Mats Lewan’s Take on the Rossi/IH Affair (Update: Another Possible Scenario Considered)

UPDATE (April 12, 2016)

Mats has posted another article, this time looking as another hypothesis in the dispute between Andrea Rossi and Industrial heat. This time he examines the possibility that the results of 1MW plant test on the E-Cat were not satisfactory — either there was a low COP, or Industrial Heat found flaws in the test, and/or IH did not want to pay Rossi the $89 million until he had transferred to them the know-how of how to achieve high E-Cat performance (IH has said that they have not been able to “substantiate” Andrea Rossi’s claims)

The article is here: https://animpossibleinvention.com/2016/04/12/and-heres-the-opposite-hypothesis-on-the-rossi-ih-affair/

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April 9, 2016

Mats Lewan has posted an new article on his An Impossible Invention blog in which he lays out his hypothesis about what he thinks has taken place in the Leonardo/Industrial Heat affair. Here’s the link to the article.

https://animpossibleinvention.com/2016/04/09/heres-my-hypothesis-on-the-rossi-ih-affair/

Mats says this is just his opinion on analyzing the facts at his disposal, and he doesn’t claim any special inside information here. His basic hypothesis is that fairly soon after Rossi and Cherokee made the deal, Rossi did not like how things were going, and he prepared well ahead of time to file a lawsuit on the exact day when the agreed-upon $89 million was due after the conclusion of the 1 MW test.

Mats believes that Rossi probably wants to get out of the relationship, and get back E-Cat manufacturing rights for the whole world, and this non-payment gives him the justification to do so.

Mats does concede that he could be wrong, and that perhaps the non-payment comes down to the fact that IH simply could not come up with the $89.

We still have to hear IH’s defense. Their press release was very vague, simply mentioning that they could not “substantiate” Rossi’s claims, and that Rossi had “repeatedly breached” unspecified license agreements. These points will probably be key points in their defense.

At some point we should learn more about the IH defense, but Mats Lewan thinks this could all take years to be resolved.

  • Curbina

    I think this post should be updated with a follow up blog article of Mats Lewan in which he presents an hypothesis of what could be the other side of the story, from IH’s poingt of view. I really think that the pro IH arguments, mostly based in the “Guest” comments, is a stretch. The mere idea that IH would have decided to “play along” with Rossi without much interest is ludicrous. That they decided to pay the 10 millions as an “ante” is also ridiculous. But is good to know arguments in both sides of the coin in order to have a complete picture, and for that alone I would like to ask Frank to put an update to this article with the new Mats Lewan hypothesis.

    https://animpossibleinvention.com/2016/04/12/and-heres-the-opposite-hypothesis-on-the-rossi-ih-affair/

  • wpj

    The contract also said that IH was to perform the year long test within 120 days, whether they liked it or not, so this was an initial breach of contract which the parties decided to ignore.

    Now gone from “Rossi says” to “Guest says”…………

    All the above does sound plausible and I’m sure it is not as black and white as Rossi implies. Having said that, IH did obtain funding from Woodford while implying that everything was rosy in the garden.

    Who knows?

  • LuFong

    I am also surprised the payment structure. Normally these things are done with warrants/options so the Rossi would have some skin in the game. I thought the $11M invested in IH initially (from SEC filing, from Darden/Vaughn???) would be used to finance the operation with warrants/options doled out to Rossi and initial investors.

  • LuFong

    Thanks for this. There is so much stuff going around it’s difficult to keep up with it.

    One point: Rossi is contractually only obligated to help IH for 1 year from the completion of the Validation test, which I think occurred May 1, 2013 in Italy. See Section 13.1 of the license agreement. I don’t believe the amendments extended this period. There may have been a further extension of this support with Rossi as Chief Scientist but we don’t have that agreement but this part of the agreement in section 13.1 is not very clear to me.

    This is how I read the license agreement anyways. I have been wondering why Rossi wasn’t asked to help. IH may have set Rossi off and he stuck to the letter of the agreement here.

    • Guest

      Agree the contract here is less clear, it does state “not less than 12 months”, so we know it’s for at least a year but perhaps longer.

      • LuFong

        Does your source say anything about whether IH is questioning the results of the ERV?

