Business

AMSC gets $57 million from Chinese theft case

A Sinovel wind turbine is seen in Charlestown, Massachusetts June 27, 2013. (Jessica Rinaldi For The Boston Globe)
Jessica Rinaldi/Globe Staff/File
A Sinovel wind turbine in Charlestown.

A federal judge in Wisconsin has ordered Chinese windmill maker Sinovel Wind Group Co., to pay $57.5 million to American Superconductor Inc. (AMSC) for stealing the Devens company’s software to control wind turbines.

The payment is the result of an unusual federal prosecution of a Chinese company, and comes as the Trump administration has pressed Beijing to end practices that it claims co-opt US technology and costs the economy billions a year. It comes on the same day that a simmering trade war between the two nations erupted into the open, with billions in tariffs on products from each country going into effect Friday.

In January, a US federal court convicted Sinovel of the theft, which cost the Devens company, also known as American Superconductor, $1 billion in stock market value, and $800 million in revenue. Just prior to Friday’s sentencing, American Superconductor reached a deal with Sinovel for compensation, and has already received $32.5 million. The Chinese company has a year to pay the remaining $25 million. Sinovel will also pay a $1.5 million fine to the US government, and $850,000 to additional unnamed victims of the theft.

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Though the settlement is a fraction of losses suffered by AMSC, chief executive Daniel McGahn said it was the most his company could hope for.

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“Their ability to pay is quite limited,” said McGahn. Sinovel sales plummeted after the company was charged in the United States, he said, so “we’re actually taking a large fraction of the cash that they had.”

AMSC and Sinovel had formed a partnership in which Sinovel would produce wind turbines, while AMSC would provide the software to control them. Sinovel had committed to purchase $800 million in software from AMSC, but in 2011 the Chinese company abruptly ended the partnership, saying that it now had its own software. In fact, Sinovel employees had persuaded an AMSC worker in Austria to hand over the raw software source code to the Chinese firm, which used it to make its own version.

AMSC only discovered the theft after Sinovel used the stolen software on several wind turbines the Chinese company built in Massachusetts. The former AMSC employee was subsequently convicted of theft in an Austrian court.

As part of the settlement, AMSC is dropping a lawsuit which it had filed against Sinovel in China, thus ending all litigation on the matter. “We’re happy to close this chapter,” said McGahn. He didn’t say whether AMSC would do business with Chinese companies, but added, “All our new products are focused on the US market.”

Hiawatha Bray can be reached at hiawatha.bray@globe.com. Follow him on Twitter @GlobeTechLab.