They might be illegal, and that’s why AMSC tried so hard to hide it.
The problem with Encryption software, even ancillary encryption SW (the ones used for digital signatures and copyright protections), is that they are Export-controlled by US, which restricts their exports to China (source code and the compiled binary).
What’s worse for AMSC, even if US approves, China has regulations on IMPORTS of such encryption software, because China is concerned about US companies making backdoors.
In AMSC v. Sinovel, we have talked about the US Export Control problems, but we didn’t get to the much bigger problem for AMSC, that it potentially could cost AMSC in the long run.
The Chinese laws (Commercial Encryption Regulations 1999) states that all foreign-made commercial products having encryption technologies, (doesn’t say what kind), must be approved and certified by State Encryption Management Commission (SEMC), PRIOR to import into China.
Failure to obtain proper certification from SEMC (which must happen once every 3 years), the penalties may include:
Confiscation Of Offending Products
Forfeiture Of Illegal Income
Fines Ranging From 1 To 3 Times Value Of Illegal Income
Possibility Of Criminal Prosecution
China SEMC regulations were precisely designed to prevent the kind of “logic bomb” that AMSC appeared to have placed into its firmware.
Take that information what you will. But I would venture, as much as US has seen fit to criminally indict Sinovel, China may be inclined to soon criminally indict AMSC.
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