Andrea Rossi sues Industrial Heat for $89M

Andrea Rossi

Andrea Rossi

(UPDATED below with statement from IH)
(Also UPDATED with response from Andrea Rossi).
(June 2: IH filed motion to dismiss lawsuit—link below).

First of all—we now know that the one-year 1MW test was very successful and that the E-Cat and LENR is a technology field that will fundamentally change the world. [Admittedly premature. We haven’t seen the report yet]. More about this later. In any case, let’s wait for the detailed report for final confirmation. Champagne is still on ice.

On Wednesday, April 6, I received a press release from the lawyer representing Rossi’s company, Leonardo Corp., about a lawsuit on Rossi’s US licensee Industrial Heat (IH), its representatives Thomas Darden and JT Vaughn, and Darden’s main company, Cherokee Investment Partners. Link to the case docket is here.

Thomas Darden

Thomas Darden

I was first somewhat surprised, but reading the documents and adding info that I have received during the last months, things became clearer.

I recommend you to read the complaint and the license agreement between Rossi and IH (see below)—it tells a detailed story of what has been going on during the last years, and one good thing about the lawsuit is that all this info, originally protected by NDA, is now open.

Rossi and IH entered an agreement in October 2012 (as I also report in An Impossible Invention), on which Rossi was paid $1.5M.

A 24h Validation Test was performed in May 2013 with a plant consisting of 30 E-Cats. After successful completion Rossi was paid $10M, and he transferred all the necessary IP for the E-Cat and its fuel to IH.

Now things are getting interesting. The license agreement defined that IH acquired a license for North and South America, China, Russia, Saudi Arabia and the Emirates, to sell and manufacture E-Cat based products, but the IP remained property of Leonardo Corp. Yet IH stated that it had acquired the technology from Rossi, apparently in order to raise more money (we know that at least $60M was raised, of which about $50M from UK based Woodford).

IH then delayed the one-year test—the ‘Guaranteed Performance Test’. If successful, with at least six times more energy output than input (COP>6), IH should pay Rossi $89M (or less at lower performance). And although the test was finally undertaken, and successfully concluded recently—producing over 50 times more output energy than input energy (!), validated by two experts, paid for and chosen by IH and Rossi—IH never paid Rossi (we will probably soon see the full report that was delivered to Rossi and Darden on March 29).

Instead, it turns out from Leonardo’s lawsuit that IH (Darden and Vaughn), made a series of maneuvers to avoid undertaking the one-year test, to avoid risking the billions in Cherokee’s fund, while trying to get hold of the E-Cat IP, sharing it with Rossi’s competitors in which IH was investing, and even filing patent applications based on the IP transferred from Rossi, nominating other inventors than Rossi.

These claims are supported by independent information I have received lately (not from Rossi), on people connected to IH, actively trying to engage experts in the field to work on replication of Rossi’s effect, while telling various stories about Rossi, all indicating that IH might have been missing some essential info, or at least wanted to get this info before paying Rossi.

Furthermore, in the lawsuit, Leonardo demands a trial by jury. Everything out in the light.

This doesn’t fit well with the hypothesis that Rossi is a fraudster and that IH knew this and therefore tried to get away from him. Not a bit.

But even if all the claims in the lawsuit are true, it’s not obvious that Darden and Vaughn had these intentions initially, as Torkel Nyberg points out on his blog Sifferkoll.

IH might have been pressed by investors’ expectations, while not being sure of having all the technology details. IH can even have been approached by more powerful entities, seeing the E-Cat as a threat, or wanting to secure the technology for the US, without depending on Rossi.

We don’t know this. And to settle the case might take years, unfortunately. In any case—the public statement from IH a few weeks ago now comes into another perspective, looking more like damage limitation, with support of the well-known PR agency APCO Worldwide.

 

The good part is that all this info now is public, that the one-year 1MW was successful, and that commercially viable LENR is here to stay, and that it will change the world.

§

As for the New Energy World Symposium, I’m very close to take the final decision to hold the event now.

§

Files regarding the lawsuit:

Link to the case docket.

Rossi et al v Darden et al_(complaint)

Rossi et al v Darden et al (Rossi’s patent)

Rossi et al v Darden et al (license agreement)

Rossi_et_al_v_Darden et al (First amendment, Exhibit A—E-cat Validation)

Rossi et al v Darden et al (Second Amendment)

[Update June 2, 2016]: IH-motion-to-dismiss

[Update June 18, 2016]: Rossi’s response to IH’s motion to dismiss

§

UPDATE (April 7): Industrial Heat has issued a statement in response to the lawsuit by Rossi and Leonardo Corp. It starts:

“We are aware of the lawsuit filed by Andrea Rossi and Leonardo Corporation against Industrial Heat. Industrial Heat rejects the claims in the suit. They are without merit and we are prepared to vigorously defend ourselves against this action. Industrial Heat has worked for over three years to substantiate the results claimed by Mr. Rossi from the E-Cat technology – all without success.”

I’m still waiting to see the report, but if it confirms the data that Rossi has given—a COP over 50, validated by the ERV chosen by Rossi and IH together—and if it’s true that IH has had its staff present at the test all the time, even bringing representatives for UK based Woodford to the plant to make due diligence and then receiving $50M in funding, I would find it quite difficult to understand that IH has not been able to substantiate the results claimed by Rossi. Maybe IH has not been able to replicate the effect themselves. But in that case I guess that they should kindly ask Rossi for help.

