On Rossi and His Contracts

It appears from many comments that there is a contingent of observers who feel that Andrea Rossi’s goals to design a self-destructing E-Cat that it is a futile effort to protect his industrial secret and that the preferred approach would be to release the technology and just accept the fact that the secret will be stolen and copied.

But we should realize that although he is dealing with a new and revolutionary technology he is also operating in a traditional business environment in which he deals with investors who would likely not be interested in investing funds unless they can receive some assurance there will be some protection for them. No doubt Rossi has made assurances that he will do all he can to provide that protection — and indeed he has said that he would delay the release of E-Cat technology in the home environment if he was not confident that his trade secets were secure. “It is a matter of contracts”, he has said. Rossi would not be in the position he is now in, were it not for these contracts, and he is taking a cautious and conservative approach as the E-Cat technology is launched.

While many seem to think that it will be impossible to prevent reverse engineering from taking place, Rossi believes otherwise, although he has given no details on how he is going to proceed. The approval of a world wide patent could help his case, but he said that even in that case, trade secrets will still exist. Whether or not he will be successful remains to be seen, but it is clear that Rossi has made it a priority to take very seriously agreements he has entered into, even if it means that the proliferation of the new form of energy production may be slowed in the domestic arena.

  • Waiting

    Several people have pointed out that the self destruct can’t succeed, but none of them have suggested he just give away the technology. Those are two separate issues.

    On the self destruct issue, consider this: no technology in history has ever been successfully kept secret by anti-tamper, anti-reverse-engineering, or self-destruct mechanisms. Not one. There are solid engineering reasons for this. Lots of people have tried. The best that has ever been achieved is to make reverse engineering more expensive. But if you have a technology worth trillions, then making the reverse engineering a little more expensive won’t protect it.

    So should he give away the technology? Of course not. He should do what businesses usually do in this situation. He should apply for patents around the world. He should scale up production as quickly as possible. He should sue those who infringe on the patent. He should launch an advertising campaign warning of the dangers of buying cheap, unlicensed copies, rather than the genuine brand name. He should expand quickly, build market share quickly, and evolve the technology quickly, so that those who enter the market later will be at a competitive disadvantage. He should use the enormous income to lobby governments to protect his IP at home, and to pressure other countries to do so.

    But all of that depends on expanding quickly. Delaying the launch would be unwise. Making products that are less reliable because of a self destruct that sometimes breaks, would be unwise. Yes, he’s going to lose some income to pirates no matter what he does. But the path I described should maximize his profits. That’s business.

  • The self-destructing technology is, IMHO, something he is doing for the sake of the investors. He know it will be difficult to develop something that really work.
    The protection must work, mainly, against cheap competitors, that have not a large capitals and expertise. Larger competitors will be able to break anything he use, but would not be able to use it (because they are large and easier to sue than small pirates).

    The diffusion of the technology will not be delayed, at worst it will be shifted from early home use to early industrial use. The demand for the e-cat technology will be larger than the supply available for many years. And, anyway, the price reductions of energy will indirectly help consumer anyway.

    • Waiting

      The cheap competitors to worry about are those in China. They can get reverse engineering information from their government. A self destruct can’t slow them down.

      Rossi has said he might delay all sales, to make time to develop the self destruct. This is unwise, if the e-cat is real. It is wise if it’s not.