Rossi v Darden : Cold Fusion Trial

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Rossi v Darden : Cold Fusion Trial

Post #1 by tjh » Fri May 26, 2017 3:03 pm

Very short summary:

(Disclaimer ... I believe Cold Fusion is real .... Warning: Don't believe wiki on the subject, it's locked up by fanatic skeptics )

Italian Inventor Andrea Rossi claims to have invented a commercially viable Cold Fusion device called the eCat.
He has had a couple of other ventures: for one he ended up in jail for a couple of years on environmental/economic terms, but was mostly exonerated. (And his prosecutor is now in jail!)

For a variety of reasons his demonstrations/experiments/independent trials have neither conclusively show his claims to be false or true.

Rossi is a showman, and rather than conclusively testing a small unit (the infamous 'brew me a cup of tea' challenge for Cold Fusion) he went straight to a monster 1 MW system.

Anyway, he reached a deal with a an offshoot of Cherokee, called Industrial Heat (IH), headed by a fellow Tom Darden.

IH has already paid Rossi $11.5M for the 1MW unit (following a 24-hour acceptance test, which passed) and for Rossi's intellectual property.

The contract then called for, at Rossi's insistence, a 1-year-long trial of the system, called the Guaranteed Performance Test (GPT), which ended early 2016.

Rossi claims it worked, and wants the rest of his money ($90M or so) -- so he sued Darden et al. Federal Civil suit, Miami, FL.

Darden say it never worked, and that the GPT wasn't the GPT (it sure walks like one, and quacks like one to me ....).

In addition Darden counter-sued Rossi (and a bunch of others, who the court lumped together as the "3rd-party defendants) for fraud.

All the pacer court documents are at : http://coldfusioncommunity.net/rossi-v- ... ase-files/

Rossi is represented by a 3-man firm (and family friend?) Annhauser
Darden/IH is represent by Jones Day, led by Christopher Pace (no relation to Pacer!)

Up to 313 docket entries, many with zillions of attachments and exhibits. Both sides have pissed off the judge and magistrate judge.
Both sides file motions for summary judgement ... both denied (because the judge pointed out they could hardly agree on the time of day).

Darden also filed for spoliation of evidence by Rossi ... also denied (mostly because they did it too late).
Darden is calling only two expert witnesses. Rossi only has one expert rebutting them (and 2 of his rebuttals were disallowed under Daubert)

So ... off for jury trial in mid June.



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Re: Rossi v Darden : Cold Fusion Trial

Post #2 by tjh » Fri May 26, 2017 3:05 pm

I'm not sure anyone wants to follow this in detail ... a lot of the issues are being discussed at

https://www.lenr-forum.com/forum/thread ... nts-part-2

(including at least one IH person who is on the witness list).



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Re: Rossi v Darden : Cold Fusion Trial

Post #3 by tjh » Fri May 26, 2017 3:09 pm

I'm not sure how a claim/counter-claim trail goes. For sure the judge is keeping them together, not splitting them.

<http://www.businesslawbasics.com/chapter-9-steps-civil-case> doesn't explain.

I'm guessing

A = Rossi (and third-party)
B = Darden/IH
C = 3rd Party


A opening
B opening

A claims ... you owe me $90M x 3
B defense
[A rebuttal]

[ Is there a mini-closing here ? ]

B counter-claims .. it's a scam! We're suing for fraud!
A defense
C defense
[ B rebuttal ]

A closing
B closing
C Closing



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Re: Rossi v Darden : Cold Fusion Trial

Post #4 by RoadScholar » Fri May 26, 2017 3:20 pm

Garbage. If there is some energy-producing phenomenon at all in their work it sure as shit ain't fusion.


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Re: Rossi v Darden : Cold Fusion Trial

Post #5 by tjh » Fri May 26, 2017 4:00 pm

This isn't about the technology, it's about a trial.