§

(UPDATED April 8): Rossi earlier said he couldn’t comment the ongoing lawsuit, but after IH’s press release above, he responded to some questions on his blog, Journal of Nuclear Physics. I have chosen to publish three of these comments, which I think speak for themselves:

 

  • Andrea Rossi
    April 7, 2016 at 7:27 PM
    Dear Janne:
    I have to comment the press release of IH, being a press release and not a forensic act.
    They made the Lugano reactor ( they also signed it ) they made many replications of which we have due record and witnesses, they made multiple patent applications ( without my authotization ) with their chief engineer as the co-inventor ( he invented nothing ) , with detailed description of the replications , they made replications with the attendance of Woodford, after which they got 50 or 60 millions of dollars from Woodfords’ investors, they made replications with the attendance of Chinese top level officers, after which they started thanks to the E-Cat they made an R&D activity in China in a 200 millions concern, they made replications with an E-Cat completely made by them under my direction the very day in which the 1 MW plant has been delivered in Raleigh, they made replications that we have recorded. After the replication they made with the attendance of Woodford in 2013 Mr Tom Darden said publicly: ” this replication has been stellar” ( witnesses available). But this is not the place to discuss this. We have prepared 18 volumes to explain exactly and in detail the activity of our “Licensee” and his acquaintances from 2013 to now. Until they had to collect money thanks to the E-Cat, they made replications and have been happy with the E-Cat; when it turned to have to pay, they discovered that they never made replications, that the ERV that they had chosen in agreement with us was not good, that the test on the 1 MW plant, thanks to which they collected enormous amounts of money from the investors and where I put at risk my health working 16-18 hours per day was not a good test ( but for all the year of the test they NEVER said a single word of complaint, even if they had constantly their men in the plant), etc etc. But the worse has still to come out. The worse is in the 18 volumes we will present in due time, in due place. A blog is not the right place to discuss a litigation. This is only a quick answer to the press release made by IH.
    Ad majora.
    Warm Regards,
    A.R.
  • Andrea Rossi
    April 7, 2016 at 8:32 PM
    Hank Mills:
    They prepared everything, the charges, the body of the reactor EVERYTHING !!!.
    I just teached to them what to do.
    They never used anything pre-prepared by Leonardo Corp.
    Now, let me talk to you of a very singular coincidence: Brillouin has always made only electrolytic apparatuses: go to read all their patent applications made before their agreement with IH, and you will find confirmation of what I am saying ( I know their patents by heart, because I have studied them and probably I know them better than themselves : I wrote about 100 pages of notes about their patents ). And now the singular coincidence: they make the agreement with IH in April 2015, and Voilà, they made a public demo in Capitol Hill ( Washington, DC) with a device that is the Copy-Cat of something I am familiar with. Nothing that Brillouin has ever made before the agreement with IH. What a coincidence !!!
    Warm Regards,
    A.R.
  • Andrea Rossi
    April 7, 2016 at 9:09 PM
    Hank Mills:
    In the press release of IH they write that ” for three years they tried to replicate the Rossi effect, with no avail”: very good, but during those three years Industrial Heat collected about 60 million dollars from Woodford, more millions from other sources, exclusively based on my E-Cats technology. This before making shopping to buy other patents. Now, the cases are two: either they are lying when they say they didn’t replicate, or they made a fraud collecting 60 millions from Woodford, more from others, not to mention Cherokee fund. You had to see Tom Darden and JT Vaughn dance like ballet etoiles around the investors, showing them the E-Cats, and telling them that the E-Cats had been built by them! “Stellar” coherently Darden, in his role of etoile, repeated to the enchanted attandees, ready to spend 50 millions. Now, that my bill arrived, the E-Cat had not been replicated , they say. For three years.
    Again, I am just answering to a press release of IH.
    Warm Regards,
    A.R.

 

 

Advertisements

82 comments

  1. Rossi is clearly a genius. Without any independently verified product, without any known sold units, using a technique that is as realistic as magic, he has managed to set millions of dollars in motion. $10 millions to himself from Industrial Heat and a claim of $89 millions on same company. Then $50 millions from Woodford to IH. More than a $100 millions from the Chinese Baishishan International Innovation Park. And when the only public supporter, IH, after three years of vain attempts throws in the towel and says: “This ain’t working,” he is still able to convince people to believe in him.

    I admire this man!

  2. @Mats,

    I know you can’t help but have a bit of a rooting interest in this story, but as an independent journalist with reputation at stake have you started doing any investigation into tax filings or employment records associated with JM Products?

    Even if the ownership of the shell company remains elusive, if they’ve been earning revenue or making payments to IH as Rossi states, then that corporate entity would have legally had to file tax returns in the US. Plus if they’ve been producing anything with the heat they must have employees.

    I’m not well-versed with finding such things online, but I’m sure you have some tricks up your sleeve!

    Even if, as you say IH may have apparently accepted the customer, don’t you want to find out what’s true for yourself (and for all of us!)?