    • Michael W Wolf

      There was a self proclaimed experienced lawyer who said Rossi and his attorneys were very shrewd in the wording of the contract. 13.1 may be one reason why. IH not finding a test site is the clue for me. They were either foolish or malicious in that breach of contract.

      • LuFong

        I think Rossi’s wife maybe wrote the basic agreement. It’s a poorly written agreement as I see it.

        It appears to me from the license agreement that IH is responsible for the finding the plant. (It’s not stated explicitly but looks like it’s implied). If Rossi can show that IH made no real attempt to fulfill this part of the contract, or if IH cannot show that they made a serious and continuing attempt to fulfill this, then I think Rossi wins. As I said earlier, I believe Rossi did not turn over all IP. If it can be shown that IH made a strong attempt to fulfill this part of the contract and worked with Rossi on this, then I think Rossi will be found to have broken the contract.

        I’m not a lawyer and there may be other factors but that is how I see it at this time.

  • LCD

    It could be they filed the patents early to get the priority date but didn’t know if it would yet work, right?

  • LCD

    Yeah if they signed off on it they are screwed but I was talking more the court of public opinion.

  • Michael W Wolf

    SEC just ruled against Cherokee. IH kept their investors’ money on false pretense. They have made contradictory statements. Who is the gullible one, and who is the puppet master? Skeptics are not the ultimate group think? You defending a company that is unethical is incompetent on your part.

  • Doggy

    Rossi was making notes in his black book using codes. It’s apparent that he was paranoid and keeps secret, which is understandable. However, I can images Rossis black book made IH paranoid as well. Now I’m left to wonder how much the Chinese know and how fast they can out manoeuvre US.

    • Michael W Wolf

      I really don’t care if china has lenr first. As long as we have it in the world. The rest of the world getting it, will be academic.

  • LuFong

    Rossi’s contract was to support IH for a year after the validation. There was a clause perhaps, if I’m reading the contract correctly, for Rossi to continue this support as Chief Scientist after this period but the terms of that agreement are not known. With the delay in setting up the GPT, it’s possible that IH’s time with Rossi ran out and Rossi did not feel very generous for various reasons.

  • http://www.health-answers.co.uk Agaricus

    Well you’ve managed to get ‘fraud’, ‘incompetence’, ‘bogus’, ‘gullible marks’ and ‘puppet master’ into two short posts, but you seem to have omitted the all-important word ‘scam’, and any reference to Rossi’s ‘criminal’ past. Perhaps next time?

  • Michael W Wolf

    IH built and tested a reactor with verified by them COP of 11. They filed a patent that is tied to an oath they signed. For them to say in a public statement they could not replicate is at best false through incompetence or at worst an outright lie. That is on record. As far as we know, because some of our people here have investments tied to that money IH got, they used that info to raise 60 million dollars. They gave Rossi 11.5 million. They have completely contradicted themselves and now have an extra 48.5 million in their pockets. What you are saying is ignorant of the things we know and boarder line slanderous. I wonder what their investors think of that? Shouldn’t IH either pay Rossi or give the money back to their investors for misleading them?

  • Jimr

    Yes I meant released to the public.

  • Tom59

    Rossi developed this technology to this point making tremendous personal sacrifices in a hostile and humiliating environment. No one in his situation would easily give up control without being 100% certain that it goes in the right direction – this is rather the norm than the exception.

  • LuFong

    Maybe Darden/Vaughn wanted to delay the 1 year test until after they had independently verified Rossi’s technology. After trying Rossi became pro-active and set up the test himself. A year later still no success so they fail to pay the $89M. (As support, Brian Ahern, who claims to have spoken with IH, says that IH was not permitted to independently meter the test and were rebuffed by Rossi in their replication attempts). But in the meantime they suspect that Rossi does have something so they continue to sell and take out patents in hope that they are successful in discovering the full extent of Rossi’s IP.

    Not saying that this is correct but there are many ways to spin this story. For me I don’t care so much if IH has the IP or not. I want to know whether the E-Cat works.

  • jousterusa

    Mats, if you read this, I’d be delighted to correct the six or seven grammatical issues in this essay of yours, which I really enjoyed!

    • Alain Samoun

      Is that really important at this point Jouster?

      • jousterusa

        it is to Mars!

  • Jerry Soloman

    Matts is on point again here with a very good overview to events.

