Industrial Heat Files Motion to Dismiss Rossi Lawsuit

  • [feedquote='E-Cat World','http://www.e-catworld.com/2016/06/03/industrial-heat-files-motion-to-dismiss-rossi-lawsuit/']Thanks to Mats Lewan for posting a newly filed motion to dismiss the case that Andrea Rossi has brought against them. Here’s the introduction: The various claims pled in the Complaint all revolve around two central contentions – that IH and IPH were required to pay Leonardo $89 million under a License Agreement and that […][/feedquote]
  • This portion of the motion to dismiss should be interesting to those who have been claiming Dewey is making up fantasy information:


    "1. Because Defendants are not permitted to introduce facts outside the Complaint and its Exhibits, this motion does not address, for example, the numerous errors in Plaintiffs’ purported “Guaranteed Performance Test” that the Complaint purposely ignores (such as departing from the purported test plan, ignoring inoperable reactors, relying on flawed measurements, and using unsuitable measuring devices)."

  • Early on when the suit was filed by Rossi, and the contract was revealed for the first time, many noted how one-sided the licence was in IH's favor. This response by IH makes that point to the court many times, as they legally shred Rossi's accusations. The contract gives them such wide latitude to do just about anything with the Ecat and the IP, it almost makes Rossi look foolish to claim, as he has, that they had no right to do this or that. They had EVERY right though to do what they did...it's written plain as day into the contract!


    As others have said, IH's motion is all about the legalities, and nuances pertaining to contract law that they contend justifies their request to dismiss outright...not on the merits of the Ecat. Although they carefully slip in there that -while this is not the venue, the test was not done properly. Very possible, if IH's request is rejected, they will bring out their big guns (evidence of fraud, incompetence) in subsequent phases.


    In reading IH's case, which they make very understandable...even to a layperson like me, does make Rossi look legally naive. As did David French conclude when he analyzed Rossi's suit last month. With Rossi's suit, and latest move to unilaterally fire IH as a licensee, he appears to be letting his temper, and ignorance of contract law, dictate his moves.


    Maybe Dewey is right...Rossi soon may be taught a painful legal lesson? Never know though, Rossi may have something up his sleeve. Stay tuned.

  • I found this part interesting:


    "Furthermore, even if the Proposed Second Amendment was effective, it required that the Guaranteed Performance Test be conducted using a “Six Cylinder Unit.” Id. § 1. Plaintiffs have not pled, and cannot plead, that they performed their “test” from February 2015 to February 2016 using such a Six Cylinder Unit."


    Never heard of the "Six Cylinder Unit". Strange too that Rossi did not run the Guaranteed Performance Test immediately when the "Six Cylinder" unit, or whatever arrived in North Carolina as he was supposed to do. Choosing instead to persuade IH into agreeing to the "amendment", allowing for the 1 year test using the 1MW. That would have raised a few red flags.

  • Trying to dismiss the lawsuit based on the test starting too late is a bit weak sauce IMO. Who was responsible for finding a client in the first place?


    I'm looking forward to the the time this becomes about whether the plant works or not, and not about contract technicalities.

  • Shane,
    I agree that the contract between Rossi and IH is very one-sided, and this indicates (to me) a desire on the part of IH to "steal" Rossi's IP "for a song". Sifferkoll was completely right about this (see also his latest blog post at www.sifferkoll.se). In fact, I think that's where the focus of at least part of the discussion should be. On the other hand, I don't agree that the contract gave them "every right to do what they did" without being held in breach of contract. THAT is for a court to decide. Furthermore, the contract is somewhat murky about the $89M payment, and in my opinion contradicts itself at times.


    I might add that I'm not a lawyer, but just because something is in a contract, if it's illegal or unethical in some way, then I would expect that it would be unenforceable. For example (and this is relevant to the current case) if I sign a contract to be your slave (or in Rossi's case provide IH all of the IP that he develops in perpetuity for the rest of my life) then I would suggest that this is an illegal or unenforceable contract.


