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One More War vs. Chinese Green Energy

By the Financial Times ( Financial Times) -- A US high-technology company that was once a star of the clean energy sector is suing China's largest wind turbine manufacturer over alleged software theft, in one of the most acrimonious conflicts to break out between US and Chinese companies over the sensitive issue of intellectual property.

American Superconductor, which supplies components and systems for wind turbines, said on Wednesday night that it was bringing civil and criminal actions in China against Sinovel, the wind turbine manufacturer that had been its largest customer. Sinovel could not be immediately reached for comment.

In a filing to the US Securities and Exchange Commission, American Superconductor said it "believes that Sinovel illegally obtained and used the company's intellectual property".

It called on the Chinese company to stop selling turbines using its software, which is used to control connections to the grid, and to pay damages.

The legal actions follow months of dispute between American Superconductor and Sinovel, the world's second-largest turbine manufacturer.

In April, American Superconductor said Sinovel, which had accounted for about 75 per cent of the US company's sales, was refusing to accept contracted shipments of components. Between deliveries that the US company says were not paid for, shipments that were not accepted and contracted sales that were not delivered, American Superconductor believes it is now owed about $250m.

In June, it uncovered what it believed was evidence of illegal software use and subsequently linked the alleged theft to a former employee of its Austrian subsidiary, AMSC Windtec, according to the SEC filing.

Daniel McGahn, American Superconductor's chief executive since May, said the company needed to pursue legal action to protect itself and its shareholders. Its shares have fallen 70 per cent in the past six months.

He said that while Sinovel was no longer a customer, American Superconductor saw further opportunities in South Korea, India, Australia and even China.

"Our action is not a judgment on the Chinese wind industry or China in general," he said. "It is an issue with one specific company."

However, the souring of a success story that was hailed by President Barack Obama as an example of how US companies could export clean energy products to China will fuel concerns about relations between the two countries' industries.

American Superconductor has still not yet filed full accounts for the year to March 2011 and has warned that some published figures will have to be restated, but is aiming to report by the end of the month.

John Kerry, the Democratic senator from Massachusetts who is chairman of the Senate foreign relations committee, said: "If we don't get this resolved, it threatens hundreds of good jobs in Massachusetts. The bottom line is that this misconduct represents an egregious breach of ethical and legal commitments, which doesn't just imperil collaboration with an American company but is also a blow to Sino-American co-operation in the clean energy sector - and that's not in anyone's real interest."

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