  • timycelyn

    Mood I’m in I’d dance on their grave…

  • georgehants

    Another Wonderful reflection on America, the corrupt capitalistic capital of the World.
    The only thing that matters is does Rossi have proof of Cold Fusion, all this bullshit is irrelevant, but normal in an insane society.
    Where is the proof, Rossi is the key, SHOW THE PROOF, bugger money and riches, think of people.
    Prove Cold Fusion works, he has had five years playing silly little capitalist boy games, now time to grow-up and end this complete farce.
    I think.

    • DrD

      Good morning George,
      I thought we all appreciated that most of the world won’t accept the proof, no matter how rigorous. AR has the answer “forget the “proof”, just mass distribute”. That’s what he says he’s doing, faster than before.
      If he succeeds then the law suit is a side show but make no mistakes, there’s powerful opposition and IH could well be part of it.

      • georgehants

        DrD all agreed but it is not correct to say no proof except “mass Distribute” is the only way.
        Mr Rossi has had the “secret” for five years, if it is published then within a very short time even small concerns such as MFMP could verify it within weeks.
        It is all to do with money, profits, greed, this World needs Cold Fusion, it does not need rich people for anything, only those working for society are of any use and should be rewarded, as Mr. Rossi should be well rewarded by society not by a system that we have all witnessed for 27 years as corrupt inefficient and basically crazy.
        The only thing that matters in a sane society is the “secret” he supposedly has found to be released NOW.
        I think

        • DrD

          Sorry George but with respect I’m sure the world still wouldn’t believe.
          I may be wrong but I trust him and I expect him to achieve exactly what you describe and I hope he benefits too.

          • georgehants

            Ha, well five years and counting.

            • Omega Z

              George,

              My son was having auto problems. I told him what to do to fix it.
              When I returned latter, I asked him how it went. He said it’s still broke.
              I said, did you do what I told you?
              He says, NO, Your way was to hard. I did it my way.

              Forehead Slap!

              I’m certain Rossi has provided more then enough info for others to follow suit. Maybe not obtaining COP>50, But at least multiple COP and the path to improve. However, as with my son above, everyone wants to do it their way. It doesn’t matter what Rossi says. People will only hear what they want to hear.

              With the Lugano report, everyone discovered Lithium. I’m quite certain Lithium was disclosed by Rossi long before that. Shielding was also disclosed early on. One being Lead, and if one read all that’s been posted somewhere before, they would also be aware that Rossi has used Boron and Tungsten.

              Note: corruption, greed, cronyism. None have anything to do with capitalism. This is all about people. Starting with the 1st humans stealing nuts and berries or animal hides from his neighbors cave before any kind of monetary system even existed. The cure. Eliminate people…

              • we want LENR Fusione Fredda

                People. Behaviour. Exactly. Subscribed, in toto.

    • Roland

      You think?

      So now Andrea is but a mere petulant child bereft a functioning phenomenological grasp of the situation and he should immediately surrender to your superior wisdom and just do as he’s told.

      I see things much more clearly now…

      The proof of LENR is right at hand for the literate minded in the form of the compendium of documents behind the links at the top of the page. Simply read them.

      If you’re struggling to understand them (as is pretty much everyone here will, emphatically including myself, with the more esoteric aspects of some of the papers) I’m sure, if you asked politely, any number of folks here would help you and short list the essentials.

      In a pinch you could simply watch the documentary about the SPAWAR LENR project, the link’s kicking around here someplace, and accept what those scientists say about their work to their interviewer and the camera. They figured out how to make LENR work each and every time, and flat out say so, and tell you how they did it to boot.

      This was years ago. It didn’t, to use a popular sports metaphor, move the ball an inch.

      Rossi is playing multi-dimensional chess with, apparently, some facility and, unfortunately, you’re playing checkers using just the black squares and insisting, rather stridently, that he get hip…

      • Roland

        bereft of a functioning…

        🙂

        • Roland

          Well George while America isn’t the least corrupt nation on earth, 27th on Transparency International’s rankings if memory serves, but it’s miles better than the most corrupt nations, and if we’re to exclude all but the capitalist states we’d have to drop N. Korea which, oddly enough is way, way down at the bottom of the list anyways.

