Lawsuit

Rossi makes offer on Swedish factory building – plus more updates

Screen Shot 2016-05-16 at 15.04.35Last week, Andrea Rossi made a visit to Sweden, and apart from meeting with the team of professors in Uppsala, with me and other persons, he made a trip from Stockholm to the south of Sweden to have look at a 10,000 square meter factory building for sale. The day after, assisted by his Northern Europe partner and licensee Hydrofusion, Rossi made an offer on the building in the order of USD 3 to 5 million. Negotiations are now ongoing.

Obviously, making an offer is not the same as buying, but Rossi made it clear to me that he intended to buy the factory building, aiming at starting manufacturing of the third generation E-Cat reactor, called the Quark X, hopefully this year, otherwise in 2017, with an estimated production volume of 500,000 items a year, using a robot line provided by ABB.

Rossi said he had no other funding than the 11.5M he already received from his licensee Industrial Heat, according to their license agreement, which is now subject to a lawsuit. He said that he estimated the costs for the lawsuit to amount to 1M.

Even buying a factory building is no proof that production will start. Critics, accusing Rossi for being a fraudster, will assume that it could be a way to attract investors, but I honestly wouldn’t expect a fraudster to make use of such expensive schemes. Especially not since it would be quite fine just getting away with 11.5M without further trouble.

I would take this as a strong indication that the modular Quark X, supposedly big as a pen, producing heat, light and direct electricity at variable proportions at a total power of about 100W, based on the E-Cat LENR technology with hydrogen, lithium, aluminium and nickel in the fuel, is real. Rossi, however, said that there’s still R&D to be done to get the Quark X ready for production. He also said that the ‘X’ had no other meaning than being a substitute for a final name.

After my meeting with Rossi (first time for me since September 2012), I have a few other updates.

Claiming that everything he said could be proven with documents (or that he otherwise would be lying), Rossi told me regarding the one-year 1MW test that:

  • All the instruments for measurements were installed, under observation of IH and Rossi, by the ERV (Expert Responsible for Validation) Fabio Penon, who had been communicating also with Darden, receiving technical suggestions from him on this matter. All communications with the ERV were made with both Darden and Rossi in copy.
  • The flow meter was mounted according to all standard requirements, for example at the lowest point in the system.
  • The MW plant was placed on blocks, 33 cm above the ground, to make sure that leaking water or any hidden connections would become visible.
  • The two IH representatives present at the test were Barry West and Fulvio Fabiani (who worked for Rossi from January 2012 until August 2013, when the MW plant was delivered to IH in North Carolina, after which he was paid by IH as an expert who would make the technology transition from Rossi to IH easier). West and Fabiani reported to JT Vaughn every day on the phone.
  • Three interim reports, about every three months, with basically the same results as in the final report, were provided by the ERV during the test.
  • During summer 2015, IH offered Rossi to back out from the test and cancel it, with a significant sum of money as compensation. Rossi’s counter offer was to give back the already paid 11.5M and cancel the license agreement, but IH didn’t accept.
  • The unidentified customer (‘JM Products’) using the thermal energy from the MW plant, had its equipment at the official address—7861, 46th Street, Doral, Fl. The total surface of the premises was 1,000 square meters, of which the MW plant used 400 and the customer 600.
  • The equipment of the customer measured 20 x 3 x 3 meters, and the process was running 24/7.
  • The thermal energy was transfered to the customer with heat exchangers and the heat that was not consumed was vented out as hot air through the roof.
  • The water heated by the MW plant was circulating in a closed loop, and since the return temperature was varying, due to different load in the process of the customer, Rossi insisted that the energy corresponding to heating the inflowing cooled water (at about 60˚C) to boiling temperature would not be taken into account for calculating the thermal power produced by the MW plant. The ERV accepted. (This was conservative, decreasing the calculated thermal power. The main part of the calculated thermal power, however, derives from the water being evaporated when boiling).
  • He also insisted that an arbitrary chosen 10 percent should be subtracted in the power calculation, with no other reason than to be conservative. The ERV accepted.
  • IH never had access to the customer’s area. At the end of the test, an expert hired by IH, insisted that it was important to know where the water came from and where it was used. The ERV explained that this had no importance.
  • The average flow of water was 36 cubic meters per day.
  • At the end of the test, the ERV dismounted all the instruments by himself, in the presence of Rossi and IH, packed them and brought everything to DHL for transportation to the instrument manufacturers who would recalibrate the instruments and certify that they were not manipulated.
  • After the test, IH wanted to remove the MW plant from the premises in Florida, but Rossi would not accept until the remaining $89M were paid according to the license agreement. Rossi’s and IH’s attorneys then agreed that both parties should lock the plant with their own padlocks (as opposed to the claim by Dewey Weaver—a person apparently connected to IH, but yet not clear in what way—that ‘IH decided to padlock the 1MW container after observing and documenting many disappointing actions and facts’).

