It's been a depressing year for American Superconductor (Nasdaq: AMSC) investors. Not only is the market for wind turbines down overall, but its biggest customer, Sinovel, has rejected some shipments and refused to pay for others.

That battle has now led to court, where American Superconductor is suing Sinovel for illegal use of intellectual property and breach of contract. Chinese companies aren't known for respecting IP, and this case is especially interesting because it will demonstrate whether China is really committed to protecting the IP of foreign companies.

What exactly American Superconductor expects to receive from the lawsuit is uncertain at this point, but considering the market's reaction today, it shouldn't be much.

The final answer from China may determine whether American Superconductor's wind turbine design and licensing business is dead in the water. If China doesn't respect American Superconductor's IP, it would be a major change for the company.

Beyond China
Wind turbines aren't American Superconductor's only product, but they've accounted for a large portion of the company's revenue. The SolarTie product is a utility-scale power inverter system meant to compete with Power-One (Nasdaq: PWER) and Satcon Technology (Nasdaq: SATC). American Superconductor may have to rely on this emerging business to stay alive for now.

Management has been pretty quiet for the past few months. Besides the occasional "our financial statements still aren't ready" announcement, we really don't know where the business stands. We know that for the fiscal year ended March 31, the company expects to report $307 million in revenue, but we know little else.

Is it time to buy?
I've pointed to American Superconductor's cash along with zero debt as a reason to bet on this risky company in the past. The longer the company goes without reporting financials, the more uncertain that bet is. But now we know it isn't giving up its battle with Sinovel without a fight. The bad news is that their relationship might be over completely.

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Fool contributor Travis Hoium owns call options in American Superconductor. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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