          You could make a case for Venezuela lacking a functioning capitalist system, but then again there’s not much system of any kind left and, oddly, they’re also down there at the bottom of the list. Oh, then there’s China; another sterling example of communism in action; oops another bottom dweller in the Transparency International rankings and the iron rice bowl kind of got lost in the stampede for a pot of gold.

          I guess there’s always the Cuban model to aspire to; a chicken in the odd pot and all the veggies you can grow in the back yard with hand tools.

          The closest thing to functional socialism that scores high on every index of social development and rates right at the top of Transparency International’s corruption rankings happens to be at the very centre of Rossi’s plan for manufacturing and deploying E-cats, it’s called Sweden, you’ve probably heard of it, it’s in Europe.

      • georgehants

        Roland thanks for reply, you have made no point that in any way negates the clear points that I made, only stated your disagreement based on your apparent philosophical leaning.
        Five years Rossi has had the secret and counting and not a hint of any benefit to society.

  • http://www.health-answers.co.uk Agaricus

    Trust is now absent. Without trust, even business relationships become difficult or impossible.

  • Alan DeAngelis

    Is nicHenergy safe or will any of this have an effect on them?
    http://energycatalyzer3.com/rossi/is-piantelli-close-to-commercializing-technology

  • Roland

    The status of both the IH licensing agreement and any claims by IH to LENR IP based on Rossi/Leonardo patents are in dispute, were Rossi in a position of weakness, i.e. having granted worldwide licensing to IH and possessing no wherewithal to pay lawyers, the prognosis would indeed be much grimmer.

    Fortunately this is not the situation at hand. Though the true strength of Leonardo is unknown to us, and possibly IH as well, until such time as this dispute has been adjudicated by the highest court that consents to hear the case Leonardo could act as though the agreements with IH have no force while they:

    A. Pursue damages and,

    B. Engage much stronger partners than IH for the licenses to distribute a COP>50 technology in territories previously assigned to IH. In light of the current situation I would suggest breaking the former licensed area into smaller units and partnering with entities ready to crush IH, and any current IH partners party to underhanded behaviour, in the courts while the technology continues to be deployed.

    C. Under scenario B the money piles up for Leonardo and the licensees while IH’s former partners cannibalize IH as the legal process quite deliberately drags on and on.

    And yes, these are opinions rendered without specific knowledge but we can hope that Leonardo’s lawyers are much more astute than I and are capable of turning the situation to Rossi’s advantage by viewing this as an opportunity rather than a setback. They certainly appear to be adequately prepared for this conflict from what we’ve learned to date from the available documents.

    • http://www.health-answers.co.uk Agaricus

      As well as how well, and by whom, Leonardo is now backed, another key to how this pans out may be how well Cherokee Investment have isolated Industrial Heat, and what assets IH currently has.

      If, as I suspect, Cherokee has been (nominally) forwarding funds to IH as required, their assets may be technically small and they might just choose to fold under Leonardo’s pressure rather than go to court. If they’ve sufficiently isolated IH, Cherokee’s assets will be safe, they will have gained all the IP from Rossi they are going to get, and they (Cherokee) have other shell companies to continue with.

      Of course they’ll need to first reassign all IH patents to some new entity, so if we see that happening it will constitute advance warning that IH will declare bankruptcy and the court case will be dropped.

  • bachcole

    I.H. could have come to Rossi and said, hey, we only have (a mere) $50 million, can you cut us some slack and we will try to come up with the rest later. But they didn’t. But I don’t even know if that sort of thing happens in businesses.

    The truth is that Rossi drew first blood; it is likely that he wanted to get rid of I.H.

  • bachcole

    Maybe he wants I.H. to be able to save face.

    If the report is positive, I think that it will be difficult for Rossi to get funding and support if he does not publish the report.

    But I love your question and analysis. I really wonder where that report it.

    • LCD

      Right now the report looks tainted with Rossi friends as the judge so I’m not sure it matters.

  • kdk

    Penon might find himself in the hot-seat about whether Rossi isn’t having the energy beamed in from aliens in outer space.

    • Ged

      Rossi’s connections are out of this world.

      • NT

        Yes, he answers to a much higher authority!

  • Frank Acland

    Matt
    April 9, 2016 at 4:55 PM
    At this point is there any possibility of you and IH reconciling outside of court and continuing your work together?