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Re: Rossi v Darden : Cold Fusion Trial

Post #6 by RoadScholar » Fri May 26, 2017 4:15 pm

tjh wrote: :snippity:
I believe Cold Fusion is real .... Warning: Don't believe wiki on the subject, it's locked up by fanatic skeptics


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Re: Rossi v Darden : Cold Fusion Trial

Post #7 by Tiredretiredlawyer » Fri May 26, 2017 5:10 pm

If it's a trial, I am interested and will watch. I wonder exactly what Rossi said his product would do and why. That should be in the court documents filed. Is the Daubert requirement not met because it is or allegedly is a new technology?


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Re: Rossi v Darden : Cold Fusion Trial

Post #8 by Tiredretiredlawyer » Fri May 26, 2017 5:19 pm

The first exhibit with the complaint is a U.S.Patent which is too large to post here.
Law 360 says this is a licensing disagreement.


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Re: Rossi v Darden : Cold Fusion Trial

Post #9 by tek » Fri May 26, 2017 5:21 pm

IH has already paid Rossi $11.5M for the 1MW unit (following a 24-hour acceptance test, which passed) and for Rossi's intellectual property.

The contract then called for, at Rossi's insistence, a 1-year-long trial of the system, called the Guaranteed Performance Test (GPT), which ended early 2016.


Smells funny.

I have never heard of a seller insisting on a performance test.



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Re: Rossi v Darden : Cold Fusion Trial

Post #10 by Tiredretiredlawyer » Fri May 26, 2017 5:46 pm

Here's a Popular Mechanics article about the background dated April 2016.
In Cold Fusion 2.0, Who's Scamming Whom?
The researcher claiming a cold fusion breakthrough is in the midst of a $100 million lawsuit, all while others race to duplicate his efforts, trying to prove that this time it's not all smoke and mirrors.
http://www.popularmechanics.com/science ... ming-whom/
Much of the interest is focused on a nickel-hydrogen process, and in particular the extravagant claims Italian inventor Andrea Rossi has made about his Energy Catalyser, or E-Cat, which he was been working on since 2007. Rossi's invention is basically a cylinder the size of a wine bottle, filled with powdered nickel and hydrogen, which generates vast amounts of heat by an unspecified reaction. (Rossi, of course, won't tell the world how E-Cat works. Here's one "best guess" at the physics.) Earlier experiments with nickel-hydrogen claimed to create barely measurable fractions of a watt of excess heat. Rossi, meanwhile, claims to produce hundreds or thousands of watts. If this were true, it could be the key to the limitless, cheap, clean energy cold fusion backers have always promised. :snippity: (Omitting history of Rossi failed projects.)

THE BIG TEST
Rossi struck a deal with a U.S. company, Industrial Heat, to carry out a yearlong secret test of a one-megawatt cold fusion device. The installation is a shipping container packed with dozens of E-Cats. The experiment was to be overseen by a third-party "referee" to confirm it really was generating heat. Rossi claims to have spent most of the last year virtually living in the container, overseeing operations for 16 hours a day or more, to prove the E-Cat was commercially viable.

BUILD YOUR OWN E-CAT?
Using details from the 2014 E-Cat test, Alexander Parkhomov, a professor at the People's Friendship University in Moscow, claimed that he had successfully replicated the E-Cat reaction and published a paper on it.

"IT WOULD APPEAR FROM OUR INITIAL FINDINGS THAT ROSSI HAS EXACTLY WHAT HE CLAIMS"
Western journals rarely publish cold fusion papers because of the field's toxic name and past failures, so the Martin Fleischmann Memorial Project (MFMP) has taken an open-source approach. For years, the group has aimed to make a simple experimental setup to produce excess heat that can be reproduced anywhere, and have carried out their tests live online. The problem is that cold fusion results have always been elusive, fleeting, and hard to reproduce. That may have changed in February, when the MFMP apparently succeeded in replicating Rossi's effect and published the recipe with the hyperbolic tagline "The end of the carbon age is nigh." The reason for this excitement was an apparent burst of gamma radiation that cannot easily be explained by anything other than a nuclear reaction. "It would appear from our initial findings that Rossi has exactly what he claims," Bob Greenyer of MFMP told Popular Mechanics.


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Re: Rossi v Darden : Cold Fusion Trial

Post #11 by tjh » Fri May 26, 2017 5:55 pm

Ignore the patent. The key documents are the license agreement 1.2 License and the second amendment.