  3. Hire some guys to do proper calorimetric measurements on the ECAT

    If it were a real stuff, he would have already done it, back in 2009.
    There is nothing to measure properly, but quantity of gullible people

  4. Suggestion for Rossi: Hire some guys to do proper calorimetric measurements on the ECAT, win the law suit and get $89M. I’m sure they would settle with $100k or less. Then Rossi would have $89.9M, minus lawyer fees of course. To me, that sounds like an excellent deal for Rossi. Why do I have the feeling that this won’t happen?

  5. Now Rossi could hire some guys to do proper calorimetric measurements on the ECAT to win the law suit and to get his $89M. I’m sure they would settle with $100k or less. Then Rossi would have $89.9M, minus lawyer fees of course. To me, that sounds like an excellent deal for Rossi. Why do I have the feeling that this won’t happen?

  6. @Alan S.: People have done a lot more than forging an utility bill for 86 Million US dollars. And I must say that I am amazed about the amount of money involved. And it makes it even more important to have really independent validation of the e-cat before it can be seen as verified, as the personal interest of Rossi is now so big that he can not be seen as an unbiased observer any longer.

  7. From Rossi’s blog.
    Teemu:
    I knew the Customer in the office of my Attorney Henry Johnson. They were enthusiast to test our 1 MW plant, to see if it really worked, because they were ( and are ) interested to buy more plants for their facilities in Europe. They wanted not to be exposed, though, therefore incorporated JM Products and made a plant for their production to make the test and appointed President their Attorney, who was also, as I said, my Attorney. IH knew all this and agreed, obviously, on this, making a rental agreement with JM Products to make the test in their factory. When IH met with the President of JM in Raleigh, I was present and I explained that he was also my Attorney. No problem has been raised by IH.
    Warm Regards,
    A.R.

  8. @allan:”Not so in my view. IH were the stated beneficiaries of $1000/day from the client in return for heat. In which case it would be logical for them to pay the electricity a/c in the name of JMC. Or are you suggesting that IH are complicit in a scam too, or are too dumb not to notice that they laid out $1M over a year and only took in $350K?.”
    If JMC was set-up by Rossi through a layer. And if JMC was the company receiving the electricity bill (as you sugested). Then we have no idea what electricity bill IH might have paid. It would not be difficult to give IH a smaler bill.

  9. ‘You might be right. And if you are right then the often heard argument, that the independent customer would know if the electricity bill got expensive, falls to the ground’

    Not so in my view. IH were the stated beneficiaries of $1000/day from the client in return for heat. In which case it would be logical for them to pay the electricity a/c in the name of JMC. Or are you suggesting that IH are complicit in a scam too, or are too dumb not to notice that they laid out $1M over a year and only took in $350K?.

  10. @Allan”And, he says, ‘If you think you can oput my name of the power contract, you can ‘kin think again. You pay for the electricity, I pay for the heat.’.
    You might be right. And if you are right then the often heard argument, that the independent customer would know if the electricity bill got expensive, falls to the ground.

  11. It is not difficult to see why an intermediary company (JMC) was required. Imagine this, you are the owner of a factory with a big need for steam-heat. A bunch of smoothies and a mad professor rock up one day and say. ‘We have this new technology we want to test- we can supply all the steam you need for $1K a day. Just let us park two containers behind your factory, plumb them into your main steam feed, switch off your gas boilers and we will do the rest. -Oh and BTW, we need to put in a big new electrical feed.’

    After some more discussion the customer agrees on the understanding that these crazies keep his name out of it. And, he says, ‘If you think you can oput my name of the power contract, you can ‘kin think again. You pay for the electricity, I pay for the heat.’.

  12. I retract my statement about JM Chemicals not being a shell company. Should have read the rest of the comments first. Time will tell who this company really is.

  13. The story makes sense: a bunch of rich guys wanted to cheat an inventor and steal his ideas. What else is new?

  14. Yes Josh, but what they hint at is that the company has been set up exclusively for testing the 1MW plant in Florida, with a lawyer nominated as a president, while the owners have their main activity in the UK. So if you’re sceptical, you could define JMC Inc a shell company. We won’t have more details if we cannot contact the owners.

  15. @Attention: JMC is not a “shell company” for hiding anything!! It is JM Chemical Products, Inc. You can see it on the last appended document accompanying Rossi’s filing: http://www.sifferkoll.se/sifferkoll/wp-content/uploads/2016/04/Rossi_et_al_v_Darden_et_al__flsdce-16-21199__0001.2.pdf (see last page)

    That affidavit also states that “JMC is owned by an entity formed in the United Kingdo, and none of Leonardo, Dr. Andrea Rossi, Henry W. Johnson nor any of their respective subsidiaries, directors, officers, agents, employees, affiliates, significant others, or relatives by blood or marriage has any ownership interest in JMC.”

  16. @Alan
    “The published name (JMC) is indeed an empty shell. A shell company. But that was to preserve the anonymity of a real enterprise using real heat”
    Reference, please! And if everything is OK, why the anonymity?

  17. ‘From what I gather “the customer” is an empty shell?’

    The published name (JMC) is indeed an empty shell. A shell company. But that was to preserve the anonymity of a real enterprise using real heat.

