Much of the June 12 federal lawsuit that Manitowoc Cranes LLC has filed against Sany America Inc. discusses veteran crane engineer John Lanning's departure from Manitowoc to help Sany bring crawler cranes to the American market.
It also reveals that one of the trade secrets Lanning allegedly misappropriated—an innovative design for a floating counterweight tray—was one he invented while working at Manitowoc. According to court papers obtained by ENR, Sany allegedly offered Lanning "a substantial salary increase" to come work for Sany, which is based in Changsha, China, and operates a plant in Peachtree City, Ga.
The case is an early example of an American construction equipment manufacturer bringing legal action against a Chinese newcomer. Manitowoc specifically takes issue with two U.S. patents, both involving a design for a lift crane with a variable-position counterweight (VPC). Manitowoc filed the design patents in April 2007 and January 2008. Lanning, who is named as an inventor on one of the patents, left Manitowoc to work at Sany in January 2010.
Manitowoc, which has lodged a similar complaint with the U.S. International Trade Commission, argues that Lanning signed, in 2008, a non-disclosure agreement covering trade secrets for five years or until the information "has been made available generally to the public," according to the complaint.
During an exit interview, Larry Weyers, Manitowoc's executive vice president, warned Lanning that Manitowoc "would take legal action" if he broke his non-disclosure agreement, the complaint says. The patents were published in June 2009 and June 2011.
Manitowoc currently uses the VPC design on its Model 31000, a $30-million supercrane that has a lifting capacity of 2,500 tons. Under Lanning's direction, Sany introduced, in 2012, its Model SCC8500, a 550-ton crawler crane that uses what Sany calls "auto counterbalance equalization," or ACE.
"The beauty of this design is that you get more than 500-ton performance in a machine that transports as easily as a 400-ton crane," Lanning said in a statement when the machine was introduced. Active counterweights give cranes the flexibility to pick up loads in the air while standing inside a small footprint.
Manitowoc seeks a permanent injunction that bars Sany from selling cranes that infringe on Manitowoc's patents as well as treble damages, profits and attorneys' fees. Sany says it will fight the suit.
"Sany is proud of its industry-leading crane designs," said Sany Heavy Industry Co. President Xiang Wenbo in a statement, issued on June 19. "We categorically reject the claims made by Manitowoc and stand fully behind our market-leading products." Messages left with Lanning and Manitowoc attorneys seeking comment were not immediately returned.
Friction between Manitowoc and Sany, which is the subject of a recent story in Fortune, comes more than two years after Sany made a splash at Conexpo 2011 in Las Vegas. There, outside one of the exhibit halls, it hung a giant poster that featured Lanning's face.
"Manitowoc wasn't smiling," the Fortune article says.