The big problem with the 2nd amendment relating to the guaranteed performance test is that it wasn't signed by all parties, specified a time scale for starting which wasn't met, and a particular equipment configuration : the final test was made with an earlier technology . But all the parties, until very late, acted as if it were in effect. Darden & co keep saying "according to our contract" ...

The big problem with the test is that Rossi seems to have faked it -- and destroyed some of the equipment at the end (resulting in the spoliation claims). The energy was supposedly going to a famous but secretive customer, but it turns out to be Rossi himself.

Easy to say "scam" ... but nobody has disproved the 1-day "acceptance test", which was done with IH's staff at hand. (OK, so maybe they weren't skilled enough to spot the problems). Their claims are that it is invalid because it only ran for 23 1/2 hours, and one of the measuring devices was in the wrong position (but Darden and his engineers were there, and didn't complain).

Still can't find the trial format with counterclaims.



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Re: Rossi v Darden : Cold Fusion Trial

Post #12 by tjh » Fri May 26, 2017 5:59 pm

The Popular Mechanics article is a good summary. But it quotes Krivitt who has an axe to grind, not a fair witness in my opinion.



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Re: Rossi v Darden : Cold Fusion Trial

Post #13 by Chilidog » Fri May 26, 2017 6:08 pm

It sure sounds like a scam to me.



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Re: Rossi v Darden : Cold Fusion Trial

Post #14 by Tiredretiredlawyer » Fri May 26, 2017 6:14 pm

Sounds like a fun trial. It is possible for the defendants to put on their case during Rossi's case in chief IF the defenses alleged are also elements of their case in chief. Since this is a jury trial, the judge will try to structure the testimony to be as clear to the jurors as possible.


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Re: Rossi v Darden : Cold Fusion Trial

Post #15 by tjh » Fri May 26, 2017 6:19 pm

IH reply and Counterclaims (pdf p 24)

The best overall history and summary (which stops before the trial) is Mats Lewan's "An Impossible Invention".

The much-criticized "Lugano test" (using a different high-temperature eCat) was done by teams from Bologna and Sweden (including members of the committee which awards the Nobel prize for physics. They believed it.)



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Re: Rossi v Darden : Cold Fusion Trial

Post #16 by tjh » Fri May 26, 2017 6:28 pm

Tiredretiredlawyer wrote:Since this is a jury trial, the judge will try to structure the testimony to be as clear to the jurors as possible.


A lot of the claim/counterclaim are on the same issue. Rossi says "this worked", Darden says "no it didn't" ...

But I don't know the procedure ... will Rossi put on all his testimony (with Darden cross-examining) ... and THEN Darden does theirs. Or can it be intermingled for a particular issue.

I think it's scheduled for 2 weeks at the end of June.

Here's the joint pretrial stipulation

There are 121 "agreed facts" and 311 disputed. (Some pretty trivial IMHO).



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Re: Rossi v Darden : Cold Fusion Trial

Post #17 by RoadScholar » Fri May 26, 2017 7:22 pm

Please forgive me if I deeply doubt the existence of Cold Fusion until it is reproduced at a place like Stanford, CalTech or MIT.


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Re: Rossi v Darden : Cold Fusion Trial

Post #18 by Suranis » Fri May 26, 2017 7:49 pm

Without judgement on this case, I remember reading a book on the Previous case of Cold Fusion back in the 1980s. One thing that amused me was that one of the guys who did the experiment was called Fleischmann, and he was British, so the Newspapwers all called it the Pons (American guy) and Fleischmann discovery, but when it came out that there were problems on reproducing it, and it might not work, the Newspapers switched to Fleischmann & Pons. :rotflmao: Gotta have the American in the lead when its a success dontchaknow.

Anyway the wiki article on that is here for the curious.

https://en.wikipedia.org/wiki/Fleischma ... experiment

In that case they went ahead with the experiment because they were in a race with another university that was about to do it so they wanted to get their discovery announcement in first.

This should be fascinating to watch


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Re: Rossi v Darden : Cold Fusion Trial

Post #19 by Slartibartfast » Fri May 26, 2017 9:46 pm

Okay, I read the claims, counter-claims, and third-party claims in the joint pretrial stipulation and here's my IANAL take.