  18. @Mats:
    “Well Jed, I find it hard to believe that you make such errors for 352 days, in a controlled situation, without ever noticing anything strange. Then, you always have the raw estimate by checking electricity consumption from your grid provider and comparing to achieved result where the energy is used. I think there are good reasons to try to understand what lies behind IH’s behaviour too, not just taking their rebuttal for granted. Too easy.”

    Unless you make the error on purpose! Do we know the electricity consumption? From what I gather “the customer” is an empty shell?

  19. Monahan: I think this saga is good for the LENR field

    Every coin has two sides, so yes, some good things are coming out of this mess.
    Firstly, we know what was going on behind the curtains. The jury may ask for a public demo of the 1MW plant, which will bring into view the reality of it. The jury may appoint experts to confirm if this “cold-fusion” thing works, which, if the E-Cat works, will be beneficial for all.

    It looks like (if Rossi’s latest statements are true), IH and their scientists/engineers have the full know how of the tech, so its no more a monopoly of Rossi and will be impossible to suppress. It also looks like that IH has transferred it to China in exchange of a large sum (again if Rossi is saying the truth), which may mean that its already being copied and Chinese are planning to mass produce it. Good for the people of China, they will benefit hugely from it.

    If its exposed fully, the greed games would probably end and we may see mass adoption of this tech all over the world. Rossi will retire a billionaire in any case.

  20. The license agreement is far too much in favor of IH, if you read it carefully. I wouldn’t sign such an agreement personally. I wonder why Rossi accepted all those T&Cs and why his lawyers didn’t advise him better.
    He gave away all the IP for peanuts ($10M), when it could cost billions. No royalties, no share in sub licensing fees. No claim over the tech develop by IH using his IP. No escrow for the $89M part.
    He has no say in what IH can do with the IP. IH can get all the patents assigned to them and can file more.
    There is no termination clause, which means if Rossi decides to kick them out, they can drag him to the court.
    Probably Rossi had no choice but to accept it. But a bad choice.

  21. You had to see Tom Darden and JT Vaughn dance like ballet etoiles around the investors, showing them the E-Cats, and telling them that the E-Cats had been built by them!

    IF Rossi is right, Woodford and other investors can sue IH/Darden for fraud, since they asked for huge investment on something they knew may not work since 3 years. (I assume the word “substantiate” means they could not confirm if Rossi’s tech really works).
    It is strange because IH surely took a calculated decision. They decided well in advance that they will not pay Rossi. That may mean that Woodford and other investors knew of this and cooperated.

  22. Martin Tornberg’s explanation makes perfect sense

    However, I think this saga is good for the LENR field as they race to be the first in the market domination. The more competitors the better really!!!

  23. I think it important to note that part of the ‘long test’ agreement was that the customer would pay IH (not Rossi) $1000/day for heat during the period of the test. Supplying 1MW of purely electrical heating around the clock at 12c/Kwh would cost close to $3000/day – a big difference.

    It has long been known that the customer was originally using gas boilers, whose running costs (including oversight and depreciation) must have been somewhere between $1000/$1500 per day. They changed over to electrical heating specifically to accommodate the E-cat.

    I think it extremely improbable that anyone would fail to notice that the customer’s heat energy costs had more than doubled during a one year period. In fact such a discrepancy would have been obvious after a few weeks, because someone would be picking up the tab for it. Even if that someone was Rossi (which seems unlikely) it is impossible to believe that IH’s own expert representatives would never check-read the electricity meters.

    Something smells very fishy here, and in my opinion the smell is coming from somewhere a long way north of Miami,

  24. @Leo
    No, from what I learnt it’s just a coincidence with the letters JM and Chemical. It’s not Johnson Matthey. In the lawsuit documents, however, it says that JMC is owned by an entity formed in the UK.

  25. Argon—again, I’m waiting to see the ERV report. But honestly, I find your scenario almost impossible.

  26. Now that the report is complete it now a good opportunity for an individual or organization with enough capial to be making Rossi an offer to help him produce his E-cats for Europe with the Understanding that if IH is stripped of their license I’d have a stake in the licenseimg in all of IH’s territories.

  27. As much e-cat seems confirmed, I see one possible scenario that needs more information to come up before fraud can be ruled out:

    People asks why would IH pay 11.5m if e-cat would not work?
    1) That payment was made after hasty tests made by Penon, who now seems to have been known by Rossi beforehand. If IH was not aware of that and short tests were made quickly before delivering the container to US, IH could have been fooled to write up contract and pay 10 + 1.5m quickly to get the deal before competition.
    2) Then in US Rosssi could have used Smoke and Mirrors by showing top manageement ‘how to make Nickel fuel mix’ with his secret receipe. Maybe they made a mix but not independently verify COP achieved by that mix.
    3) During the one year test they tried to replicate test with original container, but never succeeded, still honestly believing Rossi.
    4) Before making (huge) 89m payment it is just normal business rule to verify what you are paying for. Maybe they were having increased concerns over Penons independence and started to question all measurements done by him.

    As much I would like to see COP over 50 being reality, as it looks like, there are just too many connections back to Rossi (ERV and ‘customer’) preventing me to be absolutely certain at this point.

