D.I. Dejan Karabasevic, an engineering graduate of the University of Belgrade and an employee of AMSC Windtec GmbH, pled guilty Friday in Klagenfurt, Austria, to charges associated with passing proprietary information to Chinese wind turbine giant Sinovel for remuneration.

As a result of trips to China from 2006 on, Karabasevic developed close ties with Sinovel personnel. He was arrested in Klagenfurt on July 1, 2011, for passing to Sinovel an upgraded version of AMSC’s C12 1.4.3 code which allowed Sinovel to add a Low Voltage Ride Through (LVRT) function to its 1.5-megawatt turbine crucial to meeting upgraded Chinese grid requirements.

The upgrade allowed Sinovel to cancel its contracted orders for turbine electronics with AMSC Windtec just at the time in the spring of 2011 when activity in the Chinese domestic wind market was contracting and Sinovel needed to reduce its overhead.

According to the indictment, Karabasevic admitted to having copied parts of the code and to receiving remuneration for passing it to Sinovel. 

Furthermore, the indictment stated that “criminal acts committed by the accused constitute the offence of industrial espionage for the benefit of a foreign country” because “Karabasevic was fully aware of the criminal nature both of the acts committed by him and of their results … when he carried out his ‘industrial espionage’ and accepted the damage to Windtec and to the Austrian economy that he knew would result from them.”

Finally, the indictment indicated that “criminal acts admitted by the accused constitute sufficient evidence to show that the civil claimant, Windtec, has suffered damage in the amount of at least €6 million.”

A Sinovel statement released before the conviction said it denied AMSC’s allegations of illegal use of intellectual property rights and promised “to actively respond” to suits filed in China by AMSC for breach of contract and theft of intellectual property.

Sinovel’s statement justified its actions by claiming AMSC had “failed to implement obligations to Sinovel” with timely technology upgrades. This, Sinovel’s statement asserted, forced them to develop their own LVRT solution.

“We stand behind our products and our customer service,” Jason Fredette, Vice President of Marketing and Communications for AMSC, said in reply.

In response to Karabasevic’s confession, Sinovel released a statement describing his “claims” as “completely false” and insisting “Sinovel has never bought over any business secrets or intellectual property rights from the AMSC employee.” It added that the charges brought by AMSC and Karabasevic “have seriously violated Sinovel’s public image and business reputation,” adding that “Sinovel reserves the right to legal actions.”

Regarding the code and the LVRT, the Sinovel statement said that “more than five years of development” and “the dedication of over 800 engineers” put Sinovel “technically far ahead of the industry” and without any need for “AMSC’s trade secrets or intellectual property rights.”

With Karabasevic’s conviction, it would seem the Austrian court’s judgment was that Sinovel’s 800 dedicated engineers were somewhat redundant to the code development process.

On the same day Karabasevic was convicted, AMSC noted some $100 million in new contracts since the April 1 start of its fiscal year 2011:  “Within its wind segment, AMSC signed contracts with wind turbine manufacturers in China, India, Korea and Taiwan.  Within its grid segment, AMSC received orders for its grid interconnection and high voltage stability solutions in the U.S. and Europe and made a key high temperature superconductor wire shipment to South Korea.”