    Andrea Rossi
    April 9, 2016 at 6:20 PM
    Matt:
    Yes.
    Warm Regards,

    A.R.

    • Robert Dorr

      I think Rossi was responding to Matt’s question regarding whether Rossi had sufficient funds to continue on course with the production of the e-cat. If you look you will see that Matt asked two questions, one right after the other. It was a bit confusing.

    • Buck

      Frank,

      I have copied the two back-to-back questions Matt asked of Rossi. I believe in the context of the two questions, Rossi’s answer is not “Yes” . . . . rather it is effectively “no comment” due to the litigation. I hope this helps resolve a potential misunderstanding.

      Mason

      =============================

      Matt
      April 9, 2016 at 4:55 PM

      At this point is there any possibility of you and IH reconciling outside of court and continuing your work together?

      ~~~~~
      Andrea Rossi
      April 9, 2016 at 6:20 PM

      Matt:

      I cannot answer to this question in positive or in negative, because is related to the litigation on course.

      Warm Regards,

      A.R.

      ======================
      Matt
      April 9, 2016 at 4:47 PM

      Without the 89 million from IH, how will you start the industrialization process? Do you have another source of financing?

      ~~~~~
      Andrea Rossi
      April 9, 2016 at 6:20 PM

      Matt:

      Yes.

      Warm Regards,

      A.R.

      • Frank Acland

        Yes, thanks for that. I think you are right.

        • NT

          Buck is correct Frank, I see the same thing and Buck just beat me to the posting…

  • Job001

    Money talks, BS walks. Slander is not science and has cognitive bias reasons, often of a funding biases nature which are detectable. Bias is a bad thing for science resulting in un-replicable results which is one definition of bad science.

    When bribery, influence peddling, extreme lobbing, non transparency, deregulation, decriminalizing corruption are normal, it is not conspiracy but rather SOP(Standard Operating Practice).

    I favor science without slander because it protects or favors the frontiers of knowledge against the mendacity of obsolete wealth self promotion at the expense of science improvement.

    The investor sharks and whales can look out for themselves very well without unsubstantiated silly slander.

  • bfast

    “but Mats Lewan thinks this could all take years to be resolved.” This is our greatest fear!

    • Roland

      First, the emphasis for manufacture and marketing will shift to Europe where the dispute with IH is irrelevant and the general regulatory and business environment is, by most measures, fairer and where the business case for a new energy source, to nations held hostage to unsavoury oil producers to the east and south, will be very compelling. The end of the North Sea oil play is in sight and the commitment to a carbon free future is high, LENR is perfect for them. Additionally, low cost energy will revitalize the European economies and more than restore competitiveness.

      Secondly, until the US courts rule otherwise IH has no LENR IP nor does it have a valid licensing agreement as they’re now in default through non payment. This allows scope for a entity with greater resources and US clout to pick up the torch of a COP>50 technology in IH’s territories from Leonardo and crush IH in both the arena of public opinion and the courts, when IH objects, in a straight US style power play that reverses what, apparently, IH has tried to do to Rossi.

      It’s much to soon to turn to despair.

      • kdk

        I’m hoping that IH will realize this.

      • http://www.health-answers.co.uk Agaricus

        All true, although some European states (particularly mine, the UK) tend to act as US proxies in many respects. Our current batch of politicians is also deeply in thrall to the nuclear industry.

        IMHO, Germany would be the best bet for Rossi, as they have closed down their nuclear power stations and desperately need a new source of electricity despite a huge investment in ‘renewables’.

        • DrD

          My guess is Sweden.

    • Obvious

      If another couple of years go by, I should have enough time to make the LENR heat-in-your-hand-coffee-in-a-can. And the tea version, of course. Oh, and soup, noodles, hot cocoa, hot toddies, and a sandwich/bagel/waffle warmer. Disclosure.
      And hair removal wax warmer… Boot warmer… Toilet seat heater…

  • f sedei

    There is nothing more convincing than honest indignation. Look out IH!

    • bachcole

      I first read you sentence as “honest indigestion”. I think that it works better that way. It doesn’t mean anything, but it is more fun. (:->)

  • Alan DeAngelis

    They took the bait (the obsolete E-Cat). Rossi has the E-Cat X and a lawsuit. Win, Win.