    You may ask why Rossi would sue IH if they have caught him cheating? Well technically Rossi did fulfill the details listed in agreement. Deliver container, run 350 day test and got blazing results confirmed by ERV who was accepted by IH. If in court results cannot be _proven_ to be wrong, he could get some payment. Jury is nontechnical in US court.

    Not very probable scenario, but still too possible to be ignored.

  28. @Jed, obviously for the plant’s operation, you’re right. The report counts. For the rest I don’t agree. There are quite important things to observe regarding both Rossi and IH in this case, and it’s essential to draw some conclusions. Otherwise you would just be observing people acting precisely as they want and saying that everything is fine with me, as long as I get the report.

  29. @Guest
    I think the easy answer is that IH accepted the customer without any problems. They could, and should, have done all the controls you’re mentioning, especially since it was a matter of $89M. However, as far as I have understood, the JMC company is owned by a company or persons in the UK, with their regular activity there, and the company in Florida was set up specifically to try the 1MW plant, probably since Rossi had obtained permission to run the plant in Florida, and since the plant was there. Setting up the company and not wanting to be exposed, they choose a lawyer as president. So you’ll find nothing of this companies history in that case. But again, the easy answer is the first.

  30. @ Mats Lewan

    In the light of the new Rossi vs. IH law case I more and more wonder why the United States Patent and Trademark Office is still redirecting the Patent Application of Inventor Joseph M. Zawodny and the Original Assignee USA as Represented By The Administrator Of The National Aeronautics And Space Administration (NASA)…

    https://www.google.com/patents/US20110255645

    …to the Industrial Heat Patent Application?

    http://appft1.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=HITOFF&d=PG01&p=1&u=/netahtml/PTO/srchnum.html&r=1&f=G&l=50&s1=20110255645

    http://appft1.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=HITOFF&d=PG01&p=1&u=/netahtml/PTO/srchnum.html&r=1&f=G&l=50&s1=20160051957

    I am not a conspiracy theorist, but I wonder who is really behind Industrial Heat LLC when patent application of the Assignee United States (NASA) are diverted to patent applications of a private company, without any indication!

    https://www.google.com/patents/US20110255645?dq=ininventor:%22Joseph+M.+Zawodny%22&hl=en&sa=X&ved=0ahUKEwjh9tHb_e_LAhWrFJoKHYceCNYQ6AEIHTAA#legal-events

  31. You wrote: “I think there are good reasons to try to understand what lies behind IH’s behaviour too, not just taking their rebuttal for granted. Too easy.”

    No one is taking anything for granted. Please re-read what I said:

    “We cannot judge who is right until we see the report issued by Penon and (perhaps) a rebuttal from I.H. This is a technical question, and it must be settled by a careful look at the facts and analyses.”

    This issue has nothing to do with Rossi’s behavior or I.H.’s behavior. It cannot be settled by examining their behavior or speculating about their motives. It can only be settled by reading Penon’s report carefully, and evaluating it on a strictly objective, scientific basis. If the report is never published, we will never know.

  32. Important element of dicussion from Jones Beene on «Vortex»:

    «Johnson Matthey is a name which goes back to the early days of cold fusion.
    They supplied the active palladium for P&F. They are one of the largest
    producers of metal catalysts and precious metals in the world.

    Apparently, there is mention in one of the online documents of the Lawsuit –
    that JM Chemical is in fact a subsidiary of Johnson Matthey.

    Small world, if true. The implications are many.»

  33. Hi Mats, thanks for your response to my question.

    As a journalist do you know how to get access to things like corporate tax filings or employment records? I’m not sure how to go about finding them, but if JM Chemical Products, now called JM Products Inc, actually produces and sells something they should have a history of tax filings showing taxable revenue etc?

    I think it would be really helpful if you could find some corroborating evidence that JMC is a real company, not just a legal entity set up by Henry Johnson at behest of Dr. Rossi. So far I can’t find any real evidence of a functioning company in the typical places.

    The link between LC and JMC is so strong that without further evidence it may be difficult to believe the heat was actually used for something (which refutes the entire argument that customer would have known…, customer bills will show…, etc).

    I know you’re invested in this story, so hope you can do all you can to verify even if the results are counter to our hopes.

  34. In my view, the License Agreement was flawed from the beginning by creating a conflict of interest between Rossi and IH. The main conflict arises from Section 13.4 (“After Acquired/Developed Assets, Intellectual Property Rights”), which stipulates, in the 1st half, that any refinements or upgrades that Rossi makes to the E-Cat are also covered under the agreement, and, in the 2nd half, that after the agreement, both parties can do their own research and “all inventions, discoveries, concepts, ideas, information and anything else that the Company [IH], its sublicensees, or any of their affiliates, makes or develops which relate to the E-Cat IP or are useful in the business….[etc etc]…shall remain the property of the Company (or such sublicensee or affiliate if so agreed by the Company)”.

    This 2nd half of Section 13.4 is problematic because with this in place, IH felt that it was well within their rights to not only fully utilize all E-Cat IP developed by Rossi, but also to build upon that IP themselves as well, file their own patents, and attempt to improve on Rossi’s technology independently of Rossi. If Rossi did not want them doing this, then arguably he should not have agreed to this in the first place – or he should have demanded an equity stake in IH to keep their interests aligned. Of course, it is understandable that Rossi, not being a lawyer himself, may not have thought of this at the time and may have been eager to get the money that IH was offering him ($1.5 million upfront plus $10 million upon 24-hour Validation plus $89 million after the 1-year test, which Rossi had been led to believe would take start right after the E-Cat was delivered in 2013, as stipulated in the Agreement prior to it being amended to allow for a later start date).

