Ineos sues Sinopec over carbon fibre secrets

Ineos today announced that it is taking legal action against Sinopec and subsidiaries including Sinopec Ningbo Engineering Company (SNEC) and Anqing for breach of contract and misuse of trade secrets.

Specifically, the chemical company claims that SNEC has broken an agreement dating back to 1984 for the licensing and use of Acrylonitrile technology in China that, together with trade secret misuse by other Sinopec companies, has enabled development of a series of new world-scale Acrylontirile plants without Ineos agreement or consent.

Ineos currently leads the global market for the production of Acrylonitrile, an important molecule for the production of plastics such as the polyacrylonitrile resin, used in the manufacture of carbon fibre.

Unless we protect our intellectual property, ultimately we will see the demise of Ineos

Ineos chairman Jim Ratcliffe

The company claims that Sinopec and SNEC’s breaches of Ineos’ rights will cause major harm to its Acrylonitrile business, which generates up to $500m per annum of profit and has a replacement value of $3 billion.  It supports around 5,000 direct and indirect jobs in the US and Europe.

Ineos is pursuing parallel actions in the Beijing High Court and through arbitration in Sweden, and the company today released a statement saying it had “every confidence that China has now developed an excellent system to protect intellectual property consistent with the fact that China now files more patents than any other country”.

“We have good and valuable relationships with Sinopec and other Chinese companies across our business,” added Ineos chairman Jim Ratcliffe.

“But in this case, we have to take action to protect the interests of our stakeholders. The fundamental value of a business like Ineos depends on its intellectual property which includes trade secrets and patents, covering technology, design and operations. Unless we protect our intellectual property, ultimately we will see the demise of Ineos.”

Sinopec has denied Ineos’ claims, releasing a statement saying: “Sinopec has full proprietary intellectual property rights over such technology. There is no ground for the infringement alleged by Ineos.”

The announcement of legal action comes ahead of the potential culmination in the Chinese Supreme Court later this year of a long-running intellectual property dispute between US clean technology firm AMSC and Chinese wind turbine manufacturer Sinovel.

AMSC, a former supplier of Sinovel, is pursuing the Chinese firm for up to $1.2 billion in damages for the alleged theft of the source code for its PM3000 electrical control systems software.

Dejan Karabasevic, a former employee of AMSC’s Austrian subsidiary AMSC Windtec, has already been convicted in an Austrian court of trade secret theft after admitting selling AMSC software code to Sinovel. He has also been charged along with several Sinovel employees by the US Department of Justice for the theft of AMSC’s trade secrets.