AMSC Case - Green Industry Shaken by IP Theft in 2011

AMSC Case - Green Industry Shaken by IP Theft in 2011

American Superconductor (AMSC), headquartered in Massachusetts, was a fast-growing cleantech company focused on wind turbine control systems. China was also taking a national initiative to strategically expand its wind power generation industry. In this context, China's state-owned major Sinobel Wind Group became one of AMSC's largest business partners, and its dependence on it was growing.

In 2011, however, Sinovel abruptly refused to accept shipments from AMSC and canceled contracts worth over $700 million. The background was the fact that Sinovel had illegally copied AMSC's software and control designs and transferred them to its own products. As a result, AMSC's stock price fell 40% in just one day and plunged 84% in a few months. It was a blow that shook the company's very existence and symbolized the risks inherent in the renewable energy industry.

Subsequent investigations revealed that Sinovel had illegally obtained AMSC's entire source code, enabling it to produce a nearly identical control system on its own. This was not just a breach of contract, but a systematic theft of intellectual property, which the US authorities described as "one of the largest transfers of wealth in the history of mankind. Along with cyberattacks on military technology and government systems, the report showed that large-scale Chinese economic espionage was also taking place in the emerging field of green energy.

The case also brings to light the presence of a Serbian technician, Dejan Karabasevic, who worked for AMSC's Austrian office. He was charged with having been in contact with Sinovel's side and leaking inside information. This was a case that underscored the importance of internal collaborators (insiders) as well as external cyber-attacks.

The case reflects the historical background of the early 2010s. The AMSC case revealed the reality that economic espionage in cyberspace can actually influence the fate of leading-edge Western companies, and it has accelerated the debate over IP protection and economic security among nations. It has accelerated the debate over IP protection and economic security among nations.