AMSC (Nasdaq:AMSC), a global solutions provider serving the wind
and power grid industry, today announced that the first substantive
hearing of the $450 million trade secret case is expected to be
heard in the Beijing No. 1 Intermediate People's Court on or about
May 11, 2015. Additionally, today AMSC announced that its $6
million software copyright infringement case was dismissed by the
Beijing No. 1 Intermediate People's Court. AMSC will immediately
appeal the case to the Beijing Higher People's Court. This case,
along with the $200,000 software copyright infringement case in the
Hainan No. 1 Intermediate People's Court had previously been
appealed up to China's Supreme People's Court on jurisdictional
issues. In February 2014, the China's Supreme People's Court found
in AMSC's favor.
"Given the time elapsed, lack of demonstrable progress, and that
previous decisions have had to be made by the higher courts, this
ruling by the Beijing No. 1 Intermediate People's Court is not
unexpected. We intend to appeal this decision. The jurisdiction of
this case was favorably decided by China's Supreme People's Court
and we anticipate that ultimately the Supreme People's Court may
have to rule on the merits of the copyright infringement case as
well," said Daniel P. McGahn, President and CEO. "Given the
importance of protecting the intellectual property of U.S.
companies, we look forward to continuing to work with the U.S.
government to protect our interests."
McGahn continued: "In Europe, our former employee confessed, was
tried, convicted, and jailed for the theft of our intellectual
property. Here in the United States, in June 2013 the Department of
Justice indicted Sinovel and two of its employees with the theft of
our intellectual property. While we believe the evidence of these
cases is overwhelming, our business strategy is not dependent upon
the outcome of these cases. We hope that the Chinese government
will show that intellectual property should be protected in
China."
Trade Secret Infringement Case - China
The trade secret infringement case, filed in September 2011,
alleges Sinovel's and certain of its employees' unauthorized use of
portions of the Company's wind turbine control software source code
developed for Sinovel's 1.5 MW wind turbines. In July 2012, Sinovel
filed a jurisdiction opposition motion to remove this case from the
Beijing No. 1 Intermediate People's Court and to transfer the
matter to the Beijing Arbitration Commission. In February 2014, the
Beijing No.1 Intermediate People's Court rejected Sinovel's motion
in light of China Supreme People's Court January 2014 rulings in
favor of AMSC on similar jurisdictional issues in the two civil
copyright infringement cases discussed below. Sinovel appealed the
Beijing No. 1 Intermediate People's Court decision to the Beijing
Higher People's Court in March 2014. The Beijing Higher People's
Court upheld the Beijing No. 1 Intermediate People's Court's ruling
that the dispute will be heard by the Beijing courts separate from
the commercial arbitration claims. As mentioned above, the first
substantive hearing is expected to occur in May 2015. AMSC is
seeking approximately US$450 million in monetary damages in the
trade secret infringement case.
Copyright Infringement Cases - China
AMSC's two software copyright infringement cases, one in Beijing
and one in Hainan, went through comparable appeals on similar
jurisdictional grounds as the trade secret infringement case.
AMSC's case in Beijing is against Sinovel; its case in Hainan is
against Sinovel and Guotong Electric Co Ltd (Guotong). In February
2014, China's Supreme People's Court decided in favor of AMSC on
the jurisdiction of both software copyright infringement cases.
Similar to the trade secret infringement case, Sinovel filed
motions to remove the cases from the Beijing and Hainan courts and
transfer the cases to the Beijing Arbitration Commission. In those
cases, the Supreme People's Court ruled that the cases will be
heard as copyright infringement cases separate from the commercial
arbitration claims. On September 15, 2014, the Beijing No. 1
Intermediate People's Court held its first substantive hearing in
the Beijing copyright infringement case. In April 2015, the Beijing
No. 1 Intermediate People's Court dismissed the case. AMSC is
expected to appeal this decision. On November 18, 2014, the Hainan
No. 1 Intermediate People's Court held its first substantive
hearing in the Hainan case. At the hearing, the parties presented
evidence, reviewed claims, and answered questions from the court.
The Company is awaiting a decision from the Hainan No. 1
Intermediate People's Court. AMSC is seeking approximately US$6
million in monetary damages in the Beijing copyright infringement
case and US$200,000 in monetary damages in the Hainan copyright
infringement case.
