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Woodford tech holding settles battle with scientist

Woodford-backed Industrial Heat settles legal battle with scientist over controversial ‘low energy nuclear reaction’ device.

 
Woodford tech holding settles battle with scientist

An energy technology company backed by fund manager Neil Woodford has settled a legal battle with a scientist who claimed he was owed $89 million (£69 million) for the use of his invention.

Scientist Andrea Rossi, who claims to have invented a ‘low energy nuclear device’ alleged Industrial Heat, held by Woodford's Woodford Equity Income fund and Woodford Patient Capital (WPCT ) investment trust, had ‘systematically defrauded’ his intellectual property rights to the energy catalyser, or E-Cat.

E-Cat technology has been shunned by the scientific mainstream but claims to be able to generate energy at more moderate conditions than the high temperatures required for other forms of nuclear fusion.

Rossi's claim against Industrial Heat reached the Florida courts, but the two parties reached a settlement a week into the case.

Technology and science writer Mats Lewan, author of An Impossible Invention chronicling Rossi’s work, published what he claimed were the terms of the settlement, with Rossi receiving the license to the E-Cat.

Rossi had claimed before the court hearings that Industrial Heat’s claim to the intellectual property had been crucial to its fundraising from Woodford Investment Management and others.

Woodford’s small stake in Industrial Heat has been one of his worst performing holdings. 

Over the 12 months to the end of June, only Allied Minds (ALML), 4D Pharma (DDDD) and fellow unquoted stock Kind Consumer have been a bigger drag on performance in the Patient Capital trust. Industrial Heat accounts for around 1.3% of the portfolio.

The stock accounts for a much smaller proportion of the Equity income fund, at just over 0.1%, but still ranks among the 20 biggest weights on the fund over the 12 months to the end of June.

Woodford Investment Management declined to comment, but has previously said it shared Industrial Heat’s ‘quest to eliminate pollution’ through its ‘diverse portfolio of innovative technology, such as low energy nuclear reactions’.

15 comments so far. Why not have your say?

PaulSh

Aug 30, 2017 at 16:41

The way I read both the linked blog and the actual settlement, Industrial Heat is finished. To say that Rossi is "receiving the license to the E-Cat" is a bit of an understatement because he is actually having the licence returned to him along with all existing hardware and IP - in other words, IH will have nothing.

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General Zod via mobile

Aug 30, 2017 at 17:39

Neil Woodford appearing in a citywire story?????? Rare.

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RKB

Aug 30, 2017 at 18:32

Cunning. The investors in IH lose, presumably the promoters have taken fees, the device never gets exposed as a fraud, and Rossi is free to licence to another startup. Rinse and repeat.

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Tyrion Lannister

Aug 30, 2017 at 19:28

What really worries me is that Woodford fell for it.

In effect, Industrial Heat claimed to have harnessed cold fusion. Anybody who knows anything significant about science will tell you this exists only in the realms of fantasy.

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PaulSh

Aug 31, 2017 at 10:34

@Tyrion Lannister, much as I have often scoffed at "cold fusion" and other dubious branches of pseudo-science, it has to be said that anybody who knows anything significant about science should also tell you that we don't know everything there is to be known. So it's a question of getting the balance right between, as one NASA scientist once put it, being so open-minded your brains fall out, and being so closed-minded you end up missing out on great opportunities.

In this particular case, Industrial Heat was a huge gamble that you might have put a little of your own money into in the hope of winning big, just as you might buy a lottery ticket, but there's no way you should have been putting other people's money into it.

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Abd ul-Rahman Lomax

Aug 31, 2017 at 13:05

There is full coverage of the lawsuit, all documents and links to analysis, at http://coldfusioncommunity.net/rossi-v-darden-docket-and-case-files/

I followed the case from filing to settlement. I travelled to Miami and attended the trial (Except for one person, one day, I was the only media there.) Many will comment on this case without knowledge, this is the internet.

My brief summary: Industrial Heat invested $20 million of their own money (a small group of investors who know each other well) on a long shot. Darden said in a deposition that, if there was 1% chance of Rossi technology being real, it was worth the investment, and, coming from their interest in environmental remediation and protection, their goal was the field of Low Energy Nuclear Reactions (LENR), not Rossi himself. They needed to know.

They found out, and by the time Woodford invested, (having committed up to $200 million, so the Woodford $50 million was just the first tranche), whatever has been spent of the Woodford money went entirely into other investigations and was beyond his reach, since Woodford did not invest in Industrial Heat, a United States LLC, but in IH Holdings International, Ltd, a U.K. corporation.

This was known to be very risky, with expectations that failing to find a commercial-scale application with only $50 million was likely. They did due diligence and know that LENR is real, but very difficult to control, due to severe problems with material conditions, with theoretical understanding still being in a primitive stage. Rossi's claims were damaging the field, because who wants to invest in scientific research claiming a few watts, when Rossi was claiming kilowatts? -- and there were some scientists supporting the claim (especially a group from Uppsala University in Sweden)..

To read Rossi's account to Mats Lewan, when Rossi found out about the $50 million going to his "competitors," he decided he could not trust them, and all relations were hostile from then on, and eventually he sued them (which made no business sense). IH settled for a return of the License and his reactor junk, worthless to them, but allowing Rossi to continue to claim that his technology worked. (Someone who wants to continue believing this is forced to conclude that Darden and others lied under oath, or, alternatively, that Ross never trusted them with the secrets, in spite of being paid for them. Paranoia strikes deep. Even Rossi's friends consider him paranoid and very difficult to deal with.)

As to the public interest (which they are not obligated to protect), the roughly $5 million that they are said to have spent on legal fees has allowed the public to know what happened, through case documents, clear evidence that would have been introduced in the trial if it had actually entered the evidentiary phase, filed with pleadings and attested., Future possible investors can see how Rossi treated what appears in the documents, with Rossi aggressively pursuing in discovery every bit of apparent dirt he could find, as an angel investor.

Woodford did not invest in Rossi. A small portion of Woodford funds may have been used to help pay legal expenses (IHHI became the sole owner of IH, through stock swaps). The Woodford investment was, and remains, extremely risky. It could take billions of dollars to develop LENR, but, through Industrial Heat, Woodford will have his finger on the pulse of the field and will know when it is appropriate to invest more. They bought, actually IH created, expertise. This could take twenty years to pay off. There is a small possibility that LENR will remain, forever, a lab curiosity, but ... my sense is that this is unlikely. What is unclear is what and how long it will take.

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PaulSh

Aug 31, 2017 at 15:09

Dear Mr. Lomax, thank you for that "brief" summary. Would I therefore be correct in saying your position is that Rossi's work proved to be a dead end but IH itself is far from dead even though Rossi has taken back everything apart from their "expertise"?

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Tyrion Lannister

Aug 31, 2017 at 16:27

PaulSh,

It's down to maths and physics, and the maths prove it isn't possible. The activation energy required is colossal. You simply can't get energy for free which is what would be required for cold fusion to work.

If some told you they could break the speed of light, would you keep an open mind on that?

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Mary Yugo

Aug 31, 2017 at 18:54

It seems as if a post in which I attempted to draw attention to Rossi's past may have been censored. So I will leave it to this link:

http://newenergytimes.com/v2/sr/RossiECat/Rossis-Italian-Financial-and-Environmental-Criminal-History.shtml

I also commented on the quality of Woodford's vetting of Rossi and IH. That didn't make it through either.

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RKB

Aug 31, 2017 at 19:24

Rather ironic when you consider Woodford, from his Cowley base, is just a few miles away from JET at Culham, as well as Harwell and the University. He didn't think to get their opinion - or maybe didn't understand why they were laughing so much?

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Abd ul-Rahman Lomax

Sep 01, 2017 at 01:26

Because this comment section does not allow threaded comments, I am replying to @PaulSh on a page on my blog. I have written, there, a review of the article, and also replies to almost all comments here. Comments there are welcome.

http://coldfusioncommunity.net/citywire-on-woodford-and-rossi-v-darden/#Comments

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Capt Ahab

Sep 02, 2017 at 11:27

Mr Woodford's name appears far too often for all the wrong reasons

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Capt Ahab

Sep 02, 2017 at 11:27

Mr Woodford's name appears far too often for all the wrong reasons

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Mary Yugo

Sep 05, 2017 at 22:26

Opening statements of all parties in the trial (Rossi, IH, countersuit, and two third parties) -- thanks to "Abd"

http://coldfusioncommunity.net/rvd-opening-statements/

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Mary Yugo

Sep 06, 2017 at 19:40

"The way I read both the linked blog and the actual settlement, Industrial Heat is finished. To say that Rossi is "receiving the license to the E-Cat" is a bit of an understatement because he is actually having the licence returned to him along with all existing hardware and IP - in other words, IH will have nothing."

Actually, it is Rossi who ends up with nothing but all the evidence IH was able to generate shows clearly that his devices do not produce energy. They are simply electric heaters. And IH tried to make Rossi equipment work for going on three years with Rossi's help and supposedly his full cooperation which is what they originally gave him TEN MILLION DOLLARS to get!

IH still has investment capital and is supposedly working with the most clever people they can find to make LENR work. Personally, I don't think they will but they are hardly "finished."

You can get more input on this from Dewey Weaver, an IH principal, who posts discussions in this thread:

https://www.lenr-forum.com/forum/thread/5287-rossi-vs-darden-aftermath-discussions/?postID=70796#post70796

That is a good place to learn what is going on with LENR and IH today and to discuss it pro and con although with somewhat heavy handed pro-LENR moderation.

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