Plaintiff (inventor): We had a deal for $105,000,000 (probably really $100,500,000, but who's counting). $1.5 million up front, $10 million after a one-day test,* and $89 million after the "Guaranteed Performance Test" (GPT) in which the 1 megawatt plant had to meet or exceed the standards of the one-day test for at least 350 of 400 days. It did and I want my $89 million (the $11.5 million has already been paid).

* Oxford comma.

Defendant (company): We paid the $11.5 million because they claimed they could violate the laws of thermodynamics but we think the GPT was sketchy (as were the other tests even though we paid up at the time) so we don't have to pay the $89 million.

Third party: Part of the deal was that the company pay me to assist the inventor --- that had no performance conditions, so the company, which apparently stopped paying his salary, needs to pay up (no idea how much this is for).

Looking at this, it should all probably hinge on the points of fact and contract law rather than the merits of the technology, but there are reasons to suspect both the inventor and the company are sketchy (I didn't get a feeling either way about the third party, although they are clearly aligned with the inventor.

The inventor, after the $1.5 million signing bonus and the $10 million 1-day test, apparently got the company to agree to "selling" the output of the "reactor" to another company uninvolved in the deal. This other company turns out to be a shell company of the inventor's --- which, on its face, looks like the inventor was trying to make it look like there was a market for this "steam" (don't have a clue how this is delivered), by a disingenuous, but legal, method. This would not have technically effected the GPT that was being conducted, but probably made things easier as the "steam" didn't need to be used after it was measured.

The key points of fact here, in my opinion, surround the standards of the GPT and whether or not they were met. The inventor is clearly not above the appearance of impropriety, nor is she necessarily running a scam. If the technology is woo, it is still possible that she could be a true believer rather than a con artist.

The company liked what the inventor was selling so much that they invested $1.5 million up front and $10 million more once they had a validation test on hand (at which point they apparently had title to the IP -- which seems very important for reasons that will become clear shortly). While the GPT was running, they had a window of opportunity where everything looked very legit. They could claim that the first tests were a success and that further validation under controlled circumstances (which in reality were a bit sketchy) was currently ongoing.

They apparently used this chance to get $50 million in investment for a 4% equity stake in the company ($2 billion valuation). At this point Imma wanna see the company's books 'cause something's stinky. The company apparently paid out $11.5 million (which it may have also raised from investors) and used what they bought to raise another $50 million. If they were on the up and up, this would only be a little more than half of what they already had committed for obtaining the technology. Where were they going to get the other $39 million plus whatever it would take to commercialize the technology? Either the people running the company weren't on the level, or they were incompetent because I don't see a viable business plan here or even a path to get to one.

On the other hand, if they wanted to run a cold fusion scam with the inventor as their shill, this looks like a pretty well-crafted plan. Let's say they raised $20 million (so they could do a deal with the inventor) up front. They give the inventor $11.5 million and the inventor gives them the appearance of credibility, which they use to raise another $50 million. Since they're a sham company, they don't have anything to gain by paying the inventor $89 million, so they claim that the GPT was not passed and walk away (and since they have no interest in appearances once they can't raise any more money, why keep paying the third party?). After a discrete amount of time, the company goes under and, lo and behold, the $50 million is nowhere to be seen and the investors walk away with a haircut, the inventor gets the signing bonus and guaranteed money, but not the big payday, and the people behind the company make off with just under $60 million, less expenses. Not bad for a couple of years work. I would need some pretty strong evidence to be convinced that nothing fraudulent was going on with the company.

The real question here is where is the $50 million (plus any other money the company raised) and who gets it? Too (also) I'd like to know if the inventor is a true believer or a fraud. I suspect the former. In the unlikely case that the inventor really has developed a cheap, clean energy source then it will be proven in the market. I don't suggest holding your breath.

Anyway, just my 1.111...base 2 cents


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Re: Rossi v Darden : Cold Fusion Trial

Post #20 by tjh » Fri May 26, 2017 11:46 pm

A very complex issue ... not a bad summary for a quick read.

