Concerns on the part of engineering and technology firms around the world about Chinese companies stealing intellectual property are not new. Recently, the debate has swirled around the issue wind farms, particularly Sinovel Wind Group, one of China’s – and the world’s – largest wind turbine manufacturers.
Sinovel calls itself a ground-breaking trail blazer in technology, boasting on its LinkedIn page that it is the first company in China to engage in the independent development, design, manufacture and marketing of multi-megawatt onshore, offshore, and intertidal series wind turbines that can adapt to different zones and environments.
Others, however, have accused if of stealing overseas secrets. In February, US Wind energy company AMSC filed three civil lawsuits against the firm in the Chinese courts alleging that Sinovel had illegally used AMSC wind turbine control software source code to gain access to the American firm’s wind turbine technology.
The dispute is affecting companies beyond China and the US. In Brazil, AMSC filed a court case earlier this year against renewable energy provider Desenvix, alleging that the turbines Desenvix purchased from Sinovel may have contained the allegedly stolen technology.
In response, Desenvix has filed a court order for the inspection of 23 wind turbines which it purchased from Sinovel to determine whether or not they contain ASMC’s allegedly stolen IP.
Through its action, Desenvix is trying to force Sinovel to provide the code for the turbines, which the Brazilian firm can then use to see if it contains the allegedly stolen technology.
Signs of Progress?
The latest dispute comes amid an intense international debate about China and intellectual property. In July of last year, for example, US Treasury Secretary Tim Geithner blasted the country for ‘systematically stealing’ the intellectual property of American firms.
Some have also argued that Chinese courts appear to have shown a bias against foreign companies. When foreign companies do win IP cases, awards for damages are often meagre and insufficient to justify the cost and effort involved in pursuing the lawsuits. Moreover, judgements are often opaque: detailed rulings are rarely published, making it difficult for companies to understand the reasoning behind judgements.
Yet, as a recent article in The Economist acknowledged, there are some signs of improvement. Better-trained judges in China are becoming more able to handle technical cases. Furthermore, local Chinese firms themselves are increasingly filing more patents: telecom equipment makers ZTE and Huawei are amongst the world’s top patent filers. As more leading local firms embrace patent protection, the momentum toward proper protection will shift further and in favour of patent holders, both local and international.
If the Brazilian courts approve Desenvix’s application, this will sway momentum even more by showing Chinese firms that if local courts won’t enforce patent rights, foreign courts to which they export their offerings will, making foreign customers wary of purchasing stock that contains allegedly stolen technology.
Many observers have been watching the AMSC case in China, seeing it as a test of how far Chinese courts have come in enforcing patent protection.
Attention now turns to Brazil, and the question of what role foreign courts in key Chinese export destinations might play in cases of alleged theft by Chinese technology giants.
By Andrew Heaton