U.S. Department of Justice Case – United
States
In June 2013, Sinovel, two members of its senior management
team, and AMSC's former employee were indicted by a Grand Jury for
the theft of AMSC's trade secrets. Sinovel challenged the
jurisdiction of the service of summons, contending that the
government's service attempt was inadequate, and as a result, that
the U.S. government lacks jurisdiction to proceed. In May 2014, a
magistrate judge rejected Sinovel's challenge. Sinovel appealed the
decision and in September 2014, the District Judge upheld the
decision of the magistrate judge. Sinovel immediately appealed this
ruling to the United States Court of Appeals for the Seventh
Circuit. The Seventh Circuit held a hearing on the case in April 1,
2015. The parties are awaiting a decision.
About AMSC (Nasdaq:AMSC)
AMSC generates the ideas, technologies and solutions that meet
the world's demand for smarter, cleaner … better energy. Through
its Windtec™ Solutions, AMSC provides wind turbine electronic
controls and systems, designs and engineering services that reduce
the cost of wind energy. Through its Gridtec™ Solutions, AMSC
provides the engineering planning services and advanced grid
systems that optimize network reliability, efficiency and
performance. The company's solutions are now powering gigawatts of
renewable energy globally and enhancing the performance and
reliability of power networks in more than a dozen countries.
Founded in 1987, AMSC is headquartered near Boston, Massachusetts
with operations in Asia, Australia, Europe and North America. For
more information, please visit http://www.amsc.com.
AMSC, Windtec, Gridtec, and Smarter, Cleaner … Better Energy,
are trademarks or registered trademarks of American Superconductor
Corporation. All other brand names, product names, trademarks or
service marks belong to their respective holders.
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). Any statements in this release
about expectations regarding the immediate filing of an appeal of
the Beijing No. 1 Intermediate People's Court's decision with the
Beijing Higher People's Court and when the first substantive
hearing in the trade secret infringement is expected to occur, our
anticipation that China's Supreme People's Court may have to rule
on the merits of the copyright infringement case, our continued
work with the U.S. government to protect our interests, our belief
that the evidence of these cases against Sinovel is overwhelming;
and other statements containing the words "believes,"
"anticipates," "plans," "expects," "will" and similar expressions,
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such
forward-looking statements represent management's current
expectations and are inherently uncertain. There are a number of
important factors that could materially impact the value of our
common stock or cause actual results to differ materially from
those indicated by such forward-looking statements. Such factors
include: The fact that the preliminary statement of our financial
results and cash, cash equivalents and short-term investments
contained in this press release is subject to change pending the
finalization of our quarterly closing procedures and the subsequent
occurrence or identification of events prior to the formal issuance
of our quarterly financial statements; We have a history of
operating losses, which may continue in the future. Our operating
results may fluctuate significantly from quarter to quarter and may
fall below expectations in any particular fiscal quarter; we have a
history of negative operating cash flows, and we may require
additional financing in the future, which may not be available to
us; Our Term Loans include certain covenants and other events of
default. Should we not comply with these covenants or incur an
event of default, we may be required to repay our obligation in
cash, which could have an adverse effect on our liquidity; We may
be required to issue performance bonds or provide letters of
credit, which restricts our ability to access any cash used as
collateral for the bonds or letters of credit; Changes in exchange
rates could adversely affect our results from operations; If we
fail to maintain proper and effective internal controls over
financial reporting, our ability to produce accurate and timely
financial statements could be impaired and may lead investors and
other users to lose confidence in our financial data; Our success
in addressing the wind energy market is dependent on the
manufacturers that license our designs; Our success is dependent
upon attracting and retaining qualified personnel and our inability
to do so could significantly damage our business and prospects; We
may not realize all of the sales expected from our backlog of
orders and contracts; Our financial condition may have an adverse
effect on our customer and supplier relationships; Failure to
successfully execute the consolidation of our Grid manufacturing
operations or achieve expected savings could adversely impact our
financial performance; Our business and operations would be
adversely impacted in the event of a failure or security breach of
our information technology infrastructure; We may not be able to
launch operations at our newly leased manufacturing facility in
Romania, and, if we are able to do so, we may have manufacturing
quality issues, which would negatively affect our revenues and
financial position; We rely upon third-party suppliers for the
components and subassemblies of many of our Wind and Grid products,
making us vulnerable to supply shortages and price fluctuations,
which could harm our business; Many of our revenue opportunities
are dependent upon subcontractors and other business collaborators;
If we fail to implement our business strategy successfully, our
financial performance could be harmed; Problems with product
quality or product performance may cause us to incur warranty
expenses and may damage our market reputation and prevent us from
achieving increased sales and market share; New regulations related
to conflict-free minerals may force us to incur significant
additional expenses; Our contracts with the U.S. government are
subject to audit, modification or termination by the U.S.
