its case in Hainan is against Sinovel and Guotong Electric Co Ltd. In February 2014, China's Supreme People's Court decided in favour of AMSC on the jurisdiction of both software copyright infringement cases. As with the trade secret infringement case, Sinovel filed motions to remove the cases from the Beijing and Hainan courts and transfer the cases to the Beijing Arbitration Commission. In those cases, the Supreme People's Court ruled that the cases will be heard as copyright infringement cases separate from the commercial arbitration claims. On September 15, 2014, the Beijing No. 1 Intermediate People's Court held its first substantive hearing in the Beijing copyright infringement case and in April this year dismissed the case. AMSC is expected to appeal this decision.
On November 18, 2014, the Hainan No. 1 Intermediate People's Court held its first substantive hearing in the Hainan case. At the hearing, the parties presented evidence, reviewed claims, and answered questions from the court. The company is awaiting a decision from that court. AMSC is seeking approximately US$6 million in monetary damages in the Beijing case and US$200 000 in the Hainan case.
In June 2013, Sinovel, two members of its senior management team, and a former employee of AMSC were indicted by a Grand Jury for the theft of AMSC's trade secrets. Sinovel challenged the jurisdiction of the service of summons, contending that the government's service attempt was inadequate, and as a result, that the US government lacks jurisdiction to proceed. In May 2014, a magistrate judge rejected Sinovel's challenge. Sinovel appealed the decision and in September 2014, the District Judge upheld the decision of the magistrate judge. Sinovel immediately appealed this ruling to the United States Court of Appeals for the Seventh Circuit. The Seventh Circuit held a hearing on the case in April 1, 2015. The parties are awaiting a decision.
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