    As a final thought I would add the following. If Rossi is a fraud (e.g. his technology doesn't work) then this is a case of greedy "vulture-capitalists" being fooled by a fraudster. On the other hand, if Rossi's claims are correct, then it is a case of "vulture-capitalists" taking advantage of an inventor. In either case, there is no doubt that IH has been acting (unless it can be shown - as Dewey has in part claimed - that the contract was written by Rossi) with the goal of appropriating as much as IP as possible, while still paying a minimal (and unfair in this case) amount. Besides control of the IP (one motivation), possible greed (another motivation), another possible very strong motivation (as again Sifferkoll has pointed out) is the possible desire on the part of many groups to delay as much as possible the widespread use of LENR technology. This could explain some of IH's actions (this includes filing for patents outside their allowed territories etc. and low-key approach) and even the wording of the contract as well!


    If Rossi and IH "divorce", I think that would be for the best, since either IH does not believe in his technology (as indicated by Dewey Weaver's comments regarding the Lugano test and the 1 MW test), or they secretly believe in it (this is why they are filing patents outside the allowed territories) but want to defraud him and/or suppress/control the introduction until such time as they feel is appropriate for their and/or other entities' best interests. Of course, I could be wrong. The other possibility is that Rossi has been a liar and fraudster from the beginning, while IH have been both "vulture-capitalists" and "technically naive and incompetent" in terms of the preliminary tests which they carried out. I hope that they haven't "treated" (double-entendre) their other LENR inventors in the same way in terms of control of the IP, NDAs, restrictive agreements etc. The full truth is yet to be seen.

  • For those who don't read "www.ecatnews.net", here's a salient comment from one of the posters:


    Billy Jackson • "All i am reading here is them going after technical details of the contract. This is starting to seem like the intention was to steal this technology from the beginning through legal manipulation. This is detestable. If this was the intent they should have their business license stripped from them, and if they are lawyers disbarred from where they are registered. This right here is 100% of the reason people dont trust lawyers."

  • There is a huge difference between "stealing" and payment of 11.5m$.


    Tom,
    OK. I should have put "stealing" in quotes. What is the right word for "deceitfully attempting to pay an inventor much less than the value of his/her invention"? The idea is the same. The point here is that even if IH had believed the 1 MW test to be successful, according to their legal filing and Dewey's comments they could still refuse to pay and retain control ("license") to all of the IP. In my opinion, if that were the case, e.g. if the 1 MW test were successful, then this would be "stealing".


    I might add that this makes it likely to me that their motion to dismiss will be denied since the issues regarding the 1 MW test need to be decided on their own merits.

  • Quizzical,


    I agree that the courts, if they don't allow this MTD, will decide. Let me say too that I am not necessarily siding against Rossi. He actually acts as if he does have something, as his actions seem in line with someone who has been burned, and taken advantage of by someone they once trusted. Striking out publicly, and through the legal system. It may not be the smartest move on his part, but he seems to be truly hurt.


    Of course, that could be a ruse, and he is just trying to gain sympathy to squeeze a little more money out of his latest mark/sucker.


    One point that I think believers should consider, is that according to IH's motion, Rossi initially was supposed to "immediately" do the 400 Guaranteed Performance Test when IH received the "unit"...which they took delivery of in Augut 2013. Rossi was supposed to do that test using the "Six Cylinder Unit". But Rossi did not do the test for reasons unknown.


    Seems IH could have walked away then, but for some reason decided to enter a new agreement with Rossi to allow the test be carried out later, but still using the Six Cylinder. However, Rossi used the 1 MW plant instead.


    Why did he not do the test "immediately"? If he had done so, this would have been resolved long ago. Yet another missed opportunity on his part to eliminate all doubt. And why did he use the 1MW instead of the Six Cylinder for the test allowed by the amended agreement? Maybe Rossi will answer to these questions on his JONP. He may have a good reason. Maybe not.

  • Quizzical,


    I agree that the courts, if they don't allow this MTD, will decide. Let me say too that I am not necessarily siding against Rossi. He actually acts as if he does have something, as his actions seem in line with someone who has been burned,…


    Shane D.,
    As far as I can tell, there is no "Six Cylinder" unit in the contract. I agree that there are timing issues etc. related to the "enforcement" of the contract, but if so, then why did IH allow Rossi to carry out the one-year test? This is obviously a purely legal manipulation which sheds no light on whether or not the 1 MW test was successful.


    I might add that I couldn't care less whether or not IH lost money on this contract. They are venture-capitalists and they are willing to take risks. I am also less sympathetic to them (even if Rossi is a fraudster) because of the one-sided nature of the contract.

  • It looks to me as if Rossi either didn't engage a good lawyer to help write the contract, or did, but then ignored advice.