    Once the agreement was signed and the E-Cat was delivered to IH in 2013, IH had an incentive to reverse engineer the E-Cat and start doing its own work in-house and via other partners. It also had an incentive to delay the 1-year test, so that it could a) delay paying $89 million to Rossi, and b) have more time to develop its own IP independent of Rossi.

    Rossi, on the other hand, had 2 somewhat conflicting incentives:
    1) to fulfill the obligations of the Agreement sufficiently to collect the $89 million or at least a decent portion of it, and
    2) to divulge as little as possible to IH about the ongoing refinements to the E-Cat (enhancements to the IP), in order to make sure that he stays ahead of IH in the race to develop LENR-related IP, given that IH was also engaged in its own research separate from Rossi, and given that Rossi had no ownership stake in IH.

    The real mystery in all of this is why no one realized in the first place that the License Agreement was flawed and created a conflict of interest. The Agreement should have given Rossi a substantial ownership interest in IH, and it should probably also have given IH a meaningful ownership interest in Leonardo, thereby creating a better alignment of interests. From Rossi’s standpoint, the Agreement shouldn’t have allowed Mr. Darden and Cherokee Investments to take the E-Cat IP and develop it on their own, independently of Rossi, via a company that Rossi did not have any economic interest in (IH). Rossi signed away more than he intended to in Paragraph 13.4, resulting in a conflict between Rossi and IH.

  35. The most plausible explanation I can think of is that IH plans on making the case in court that Leonardo Corp and Rossi “have repeatedly breached their agreements”, as IH put it in their press release. That most likely means Section 13, Covenants and Agreements, starting on P. 9 of the License Agreement, most likely including 13.1, which stipulates that “Rossi will provide ongoing training and support to the Company [IH] in the use of the Plant and the production of the E-Cat Products….and to the extent reasonably requested by the Company to enable it to utilize the E-Cat IP, operate the Plant and produce the E-Cat Products.” In practice, Rossi likely kept everything under his own control and did not keep IH fully educated with respect to the details of all of the trouble-shooting that took place during the 1-year test. Basically, Rossi did not provide IH with everything that it needed to be able to produce and operate an E-Cat on its own. As a result, IH was not able to independently recreate (“substantiate”) the results that Rossi was achieving during the 1-year test.

    Rossi’s motivation for not working more closely with IH, not bringing them more fully up to speed, and not sharing all of his latest tweaks and fixes with them was most likely that he felt that they were not acting in his interests and he didn’t trust them. For example, he delivered the E-Cat to them in August, 2013 (and they knew for months that it was coming), yet even a year later, they had still not started the agreed upon 1-year test and didn’t do so until Rossi himself took the initiative to arrange a customer, a location, and certifications. In addition, they started filing their own patents and investing in Rossi’s competitors. As a result, it would have been understandable for Rossi to suspect (correctly or incorrectly) that IH may have been trying to obtain as much info / IP from him as possible and utilize that info / IP on their own and/or in conjunction with other LENR companies that IH had invested with.

  36. Tack for the over view. I agree with what you say.
    I also think that on a bigger picture this is positive. I can see two outcomes.:
    1. IH and Rossi settle soon, very soon.Then they will have plenty of money coming their way.
    2. They continue the lawsuit and Rossi find other partners (to begin with outside the US) and a massive implementation plan will be set in motion.
    As I have no direct connection to Rossi or IH I have no way of knowing who is closest to the truth. There are reasons to believe that all statements in this early stage are slanted. I do believe that Rossi has performed a successful test – COP who knows. We will find that out without ambiguous tests – the energy consumption at the user site must be measured and comparison can be made. Rossi must have such data – he will use that in the lawsuit if such data indicate any COP > 6. That is my litmus test on Rossi’s credibility.
    Maybe I should go back to Stockholm – I think we will see rapid movement in this field from now on.

  37. Well Jed, I find it hard to believe that you make such errors for 352 days, in a controlled situation, without ever noticing anything strange. Then, you always have the raw estimate by checking electricity consumption from your grid provider and comparing to achieved result where the energy is used. I think there are good reasons to try to understand what lies behind IH’s behaviour too, not just taking their rebuttal for granted. Too easy.

  38. Possible typo: you wrote that the 24-hour validation test took place in May of 2014, but according to Paragraph 57 of Rossi’s court filing (the Complaint document), the test took place May 1-2, 2013.

  39. You wrote: “Furthermore, if the COP has really been above 50, it would be really difficult to mess that up.”

    It is unusual to make an error on this scale with industrial equipment, but it is not unheard of. Here are two examples:

    1. Defkalion. See: http://lenr-canr.org/acrobat/GamberaleLfinaltechn.pdf

    2. The Three Mile Island accident. The instruments and procedures caused a drastic error in measuring the heat flow, resulting in the meltdown. You can think of it as a gigantic calorimetry experiment gone wrong. (It was NOT the operators’ fault, by the way. They followed the mandated procedures.)

