Theft of wind turbine control software trade secrets and the role of an expert witness

At a time when trade relations between China and the United States are becoming more strained, the jury in a federal court in Wisconsin recently decided that a Chinese wind turbine manufacturer, and several individuals had stolen software trade secrets from an American competitor. There is already tension between the U.S. and China due to the possibility of tariffs being imposed on future imports of solar panels into the United States from China and due to President Trump’s administration focusing on alleged Chinese theft of American intellectual property and other unfair trade practices. In the recent federal court case, the jury found Beijing-based Sinovel Wind Group, one of the world’s largest wind turbine makers, and the individual defendants guilty of conspiracy to commit trade secret theft, theft of trade secrets, and wire fraud, in relation to trade secrets taken from AMSC, an American company known for selling wind turbines through its subsidiary Windtec. The court case brought by the U.S. Department of Justice involved technology AMSC created to manage the flow of electricity generated from wind turbines downstream to electrical grids, including software trade secrets.

In 2011, Sinovel ordered $100 million of AMSC’s products and services while also signing contracts for future purchases of an additional $700 million of products and services.  Sinovel was alleged to have never paid any of the $800 million agreed to under the contracts. Furthermore, Federal prosecutors alleged that after the contracts were signed, Sinovel immediately conspired to begin stealing AMSC’s copyrighted information and software trade secrets so that Sinovel could manufacture its own products and avoid having to pay AMSC. Sinovel was further alleged to have used knowledge gained from AMSC in order to retrofit its existing products and to design new products so as to better compete with AMSC while also avoiding having to pay AMSC for its technology.

According to court documents, Sinovel hired Dejan Karabasevic, a former chief engineer at AMSC’s subsidiary ASMC Windtec Gmbh, and persuaded him to secretly copy information from AMSC’s computer system, including source code for its wind turbine control system. Prosecutors said Sinovel then incorporated software containing this stolen source code into wind turbines that Sinovel sought to have built by wind turbine manufacturers located in Massachusetts.  The solicited manufacturers helped bring Sinovel to justice.

Due to Sinovel’s theft of AMSC’s trade secrets, AMSC suffered severe financial hardship, including the loss of over $1 billion in shareholder equity and over half its global workforce. Assistant Attorney General John Cronan of the Justice Department’s Criminal Division was quoted as saying, “Sinovel nearly destroyed an American company by stealing its intellectual property.” Cases such as these highlight the need for corporations to vigilantly protect their intellectual property.

Cases involving theft of intellectual property such as trade secrets, copyrights, or patents embodied in software are areas in which a software expert is highly valued as an expert witness during any ensuing litigation. A software expert would be used to study and compare the various software products at issue in a case. Taking the Sinovel case mentioned above as an example, a software expert would study the wind turbine control software and source code written by AMSC to understand the software trade secrets at issue, and compare these with the corresponding software and source code that Sinovel used in the wind turbines developed to compete against AMSC. Forensic analysis might also be performed to determine when and how the parties acquired or created their software.  To effectively do this, the software expert must be familiar with various programming languages and the tools necessary to view and understand the code and its history.

After careful analysis of the software, source code, and forensic data applying the expert’s skill and experience, the software expert generally details the expert’s findings and opinions in a written report. A strong report and other pretrial testimony from a software expert can often assist in the resolution of the matter before or during trial. Whether or not the case proceeds to trial, it is crucial that the software expert is able to communicate clearly and present information that is understood by an intended audience, including the judge and the jury, who likely is unfamiliar with the software technology at issue in the case. An experienced software expert not only understands the technology involved in the case, but also understands the litigation process and how information should be developed and presented in order to build the best case.