    Ignoring advice seems to be his stock in trade. If he had listened to competent lawyers, scientists and engineers he would be a long way ahead of where he is now.

  • 3 (3.1) The total price for the grant of the License and purchase of the Plant is One Hundred Million Five Hundred Thousand Dollars ($100,500,000).


    5 (Paraphrased) If the Plant does not produce excess heat to the required level, then the payment of 3c ($89,000,000) will be reduced commensurate to the reduced multiple of excess power created. If the Guaranteed Performance is not achieved, then the $89,000,000 does not have to be paid, and the purchase price reduced accordingly from the value specified in 3.1

  • @quizzical


    The contract is completely correct and fair for both sides.


    Nobody forced Rossi entering this agreement and I can not see that IH has done anything to breach the agreement.


    But on the contrary. They have fulfilled their previous obligations. They paid $ 11.5m for something that they had not received, if we believe IH, and for claims that are generally questionable.


    That you afterwards will not raise 89m$ corresponds to the normal human mind. Especially, if an obligation does contractually not exists, because the preconditions are not fulfilled.


    Only when it comes to Rossi, then it appears as if this normal human mind lacks in some people.


  • "The contract is completely correct and fair for both sides." That is your opinion but it is not mine.


    In terms of payment of the $89M that is an issue to be decided by the Court. In terms of IP, I still think that the contract is one-sided and unfair.


    Perhaps you "can not see that IH has done anything to breach the agreement." but unless you represent IH or Rossi, you do not have all of the facts. Whether or not IH has breached the agreement will be decided by the court.


  • Tom,
    Let me respond to your post in a slightly different way. It's obvious that Rossi and IH signed the contract. But that does not make it fair from an IP point of view. Also, a number of provisions of the contract may be interpreted differently. Similarly, for Rossi's and IH's actions related to the contract and to IP. Getting to the bottom of this requires both knowing all of the facts (which we don't know) as well as legal interpretation (to be done by a Court).


  • Tom,
    Let me respond to your post in a slightly different way. It's obvious that Rossi and IH signed the contract. But that does not make it fair from an IP point of view. Also, a number of provisions of the contract may be interpreted differently. Similarly, for Rossi's and IH's actions related to the contract and to IP. Getting to the bottom of this requires both knowing all of the facts (which we don't know) as well as legal interpretation (to be done by a Court).


    That we comment here on the basis of previously published facts and that ultimately a court will decide on the case is probably quite clear.


    But just as you have brought your views expressed, I also expressed my estimation.


    And I can assure you that I have examined the known facts intensive with different perspectives.

  • So why did they then proceed to introduce those facts in the following sentences?


    IHFB, those are not my words...that is a portion of the motion to dismiss. This is quite typical in cases like this...it is a way to infer future posturing in a framework that does not allow it to be addressed. Basically a legal tactic to show foreshadowing...it really is commonplace in law. I assume you did not read the motion to dismiss yet?


  • The way Rossi works in his R&D is to continually improve the technology without establishing a baseline release level. Rossi will alway use this new invention and discard the older less capable baseline.


    Rossi does not want to manufacture the 12 inch wafer format reactor, when he now has a micro sized "Quark" tech upgrade, because these two technologies are substantially different. Why manufacture a model T when you have a Tesla in the last stages of design. The "Six Cylinder" design is antique technology at least two generations behind the Quark reactor and Rossi had no intention of manufacturing that product.

  • I though that the 1MW plant was a combined R&D project between Rossi and IH where Rossi provided the 12 inch wafers and its control system and IH designed the boiler that converted the heat produced by the wafer into steam.


    If the boiler sprang a leak and had to be repaired, how can Rossi be held accountable in the contract for the downtime needed to repair the leak?


    This analysis of the legal case and associated contract assumes that IH had no design or production responsibility for the I MW plant design and performance.

  • Axil - tell us more about the "12 inch wafers". Rossi took apart the IH designed plumbing, measurement and monitoring systems during the first week he had the 1MW in Florida. He owned the leaks, downtime and modifications from that point forward.


  • As far as I can tell, there is no "Six Cylinder" unit in the contract. [...]


    I might add that I couldn't care less whether or not IH lost money on this contract. They are venture-capitalists and they are willing to take risks. I am also less sympathetic to them (even if Rossi is a fraudster) because of the one-sided nature of the contract.