    Three Mile Island is not the only example. Many boiler explosions and meltdowns were caused bad calorimetry. Others are not, of course. The Fukushima disaster was caused by the destruction of the cooling water pumps. The instruments correctly showed that conditions were deteriorating and the reactors were overheating, but the operators were unable to do anything about it.

  40. @Leo
    As far as I understand, the IP was transferred in order to make it possible for IH to use it for manufacturing and maintaining E-Cat based products. But the property of the IP remained Leonardo’s.

  41. @Jed
    I agree that Penon’s first report was poorly done. If I remember right, on one of the reports he was even co-author without having assisted at the measurements.
    I also agree that we don’t know for sure before having seen the report. Fair—I made an exaggeration in the beginning of the text. Regarding Penon, however, the brief description of his CV that I have heard is promising (I think it will be published), and he has been chosen by Rossi and IH together. It seems fairly obvious to me also that this measurement was made with higher professionally than the reports you mention. Furthermore, if the COP has really been above 50, it would be quite difficult to mess that up.
    But, in any case, let’s see.
    Also see my update above, on IH’s new statement.

  42. Hi, Mats, Thank you for your work. You say: a) «After successful completion Rossi was paid $10M, and he transferred all the necessary IP for the E-Cat and its fuel to IH.» . And b) «The license agreement defined that IH acquired a license for North and South America, China, Russia, Saudi Arabia and the Emirates, to sell and manufacture E-Cat based products, but the IP remained property of Leonardo Corp. »
    How can both of these statements be true?

  43. You wrote: “First of all—we now know that the one-year 1MW test was very successful and that the E-Cat and LENR is a technology field that will fundamentally change the world.”

    No, we do not know that. I.H. claims the tests were flawed, and there was no excess heat. See their press release:

    https://www.lenr-forum.com/forum/index.php/Thread/2979-Industrial-Heat-Statement-on-Meritless-Litigation-from-Leonardo-Corporation-and-/

    We cannot judge who is right until we see the report issued by Penon and (perhaps) a rebuttal from I.H. This is a technical question, and it must be settled by a careful look at the facts and analyses.

    Rossi has made grievous errors in the past, such as when NASA examined one of his devices. The device was plugged up; the flow rate was zero. Rossi did not realize this and he was upset when they pointed it out. His test of the 1 MW reactor in Italy was so poorly done it is impossible to draw any conclusions from it.

    The author of this report, Penon, reported on one of Rossi’s devices in 2012. In my opinion his report was very poorly done, with many error similar to the ones in the Lugano report. Using his methods he could not determine whether the device was apparently producing 2.5 kW or 3.7 kW (see p. 14). That is a large error margin. He could have fixed this easily by performing calibrations. This is poor technique. See:

    http://coldfusionnow.org/wp-content/uploads/2012/09/105322688-Penon4-1.pdf

  44. @Guest
    I have not been at the plant, but people who were there got the impression that the energy was used for real activities. They also talked with the customer. As for JMC, the info I have gathered indicates that the company doesn’t want to be exposed and that lawyer of the company therefore has been nominated president, and he also happens to the lawyer of Rossi. I don’t know what you can make out of that. Maybe he made the connection between Rossi, IH and the customer. It also says at the end of the License Agreement document, in the ‘Compliance with OFAC’ that this person, Henry W Johnson, has no ownership in JMC.

  45. @alain samoun
    Yes, apparently it’s the company that bought the energy from the 1MW plant. I figure they don’t want to be exposed and there’s very little information. The president seems to be a lawyer, hiding the real persons behind the company.

  46. The story of cold fusion is a sure fire way to bring out the trolls and nere-do-wells as evidenced in quintessentially trollish commentary that is raging. More important it also brings out those with earnest and honest hearts.

    Of course the main points of ‘cold fusion’ are more about the promise and threat that this transformational technology delivers. On one hand had ‘cold fusion’ been accepted and developed starting more than 25years ago, today the world would be without the trials and tribulations of fossil fuels, millions of lives would have been saved, more whose health has been harmed by carbon emission taken care of, and the world would be one of hope not hostility as wars over oil would not be occurring.

    Similarly those gorging themselves at the global pork barrels of oil, high energy physics, and to a lesser degree the mere trillion dollar ‘climate change’ research field would need to have found a more peaceful and beneficial path for their lives! here’s another tidbit of history http://atom-ecology.russgeorge.net/2016/04/07/cold-fusion-historical-fueds-kowalski/

  47. Hey, Alan Mats and everyone, have you seen IH’s current news release? Here’s the thrust of it:

    “”Industrial Heat has worked for over three years to substantiate the results claimed by Mr. Rossi from the E-Cat technology – all without success.””

    How do you rationalize that into thinking Rossi *EVER* had *ANYTHING*?

    http://www.prnewswire.com/news-releases/industrial-heat-statement-on-meritless-litigation-from-leonardo-corporation-and-andrea-rossi-300248066.html?tc=eml_cleartime

    Still having a meeting in June, Mats? Expecting Rossi?

  48. And yet again the light of wisdom and history shines on the antics of Rossi. Wonder if he will talk himself back into prison? Of course no one with real money will pay without ACCEPTABLE proof. Rossi is Rossi. The leopard still has it’s spots. Rossi’s latest foray into the energy generation and energy recovery industry seems deemed to; and for many always was; headed for the same result as all Rossi’s preceding ventures in this field.