I should also add that I have been in contact with people with insight into the MW report, that hopefully will get public this summer as part of the lawsuit, and they told me that based on the contents, the only way for IH to claim a COP about 1 (that no heat was produced—COP, Coefficient of Performance, is Output Energy/Input Energy) would be to accuse Penon of having produced a fake report in collaboration with Rossi. Nothing in the report itself seems to give any opportunity for large mistakes, invalidating the claim of a high COP (as opposed to claims by people having talked about the report with persons connected to IH).

As for hints on the ERV Penon being incompetent, based partly on the HotCat report from August 2012, I would like to point out:

  • Fabio Penon has a degree in Nuclear Engineering, from Bologna University, with rating 100 of 100 and honors.
  • He worked for several years in the nuclear industry with thermo mechanics.
  • When the nuclear industry was put on hold in Italy, he turned to work as expert on product certification, collaborating with entities such as Bureau Veritas, Vertiquality and Det Norske Veritas.
  • The HotCat report from August 2012, signed by Penon, containing a few notable errors, was not written by Penon. Penon assisted at a test on August 7, 2012, repeating an experiment made on July 16, 2012. The report was written on the July test, and Penon was only confirming that similar results were obtained on the August test. Penon told me this in an interview in September, 2012. You could of course accuse Penon of not having studied the original report sufficiently before signing it, but the errors were not a result of Penon’s work.

Two further remarks regarding earlier E-Cat tests:

  • I had a new look at the calculations of the October 6, 2011, test, which was recently disputed. A total of about 31 MJ of electric energy was input. At 0,9 g/s, a total of about 26 kg of water was input during the test from 11 am until 7 pm. Heating this water from 25 to 116 degrees centigrade requires about 10 MJ. During the last 5 hours, 16 kg of this water was also evaporated, which required about 36 MJ. An estimated 100W was radiated from the E-Cat for at least 5h, making about 2MJ. The E-Cat was leaking a significant amount of hot water during large parts of the test. Even without taking this lost thermal energy into account, about 48MJ was released and 31MJ input, which gives a rough COP of 1.5.
    (Boiling at 116˚C assumes an internal pressure of about 1.7 bars—lower pressure would mean lower boiling point and longer period of boiling, with more energy released—116˚C was the final temperature, when the water was still boiling, before interrupting the test).
  • I have contacted several experts to get a third party evaluation of the Lugano test report and the contesting papers by Thomas Clarke and Bob Higgins. Until I receive these evaluations I only note that the original result is contested, but that no conclusive result is agreed upon. The isotopic shifts remain unexplained, unless you assume fraud.

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Now, all this makes me conclude that the E-Cat is most probably valid and that the 1MW test was indeed successful. What remains to be explained is why IH in that case didn’t pay Rossi the final $89M and continued to partner with him to develop and market such a disruptive, world changing technology.

After looking at it for some time, I tend to be skeptic about the conspiracy hypothesis, involving large financial and political interests being threatened by such a technology, even though I find it remarkable that IH has involved APCO Worldwide and Jones Day.

I then ask myself if it’s really possible that it all comes down to money. That IH/Cherokee, as has been suggested, has a track record of putting up companies based on emerging technologies or remediation projects, collecting public and private funding (or also this link), making the funds disappear and then closing down the companies with reasonable explanations for unsuccessful development of the technology or of the project.

Admittedly, this could be a defendable strategy in some cases where results could be obtained. Still, if the E-Cat is really working as claimed, why wouldn’t they then take the chance to build it into a prospering money machine? Taking care of the magic hen that lays golden eggs instead of roasting it after having collected the first egg, as some would put it. I cannot figure it out.

Clearly, such an endeavour would require investing a lot of money and work, spending large parts, if not all of the funding IH collected while boasting about the successful MW test, and also taking a market risk that it might not play out as expected. But wouldn’t it be worth it? Becoming remembered for introducing a technology that could change and literally save the planet, from the climate crisis and from fossil fuel pollution? Rather than being forever remembered as those who only saw the money, and didn’t want to get involved in the technology project? I just cannot understand.

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Finally—I will continue having the comments on this blog closed. The main reason is that few new facts have been presented, whereas unmanageable amounts of opinions have been posted.

I would like to apologise if I have hinted at Thomas Clarke’s having an agenda with his impressive number of comments. I want to assume that Clarke is perfectly honest in the significant work he has laid down on analysing the Lugano report and on commenting what, according to him, is probable or not. But I would also like to note that producing for some periods up to 34 posts per day hints at a position which I’m not sure if it should be called balanced. This, combined with obvious spin from a few people, apparently having an agenda in criticising some individuals, adds to my decision to keep the comments closed.

However, please share the post if you think t’s relevant, and feel free to email me if you have facts that you think I should be aware of.

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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.

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

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Files regarding the lawsuit:

Link to the case docket.

All documents released from the court

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)

For further documents use the link above (“All documents…”).

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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.

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(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.