    Whether or not the contract was unfair or "one-sided" depends on who wrote it, primarily. Otherwise, it would be assumed that with a contract like this, both sides have counsel and have done due diligence.


    The original Agreement refers to a "1 MW E-CAT unit," which was to be sold and delivered to IH. Apparently this thing was actually delivered. It was the unit to be tested. Refereces in the agreement to the extended test were to be of this unit, not something else. Obviously, anything that IH and Rossi subsequently agreed upon could modify the Agreement.


    The first Amendment modified the delivery date for the plant to April 30, 3013, after the Validation test described. This is all part of the first exchange, $1.5 million for the plant, and $10 million for full disclosure of the IP and the license.


    The second Amendment refers to the Six Cylinder Unit. What I notice, in this, and in the original Agreement, is that the test focuses on COP. The original agreement, minimum COP of at least six. In the amendment, a COP of as low as 2.6 still would be considered performance, but with reduced payment.


    However, consider this. Suppose the plant has a COP of 50. Suppose input power is 10 watts. Suppose output power is 500 watts. COP 50. Does this satisfy the test? Would this be worth $100 million? Maybe. It depends on details.


    I'm seeing comments essentially complaining that IH is "resorting to legal technicalities."


    First of all, this is a court proceeding. Rossi supposedly has competent counsel. Legal technicalities matter in court process. Don't satisfy the technicalities, they will indeed throw your case out, but if there is a motion like this, the plaintiff may amend the complaint, if it is possible to fix the alleged problems. If the legal ducks are not in a row, the court will reject the case, possibly "without prejudice," meaning that a new action could be filed that was proper. Or with prejudice, which would mean that Rossi's complaint was really dead. I don't expect the latter. The former is possible. Or, even more likely, Rossi's counsel will get their act together and amend the complaint (or attempt to settle out of court).


    Now, to the details of what the Motion to Dismiss discloses and what is visible from it ...


    First of all, it is professionally written. It starts with four pages of legal authorities. If anyone actually wants to understand this motion, they may need to look at those authorities, at least as they are cited in the Motion. I'm not doing this at this time. It could be days of work. We will see legions of idiots giving opinions, however, who know neither law nor the facts of this case. It's the internet, after all.


    Could this list be fluffed up? Sure. Lawyers seek to win, serving clients, and one method used is to make litigation more expensive for the other side. If someone sued me, I would drop a pile of interrogatories on them, questions that they are legally obligated to answer. I would not make it easy. I've actually done this, and professional counsel for the other side caved and agreed to settle on favorable terms. It saved a whole lot of trouble for everyone. They had, in the case, agreed to serve on contingency, thinking they were facing an easy target (an ex-wife of mine), so it would be easy money for them. Not. It was going to get very expensive, and they saw the handwriting on the wall. And yes, I would file technical motions, I did that in another case, a motion to quash. My goal was to delay. Time is money. And the result was actually justice. From being totally intransigent, the plaintiff instructed his attorney to talk with us, so we agreed to something fair. Which we would have agreed to in the first place. The delay probably cost the plaintiff about $30,000. It cost us nothing but a little time of mine in a law library. I hated reading law, where there was personal involvement. It gave me headaches.


    The Introduction pretty much summarizes my non-lawyer impression of the Complaint, which appeared to me to have been very badly drawn, indicating one of two things: an incompetent lawyer, or one simply repeating what the client told him. A competent attorney will advise the client against this, but the client may insist on going ahead.


    Reading on, the Motion is quite clear and appears sound. Notice this:


    Quote

    Parties may not recast breach-of-contract claims as tort claims.

    Right. I've pointed that out and a lawyer pointed that out.


    Reading the Motion, I'm applauding, not on the basis of justice -- which is another matter -- but on the basis of clarity, cogency, and precise professionalism.


    But what about the 400-day test? Aren't they going to answer about that? Several have pointed out that there is a very good possibility that the public will learn nothing about that test based on this case.


    It was written here:


    Quote

    I might add that this makes it likely to me that their motion to dismiss will be denied since the issues regarding the 1 MW test need to be decided on their own merits.

    This is at this point legally irrelevant. My non-lawyer opinion is that if there is no amendment to the Complaint -- and it would need to be truly major -- the Court will dismiss it. If there is no proper complaint, the Court is not going to take up a case based on, say, some "need" to know. Need by whom? There is no party to this case representing the Public Need To Know.


    What reading law taught me was clear thinking. Common thinking is fuzzy as hell, largely based on "I like it" or "I don't like it."