Andrea Rossi's a guy. (And an update : he wasn't exonerated for breaking some environmental laws ... which were introduced in mid-stream, so he suddenly became non-complying. He did deliver product. But the mafia supposedly moved in and dumped all the industrial waste on his doorstep).

Cherokee/Industrial Heat/Darden are honest (-ish) entrepeneurs (sp?) ... they believed the system works. (And it's not a perpetual motion machine / law of thermodynamics violator : the overall claim of metal-hydride cold fusion is that when hydrogen or deuterium is loaded into a metal lattice then the free-space coulomb-repulsion laws don't necessarily apply, so nuclei can get close enough to transform. Could be resonances. Could be photon/phonon interactions. Could be weird quantum states like bose-einstein condensates. Cold fusion is not hot fusion. Theory isn't known ... but neither is the theory of room-temperature superconductors.)

I don't think IH were trying to scam their investors, just wanted to lock up a trillion dollar industry at the ground level. (Off course, they might have wanted to rip off Rossi).

Both the contract and the terms of the performance tests really really suck. Rossi seems to have written it. For example, he wrote a non-disclosure clause which applies to him, but not to IH! I wouldn't have signed for either party.

About $20M has been spent ... in addition to paying Rossi they had to buy the license from another party for 50% of what they paid Rossi.

This was a high-risk investment ... and IH is still investing in other cold fusion projects (getting the main active CF people under license too.) So their investors aren't (that I know of ... yet) planning to sue IH.

Third party : they all got paid. But IH is suing them for being part of the scam -- they're just defending that.

Lots and lots of other foo and sub-plots.



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Re: Rossi v Darden : Cold Fusion Trial

Post #21 by Notorial Dissent » Sat May 27, 2017 12:15 am

I have to go with Slarti on this one, sounds like a complicated penny stock scam to me, just bigger/broader venue, fancier bells and whistles, and a larger dog and pony show, but still a penny stock scam, although in today's economy, not really so much.

I'm still trying to figure out what the actual trial issue is. If it's really just you owe me lots of money - no we don't then it's going to boil down to was there an actual valid contract, and were the conditions met, otherwise, I don't see it.


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Re: Rossi v Darden : Cold Fusion Trial

Post #22 by Slartibartfast » Sat May 27, 2017 12:53 am

tjh wrote:A very complex issue ... not a bad summary for a quick read.

Thanks.

Andrea Rossi's a guy.

:oops:

(And an update : he wasn't exonerated for breaking some environmental laws ... which were introduced in mid-stream, so he suddenly became non-complying. He did deliver product. But the mafia supposedly moved in and dumped all the industrial waste on his doorstep).

Don't have enough context or information to evaluate that, but it certainly seems to raise red flags.

Cherokee/Industrial Heat/Darden are honest (-ish) entrepeneurs (sp?) ... they believed the system works.

If they are honest, then they don't strike me as particularly competent. Unless the cold fusion works as advertised,
in which case I don't see what their problem is.


(And it's not a perpetual motion machine / law of thermodynamics violator : the overall claim of metal-hydride cold fusion is that when hydrogen or deuterium is loaded into a metal lattice then the free-space coulomb-repulsion laws don't necessarily apply, so nuclei can get close enough to transform. Could be resonances. Could be photon/phonon interactions. Could be weird quantum states like bose-einstein condensates. Cold fusion is not hot fusion.

I was just referring to this statement from the defendant's claims: "Plaintiffs claim to have invented a technology called the “E-Cat” capable of violating the law of conservation of energy by producing far more energy than it consumes." The defendants are clearly accusing the plaintiff of claiming something physically impossible. Don't know who's in the wrong here,
but someone is.


Theory isn't known ... but neither is the theory of room-temperature superconductors.)

I actually made high-Tc superconductors in my professorial assistantship my freshman year. Got to play with the liquid nitrogen too. also.

I don't think IH were trying to scam their investors, just wanted to lock up a trillion dollar industry at the ground level. (Off course, they might have wanted to rip off Rossi).

