Siemens Energy Sinks as GE Accuses Rival of Trade-Secret Theft

Siemens Energy AG shares fell Friday after General Electric Co. accused its rival of stealing trade secrets for gas turbines and using them to win at least nine gas turbine contracts worth billions of dollars.

An account manager at Siemens Energy Inc., the German company’s U.S. unit, received secret information during a confidential bidding process and shared it with dozens of colleagues, some of whom used it to alter a bid for a lucrative contract in Virginia, GE claimed in a lawsuit filed Thursday in federal court in the state.

Siemens waited 16 months before disclosing that it possessed the information, during which time it “unfairly won” eight additional deals, GE said.

“The sprawling and calculated theft of GE’s trade secrets has enabled Siemens to win, so far, billions of dollars of contracts and remains ongoing -- all at the expense of GE’s ability to fairly compete,” the Boston-based company said in the complaint.

Siemens Energy shares dropped 6.5% at the start of Frankfurt trading. The company spun off last year from Munich-based Siemens AG said it hadn’t yet been served with the lawsuit and learned of it through news reports. It involved a third party in an internal probe, disclosed the findings to its customer and competitors and said it “implemented extensive remedial measures in response” to the investigation.

“Siemens Energy’s integrity is foundational to our operating principles and will not be compromised under any circumstances,” the company said in a statement.

What Bloomberg Intelligence Says

“A GE lawsuit alleging Siemens Energy stole and misused proprietary data could be material. GE cites bids valued at more than $1 billion lost to its rival, yet it may be contested and end in a lengthy court process. The companies have a history of lawsuits over patent infringements and other factors, which highlights the fierce competition for orders in the struggling gas-turbine market.”

-- Johnson Imode, BI industrials analyst

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The lawsuit opens a new front in a series of U.S. legal clashes between the industrial heavyweights over power-generation products that are key to the portfolios of each company. The manufacturers compete fiercely for turbine and service contracts that can generate cash for decades, while contending with a tough market marked by excess capacity as demand rises for electricity generated from renewable sources.

“We aggressively protect and defend our intellectual property,” GE said in a statement, declining to comment further on the lawsuit.

The U.S. company filed a patent-infringement complaint in August at the International Trade Commission in Washington, accusing Siemens Gamesa Renewable Energy SA, the German company’s wind-turbine unit, of using GE technology that guards against power fluctuations. A trial in the case is scheduled for June.

Siemens Gamesa struck back in September with a patent-infringement suit against GE in Florida, claiming unauthorized use of Siemens inventions for ways to improve the performance of wind turbines and a structural support so they can be made bigger. That case is pending.

The latest case is General Electric Co. v. Siemens Energy Inc., 21-25, U.S. District Court for the Eastern District of Virginia (Richmond).

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