    What could an amended complaint look like? It would probably be a breach of contract claim, failure to pay the $89 million. He could claim that the delayed performance was due to failures on the part of IH, say. and that the substance of those provisions was satisfied. By overstating the claim, tossing in fraud allegations and the kitchen sink, he may have made settlement more difficult. If he files that case, two things might be a part of it: one would be the ERV report, and the other could end up being full disclosure of the IP.


    At this point, IH may be able to publish the IP, if they choose to do so. That's how I read their arguments in the Motion to Dismiss.


    Let me put it this way: if someone holds your trade secrets, suing them is probably a very bad idea. There went your trade secrets! All it would take, even if you could get "legal protection," is that someone steals the documents and publishes them on wikileaks or the like. Gee, who would be so rude as to do that?


    Remember, Rossi fans: Rossi is supposedly out to benefit humanity. If his secrets are gone, disclosed, open, does humanity lose? Wouldn't that mean that anyone could carry on the work, even if the Evil Conspirators try to stop it?


    There could be a problem, though. What if he did not disclose his secrets? If he didn't, he was in violation of the Agreement, and he's basically screwed, blued, and tattooed.


    And then we can see that IH is carefully avoiding the nuclear option, a fraud claim.


    Dewey is right. Rossi is in trouble. I have always looked with some sympathy at his Petroldragon past, perhaps he really was screwed over by the Mafia. But ... did he effectively defend himself? Did he take reasonable protective measures, as he could have done. How did they manage to arrest and jail him?


    If he had a lawyer in that affair, like he has in this one, an the lawyer was incompetent or he didn't listen to the advice, it's simply not surprising what happened. Again, I recommend and urge people to read An Impossible Invention, by Mats Lewan. Factor for Lewan possibly being unwilling to grossly confront Rossi, so the book understates criticism, avoids detailing it, because he could lose access, but ... a quite clear story of Rossi's character emerges.


    The Motion to Dismiss and other documents are linked on Lewan's web site, in this post: https://animpossibleinvention.…-industrial-heat-for-89m/

  • stephenrenzz wrote:


    So why did they then proceed to introduce those facts in the following sentences?

    The MTD will assume and examine only what is in the Complaint. If it depends on something outside that, this could require court examination, i.e., further process. They might mention this or that, but it would be dicta, of no legal effect. I did not notice such "facts" in the MTD. If court process continues, later there can be a motion for Summary Judgment, which will consider all evidence before the court at that time, alleging that it is enough to decide the case, that there is no "triable fact" left. IHFB apparently has not noticed the "Six Cylinder Unit" in the 2nd amendment, so maybe he was referring to that. The Complaint includes all the documents filed with it.


    One fascinating claim: the failure of Ampenergo to sign the 2nd amendment. So. You have an agreement that, if you satisfy your side, will give you $89 million. How careful are you to dot every i and cross every t? You already have $11.5 million. Do you have an attorney check everything?


    The Fan club will scream that this is all unfair. But the attorneys for IH would be incompetent if they did not notice and point this out. Can this be fixed? Maybe. The intention was obvious. I suspect that the problem was that Rossi thinks of himself as all of these parties. He could have signed it for Ampenergo, perhaps, if he were authorized. Rossi actually did not sign for himself, but for Leonardo (corporation). [corrected} Rossi signed for himself, but also not for Leonardo.


    I think he wrote all these agreements, perhaps putting in this or that which was demanded. If IH wrote the agreements, my opinion of IH plummets. But, as it was, I think that they believed that if there was a problem, it could be fixed. They believed that if it was a failure of the purpose of the Agreement for them to pay $89 million, they'd have recourse, starting with simply not paying. When I am party to a contract, and I supposedly agreed to something, and then conditions arise that actually makes it a rip-off for me to pay, I don't pay. Underneath the letter of contracts are the intentions. Many people don't understand that!

  • Axil - tell us more about the "12 inch wafers". Rossi took apart the IH designed plumbing, measurement and monitoring systems during the first week he had the 1MW in Florida. He owned the leaks, downtime and modifications from that point forward.


    The 12 inch wafer is described in Rossi's patent.


    Does IH assume any responsibility for the design and production of the 1 MW plant? Did Rossi build that plant all by himself? Did Rossi sign his name on a contract to assume responsibility of all the leaks, downtime and modifications from what point forward?