United States: Dispute Over Solar Inverter Technology Heads To Federal Court

Last Updated: February 20 2018
Article by Justus L. Getty
  • A manufacturer of solar inverter components, MAGicALL, has accused its former customer Advanced Energy Industries of stealing trade secrets and violating non-disclosure agreements relating to MAGicALL's product designs.
  • Trade secret law protects companies against the misappropriation of valuable business information that has been subject to reasonable efforts to maintain secrecy.

California's MAGicALL, Inc. has filed a lawsuit against Advanced Energy Industries, Inc. ("AEI") and several affiliated companies alleging breach of non-disclosure agreements and theft of trade secrets relating to MAGicALL's solar inverter technology. In a Complaint filed in federal court in Colorado this month, MAGicALL requested that the court issue an injunction preventing AEI from continuing to sell any products containing MAGicALL's proprietary technology, and award monetary damages in an amount yet to be determined.MAGicALL is a manufacturer of "high performance magnetic and electronic systems." (http://www.magicall.biz/). AEI is a NASDAQ-listed manufacturer of power and control technologies headquartered in Fort Collins, Colorado. (https://www.advanced-energy.com/). The named defendants in the lawsuit include AEI and a pair of companies presumed to be AEI subsidiaries (AE Solar Energy, Inc.; Advanced Energy (Shenzhen) Co., Ltd.), which this post refers to collectively as "the AEI Defendants." Four additional defendants are named, which appear to be suppliers to AEI of components for solar inverters (Eaglerise Electric and Electronic Co., Ltd.; Eaglerise E & E USA, Inc. (CA); Eaglerise E & E USA, Inc. (PA); Eaglerise Power Systems, Inc.). This post refers to these four defendants as "the Eaglerise Defendants."

Solar inverters are a critical component in any photovoltaic system. Solar panels output power in direct current, which is incompatible with the commercial electric grid and the vast majority of electric consumption in the United States. For solar panels to have a useful output, their power must be converted from direct current to alternating current. A solar inverter performs this conversion.

MAGicALL claims to have developed "a highly efficient inductor" – a key piece of a solar inverter – that resulted in "dramatically improved inverter efficiency." MAGicALL allegedly shared details of its inductor design with the AEI Defendants under a series of non-disclosure agreements and then began selling inductors to the AEI Defendants in 2010. After four years, MAGicALL alleges that AEI abruptly stopped purchasing the components and began to use "knock-off copies of MAGicALL's proprietary inductors" manufactured by the Eaglerise Defendants.

A trade secret is valuable business information that is not publically known and is subject to reasonable efforts to preserve confidentiality. [Note 1]. To prevail on a claim of misappropriation of a trade secret, a party must show that it has a trade secret, and that another party "misappropriated" the trade secret by one of: (1) non-consensual disclosure, (2) acquisition from a person with a duty to maintain the trade secret, or (3) acquisition by improper means (i.e. theft, bribery, misrepresentation, or breach of secrecy).

MAGicALL specifically alleges in its Complaint that the AEI Defendants violated a pair of non-disclosure agreements and misappropriated trade secrets by copying technical drawings of MAGicALL's inductors as their own. AEI allegedly used those copied drawings when directing Eaglerise in China to manufacture knock-off inductors that supplanted MAGicALL's inductors.

If MAGicALL's allegations are proven in court, the AEI Defendants could be found to have misappropriated trade secrets by sharing MAGicALL's confidential inductor design without MAGicALL's consent. The Eaglerise Defendants could be found to have misappropriated trade secrets by acquiring the secrets from another party (the AEI Defendants) with a duty to maintain the trade secrets.

One key issue for the court to resolve in this case is whether MAGicALL took reasonable efforts to preserve the secrecy of its inductor design. Because trade secret law does not prevent reverse engineering a product, the validity of MAGicALL's alleged trade secret may hinge on the manner in which MAGicALL sold the inductors to AEI and how AEI then sold the inductors for public use. If MAGicALL did not include sufficient restrictions on the sale and use of the solar inverters containing its inductors, then the court may find that MAGicALL failed to take appropriate measures to protect its asserted trade secrets and therefore there can be no liability for misappropriation.

The defendants in this lawsuit will now have an opportunity to respond to MAGicALL's allegations.

Note 1: This definition of a trade secret comes from the Defend Trade Secrets Act of 2016, which for the first time created a federal cause of action to trade secret theft. Prior to 2016, trade secret lawsuits were brought under state law.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Practice Guides
by Mondaq Advice Centers
Relevancy Powered by MondaqAI
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions