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. The full document is here:

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 Defendants were limited in their use of certain information they received from Plaintiffs. Attached to, and incorporated into, the Complaint, however, is the License Agreement. The plain language of that Agreement, coupled with the admissions in the Complaint, demonstrates that Plaintiffs’ central contentions are incurably flawed: The License Agreement required
performance by Plaintiffs within a specific time period, which Plaintiffs acknowledge did not occur within that time period, and the License Agreement permitted IH and IPH – after having paid Plaintiffs over $10 million (which Plaintiffs admit was paid) – virtually unlimited usage of information they received from Plaintiffs.

Plaintiffs’ non-contract claims, brought in an effort to bring parties into this litigation beyond IH and IPH, suffer from additional fatal flaws. Plaintiffs’ misconceived fraud claims are simply efforts to recast breach of contract claims as fraud claims, but this is clearly impermissible. They are not predicated on the breach of any duty independent of contract created obligations. The Complaint also fails adequately to allege facts in support of Plaintiffs’ non-contract claims, and further suffers from an impermissible lumping together of Defendants without identifying how each Defendant allegedly committed each claimed infraction. For all of these reasons and the additional reasons set forth below, Defendants respectfully request that the Court dismiss the Complaint in its entirety

The crux of the argument surrounds technicalities.

There is clause in the License agreement which states that IH would pay Leonardo the $89 million payment “contingent upon the Plant operating at the same level (or better) at which Validation was achieved for a period of 350 days (even if not consecutive) within a 400 day period commencing on the date immediately following delivery of the Plant to the Company.”

There was an amendment included in Rossi’s filing which “formally eliminated the requirement that the Guaranteed Performance test period be commenced immediately upon delivery of the plant and instead requiring [sic.] that the Guaranteed Performance Test period would commence on a date agreed to in writing by the parties.” IH says in this motion to dismiss that Ampenergo, one of the parties to the License agreement did not sign that document, making it invalid.

The motion does not address the performance of the E-Cat; it does not discuss the ERV report (which has still not been published), but it does have this comment:

“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).”

Further points made by IH in response to Rossi’s Complaint:

“Count I Fails to State a Breach of Contract Claim . . . because the Complaint and its Exhibits demonstrate that Plaintiffs have failed to fulfill their obligation regarding Guaranteed Performance, the fulfillment of which is a condition precedent to IH and IPH’s obligation to pay $89 million under License Agreement

“Count II Fails to State a Breach of Contract Claim . . . because it fails sufficiently to allege specific provisions of the License Agreement that were breached

“Defendants’ statement about their “ownership” of the E-Cat IP is not a breach of the License Agreement . . . Plaintiffs have failed to point to any provision in the License Agreement that forbids IH or IPH merely from stating that they “own” the E-Cat IP. In fact, the License Agreement expressly required that, after IH paid
Leonardo $10 million, “Leonardo and Rossi w[ould] immediately transfer … to the Company [i.e., IH] all E-Cat IP.”

“Listing T. Barker Dameron as a co-inventor in a U.S. Patent Application is not a breach of the License Agreement . . . Plaintiffs have failed to point to any provision in the License Agreement that forbids IH or IPH from listing people as co-inventors on U.S. patent applications. Indeed, the License Agreement contemplates and accepts that such co-inventors might exist in connection with inventions or ideas derived from the E-Cat IP after its transfer to IH”

“Count III Fails to State an Unjust Enrichment Claim.

“Count IV Fails to State a Misappropriation of Trade Secrets Claim . . . By the License Agreement, Plaintiffs permitted IH and IPH to disclose the ECat IP and did not protect its secrecy against IH or IPH’s use or disclosure . . . . Defendants did not use improper means to obtain the E-Cat IP . . . The specific acts alleged by Plaintiffs do not constitute misappropriation.”

“Count V Fails to State a Civil Conspiracy Claim . . .Plaintiffs’ civil conspiracy claim fails as a matter of law because their misappropriation of trade secret claim fails”

“Count VI Fails to State a Fraud and Deceit Claim . . . Plaintiffs’ fraud claim fails because it does not allege any tortious conduct by Defendants independent of the conduct that serves as the basis for the alleged breaches of the License Agreement.”

“Count VII Fails to State a Constructive and Equitable Fraud Claim . . . Count VII fails to state a claim for constructive and equitable fraud because Plaintiffs have not alleged any facts demonstrating that Defendants owed Plaintiffs a fiduciary duty”

“Count VIII Fails to State a Patent Infringement Claim . . . Contrary to Plaintiffs’ belief, filing a patent application is not an act of patent infringement.”

” IX. Plaintiffs Impermissibly Lump Defendants Together in Several Counts . . . Plaintiffs are not permitted, particularly with respect to their fraud claims, to merely lump together all of the defendants in their allegations.”