Health and Science

GE accuses Siemens Energy of using stolen trade secrets to rig contract bids in new lawsuit

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Key Points
  • GE on Thursday sued rival Siemens Energy, saying that its employees used stolen trade secrets to outbid GE for lucrative gas turbine contracts.
  • The new suit comes just months after Siemens spun off Siemens Energy, which began trading on the Frankfurt Stock Exchange in September.
  • GE alleged in the suit that Siemens used the trade secrets to win contracts that boosted the price of Siemens Energy's initial public offering.
A trader walks next to Siemens Energy AG logos during Siemens Energy's initial public offering (IPO) at the Frankfurt Stock Exchange in Frankfurt, Germany, September 28, 2020.
Ralph Orlowski | Reuters

General Electric on Thursday sued rival Siemens Energy, alleging the company used stolen trade secrets to rig bids for "billions of dollars" worth of contracts to supply gas turbines to public utilities.

Central to the lawsuit, which was filed Thursday in a U.S. District Court in Virginia, is a 2019 bid to provide gas turbine equipment and maintenance services to Dominion Energy, a Virginia-based power utility company.

During the bidding process, the suit alleges, a Dominion employee sent confidential information submitted by GE as part of their bid to a Siemens employee. The information allegedly illegally shared with Siemens also included an analysis of all bids for the so-called Peakers Project, which served as a "blueprint" to help Siemens win the contract, worth at least $225 million and up to $340 million.

GE noted in the suit that Dominion services about 4 million customers on the East Coast and is a "crucial strategic partner for energy equipment manufacturers."

The new suit comes just months after Siemens spun off Siemens Energy, which began trading on the Frankfurt Stock Exchange in September. GE alleged in the suit that Siemens used the trade secrets to win contracts that boosted the price of Siemens Energy's initial public offering.

Tim Proll-Gerwe, a spokesman for Siemens Energy, told CNBC that the company has not yet been officially served notice of the lawsuit and only learned about it from news reports. He noted that Siemens' compliance process identified the relevant infraction and the involved employees were disciplined.

"Siemens Energy's integrity is foundational to our operating principles and will not be compromised under any circumstances," he said in a statement.

Siemens allegedly did not disclose that one of its employees had obtained the trade secrets until September, roughly 16 months after the information was allegedly first accessed, in what GE described as a "nothing to see here, folks" letter minimizing the violation, according to the lawsuit. That notice came after Siemens had completed its own internal investigation, the suit says.

Since the disclosure, Siemens has "steadfastly refused" to assure GE that documents containing the trade secrets have been destroyed, the lawsuit says.

"At GE, we aggressively protect and defend our Intellectual Property. As this litigation is ongoing, we have no further comment at this time," Mathilde Milch, a GE spokeswoman, told CNBC.

GE asked the judge to halt Siemens' use of the allegedly stolen material and pay damages of at least hundreds of millions of dollars.

"Siemens' employees did not just receive and disseminate GE's Trade Secrets," GE said in the suit. "They aggressively and affirmatively exploited the Trade Secrets to gain an unfair commercial advantage in preparing competitive bids against GE."

Among the information allegedly accessed by Siemens were GE's trade secrets related to four gas turbine models, the pricing structure for different turbine units and GE's turbine maintenance process, the suit says. GE said in the suit Siemens employees likely used the allegedly stolen information to help win eight other contracts, for a collective value greater than $1 billion.

Siemens' possession of that information enables the company to "undercut GE's price and/or engineer its products to match GE's specifications," GE said in the suit.

"Even for projects that GE wins, Siemens is able to use GE's confidential information to rig the bidding process and drive down the price, causing GE's successful bids on gas turbine projects to be won at razor-thin or negative margins," GE added.

The company noted that it's currently competing with Siemens for a contract with Dominion Energy in South Carolina. GE said it is competing at a disadvantage because Siemens employees could still have access to the trade secrets. Bids for that contract are due next week.

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