government and include certain other provisions in favor of the
government. The continued funding of such contracts remains subject
to annual congressional appropriation which, if not approved, could
reduce our revenue and lower or eliminate our profit; Many of our
customers outside of the United States are, either directly or
indirectly, related to governmental entities, and we could be
adversely affected by violations of the United States Foreign
Corrupt Practices Act and similar worldwide anti-bribery laws
outside the United States; We have limited experience in marketing
and selling our superconductor products and system-level solutions,
and our failure to effectively market and sell our products and
solutions could lower our revenue and cash flow; We may acquire
additional complementary businesses or technologies, which may
require us to incur substantial costs for which we may never
realize the anticipated benefits; Our success depends upon the
commercial use of high temperature superconductor (HTS) products,
which is currently limited, and a widespread commercial market for
our products may not develop; Growth of the wind energy market
depends largely on the availability and size of government
subsidies and economic incentives; We have operations in and depend
on sales in emerging markets, including China and India, and global
conditions could negatively affect our operating results or limit
our ability to expand our operations outside of these countries.
Changes in China's or India's political, social, regulatory and
economic environment may affect our financial performance; Our
products face intense competition, which could limit our ability to
acquire or retain customers; Our international operations are
subject to risks that we do not face in the United States, which
could have an adverse effect on our operating results; Adverse
changes in domestic and global economic conditions could adversely
affect our operating results; We may be unable to adequately
prevent disclosure of trade secrets and other proprietary
information; Our patents may not provide meaningful protection for
our technology, which could result in us losing some or all of our
market position; There are a number of technological challenges
that must be successfully addressed before our superconductor
products can gain widespread commercial acceptance, and our
inability to address such technological challenges could adversely
affect our ability to acquire customers for our products; We have
not manufactured our Amperium wire in commercial quantities, and a
failure to manufacture our Amperium wire in commercial quantities
at acceptable cost and quality levels would substantially limit our
future revenue and profit potential; Third parties have or may
acquire patents that cover the materials, processes and
technologies we use or may use in the future to manufacture our
Amperium products, and our success depends on our ability to
license such patents or other proprietary rights; Our technology
and products could infringe intellectual property rights of others,
which may require costly litigation and, if we are not successful,
could cause us to pay substantial damages and disrupt our business;
We have filed a demand for arbitration and other lawsuits against
our former largest customer, Sinovel, regarding amounts we contend
are overdue. We cannot be certain as to the outcome of these
proceedings; We have been named as a party in various legal
proceedings, and we may be named in additional litigation, all of
which will require significant management time and attention,
result in significant legal expenses and may result in an
unfavorable outcome, which could have a material adverse effect on
our business, operating results and financial condition; Our common
stock has experienced, and may continue to experience, significant
market price and volume fluctuations, which may prevent our
stockholders from selling our common stock at a profit and could
lead to costly litigation against us that could divert our
management's attention.
These and the important factors discussed under the caption
"Risk Factors" in Part 1. Item 1A of our Form 10-K for the fiscal
year ended March 31, 2014, and our other reports filed with the
SEC, among others, could cause actual results to differ materially
from those indicated by forward-looking statements made herein and
presented elsewhere by management from time to time. Any such
forward-looking statements represent management's estimates as of
the date of this press release. While we may elect to update such
forward-looking statements at some point in the future, we disclaim
any obligation to do so, even if subsequent events cause our views
to change. These forward-looking statements should not be relied
upon as representing our views as of any date subsequent to the
date of this press release.
CONTACT: AMSC Contact:
Kerry Farrell
Phone: 978-842-3247
Email: kerry.farrell @ amsc.com
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