In July 2018, a federal judge in Wisconsin imposed a $1.5 million penalty—the maximum statutory fine—against Chinese wind turbine manufacturer, Sinovel Wind Group Co. Ltd., for stealing trade secrets from Massachusetts-based technology company, AMSC Inc. In addition to the fine, Sinovel was sentenced to 1 year probation and ordered to pay $57.5 million in restitution to AMSC, an amount the companies had settled on prior to the ruling. Sinovel also agreed to pay $850,000 to Massachusetts wind turbine operators.
As we previously reported, a jury convicted Sinovel of stealing AMSC’s trade secrets back in January 2018. Sinovel—once AMSC’s biggest customer—paid a former AMSC employee to copy the software used in Sinovel’s wind turbines. After the theft, Sinovel canceled approximately $800 million worth of orders for AMSC’s software, causing AMSC to lose over $1 billion in shareholder equity and forcing it to lay off almost 700 employees.
This kind of intellectual property theft has been highlighted by the Trump administration as a justification for levying 25% tariffs on $34 billion of Chinese goods entering the U.S., which went into effect the same day the Court announced Sinovel’s sentence. China immediately retaliated with tariffs on $34 billion worth of U.S. goods.
While it is unclear whether the Trump administration’s controversial tariffs—which have “launched the biggest trade war in economic history,” according to China’s Ministry of Commerce—will effectively protect U.S. innovation, it is obvious that basic security protocols and vigilance on the part of U.S. companies is frequently a first line of defense in preventing intellectual property theft.