  49. Mats, how do you view the reported results within the context that the customer appears to be a Rossi-linked shell company (JMC shares its President with Leonardo, no public records of income or having sold any products)?

    I believe you’ve mentioned having been to the factory, were you able to confirm that it was truly a viable business? Or were you kept separate from the production side?

    Just wondering if there’s any confirmation that the heat was used for anything, otherwise this seems to be another laboratory test with potential for calibration trickery that could have fooled Penon (if he indeed had to be fooled).

  50. Mary Yugo – you asked Mats. ‘Do you trust Penon to be able to detect if Rossi is fooling him?’

    It is worth pointing out that the appointment of Penon was jointly agreed by both Darden and Rossi at the beginning of the long test. The fact that you don’t think it should be so is irrelevant, that is what happened. Darden may have had his own motives for approving the deal.

    It is also a fact that IH had their own crew in and out of the customer factory checking power data. And yes, there really is a customer -something else I think you doubt.

    Rossi’s action in suing IH means that many previously undisclosed facts will be dragged out into the light and closely examined by various experts, And bringing a suit at this stage does tend to suggest he has a case – at least until we hear IH’s counter-claims

  51. In the movie “Miracle on 34th Street”, a smart attorney got a judge to rule from the bench that Santa Claus is real. Barring an out-of-court settlement, a judge and / or jury will need to weigh the facts and make a determination whether the E-Cat met the contract requirements.

    Maybe, just maybe, this is a strategy to get cold fusion / LENR recognized as legally valid. When that happens, the USPTO is going to have to reopen a few patent apps.

  52. Nice overview Mats, thanks. This event is just a small stumbling block on the way to the inevitable transformation in human energy production and a concomitant cultural and economic shift of unimaginable proportions.

  53. One more thing, Mats. Do you trust Penon to be able to detect if Rossi is fooling him? Like Rossi did in 2012? If you trust Penon, why do you trust him? Why wasn’t some truly independent ERV found who had never worked for Rossi? Why was not a major testing institute or government lab involved instead of an unknown who had worked for Rossi in the past and who had done highly questionable work?

  54. Mats, you’re, as they say, throwing good money after bad. You still think Rossi has a table top fusion reactor with a high COP and high reliability AND Industrial Heat threw away billions of dollars’ worth of business to avoid a single payment of $89M? This makes sense to you? Why, please?

  55. CimPy la tua opinione la conosciamo da anni, sei come un disco rotto, non fai più testo, sei su tutti i blog a sparare balle contro Rossi. il tuo lavoro e quello di parlare male a prescindere.

  56. Mats, thank you for the overview.

    Could you elaborate more on the topic “people connected to IH (…) telling various stories about Rossi”?

  57. So, it is over then, Andrea Rossi’s latest energy scam.

    Oh, well, wait! … I do not suspect the Believers will go away, even if faced by the facts.

    There will be more. Damned reality.

  58. To Brent B

    Assign a patent does not mean own; it just gives a right to use. All of my patents for the company were assigned to them due to my contract. I then had to release any rights I might have had for the typical $1 payment.

  59. What it’s hardly understandable (for my at least) is why Darden and co, accepted Fabio Penon as ERV and Fulvio Fabiani as representative in the plant if they wanted to cheat Rossi. They surely knew that both Penon and Fabiani were close to Rossi.

  60. Andrea Rossi’s scam was obvious to everyone and still some wanted to believe in it.

    Oh, well, now it is over. Time for the end-game?

  61. This seems like a very emotional action by Rossi himself, including making these documents publicly available. I would love to see IH’s point of view, but likely they will not let themselves tempted to respond in public. IH must have clear reasons not to pay the agreed amount, probably beyond the test result but more related to the IP. The related patent application seems rather worthless though. I would not be surprised if the real fight is about Rossi’s next intended patent applications and whether they would be part of the deal.

    Two dogs fighting a bone. There are others who may run away with it (keep an eye on e.g. Holmlid)

  62. It is time for the competitors.
    If someone is meanacing their leadership, maybe they will stop being kiddish.
    They are sitting on a trillion$ business, and battle just not to share half…

    half of a revolution is more than full of a failure.

  63. Mats, you know I have always trusted you and supported you. So I am not being obnoxious when I ask, besides Rossi says, and besides Rossi says Penon says, how do we know that the 1 year test was successful?

  64. Ja, det er ikke så lett å være liten og komme i kontakt med de store. Følg med, følg med….

  65. You wrote: “The license agreement defined that IH acquired a license for North and South America, China, Russia, Saudi Arabia and the Emirates, to sell and manufacture E-Cat based products, but the IP remained property of Leonardo Corp. Yet IH stated that it had acquired the technology from Rossi”

    The License Agreement also states in Section 10: “Upon request of the Company, Leonardo and Rossi shall assign to the Company the Licensed Patents with respect to the Territory”. Perhaps that’s a basis for IH’s claim. Anyway, I suppose soon enough we’ll see court documents from IH.

  66. What’s your take on Henry W Johnson being the President of both Leonardo Corporation and the customer, JMC?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s