If I were investigating, I would look very carefully at their corporate documents. Were they equipped to get a trillion dollar industry off the ground? If they were, how did they get into this mess? It doesn't seem like they're ripping off Rossi,
what with the $11.5 million they gave him, although they might be if they retain the IP (I'm not clear on what happens to that since the $89 million wasn't paid). I would think that would be a significant issue in this dispute.


Both the contract and the terms of the performance tests really really suck. Rossi seems to have written it. For example, he wrote a non-disclosure clause which applies to him, but not to IH! I wouldn't have signed for either party.

Which is quite possibly par for the course for an inventor (I know this first hand), but entrepreneurs doing their due diligence should have had a lawyer read it (. There are non-nefarious ways that bad contracts can arise, but they certainly aren't a good sign.

About $20M has been spent ... in addition to paying Rossi they had to buy the license from another party for 50% of what they paid Rossi.

That is still at least $30M in "profit". More if any of the $20M was raised by investment. This may have been completely on the up and up, but if I was one of the people that put in that $50M investment, I'd have some very serious questions that I would want answered.

This was a high-risk investment ... and IH is still investing in other cold fusion projects (getting the main active CF people under license too.)

Yet they don't seem to have been very professional in their dealings with Rossi.

So their investors aren't (that I know of ... yet) planning to sue IH.

As I said, if it were my money, I'd want them to answer some difficult questions, but it's impossible to know what the terms of the investment were.

Third party : they all got paid. But IH is suing them for being part of the scam -- they're just defending that.

Lots and lots of other foo and sub-plots.

:popcorn: :popcorn: :popcorn:



ND,

Agree about the trial issue.


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Re: Rossi v Darden : Cold Fusion Trial

Post #23 by tjh » Sat May 27, 2017 1:33 am

Slartibartfast wrote:If they are honest, then they don't strike me as particularly competent. Unless the cold fusion works as advertised,
in which case I don't see what their problem is.


(And it's not a perpetual motion machine .....

I was just referring to this statement from the defendant's claims: "Plaintiffs claim to have invented a technology called the “E-Cat” capable of violating the law of conservation of energy by producing far more energy than it consumes." The defendants are clearly accusing the plaintiff of claiming something physically impossible. Don't know who's in the wrong here,
but someone is.


Day Jones (for IH) ought to know better than write that. A regular nuclear power plant produces far more energy than it consumes.

If I were investigating, I would look very carefully at their corporate documents. Were they equipped to get a trillion dollar industry off the ground? If they were, how did they get into this mess? It doesn't seem like they're ripping off Rossi,
what with the $11.5 million they gave him, although they might be if they retain the IP (I'm not clear on what happens to that since the $89 million wasn't paid). I would think that would be a significant issue in this dispute.


Here is IH/IPH 12 month business plan (undated, but mid 2014 I think, about 6 months before the GPT).

Cash flow on pacer p8.

Note that they're planning at this point to raise $25M short term ... up to $300M if they have to pay Rossi (and previous licensee Ampernergo) their 'success fee' -- which they're talking about on p 35. (Walks like the GPT, even though unsigned, different system, and late!)

So I think this is the proposal to Woodford (and others?) : Woodford put in $20M ISTR.

They planned to spend $15M on IP protection and detailed business plan.

They DID get Boeing on board to test a unit. (Reportedly failed)

About $20M has been spent ... in addition to paying Rossi they had to buy the license from another party for 50% of what they paid Rossi.

That is still at least $30M in "profit". More if any of the $20M was raised by investment. This may have been completely on the up and up, but if I was one of the people that put in that $50M investment, I'd have some very serious questions that I would want answered.

I think there's an IH/IPH balance sheet somewhere in the 1000+ docket entries!

One of the problems with armchair-lawyering is that we don't see the complete transcripts of the depositions, or the zillions of exhibits to them.




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Re: Rossi v Darden : Cold Fusion Trial

Post #24 by tjh » Sat May 27, 2017 1:52 am

Woodford Dec 2016 Report

IH is about 2% of their $990M portfolio ... or $20M



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Re: Rossi v Darden : Cold Fusion Trial

Post #25 by tjh » Sat May 27, 2017 1:59 am

lawyers will file for fees (if winning)

Rossi : $7.5M
IH: $7.5M
3rdP: $0.5M




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