Fuel cell maker sued for Microsoft claims

N.Y. firm initiates class action suit on behalf of Medis shareholders, saying the company misled investors about a deal with Redmond.

Earlier this month, Medis Technologies announced that it struck a fuel cell deal with Microsoft. Now it's being sued for that statement.

The Rosen Law Firm in New York City has initiated a class action lawsuit on behalf of Medis shareholders, alleging that the publicly traded company misled investors about the scope of the deal. Microsoft is not identified as a party in the suit.

In a press release earlier this month, Medis said it started shipping its 24/7 fuel cells and that its first customer was Microsoft.

"This is a historic moment for our company," Robert K. Lifton, chairman and CEO of Medis Technologies, said in the press release. "It marks the first commercial sales of our 24/7 Power Pack product and indeed, the first commercial sales in quantities of any consumer fuel cell product. We are pleased to be able to serve Microsoft as our first customer."

The Medis release also said the products would be Microsoft-branded fuel cells.

Inside Greentech, a Web publication, quoted an executive from Medis as saying that Microsoft would sell the fuel cells around the world, and that ultimately the order would reach into the millions of units.

Medis, however, did not say how Microsoft would use the fuel cells or how many Microsoft planned to buy.

It turns out Microsoft ordered a relatively small number of fuel cells and will use them as promotional giveaways. Whether a Microsoft logo embossed on the fuel cells constitutes a "Microsoft branded 24/7 Power Pack" will likely be a big issue in the case.

Still, in the portable fuel cell world, shipping 50 units would be a pretty historic order. So far, most companies have only produced and shown off a few prototypes.

On Tuesday, Medis said the lawsuit was without merit and asserted that its April 13 press release was accurate. The company further stated that "a third-party article elaborating upon such press release and cited in the plaintiff's complaint was materially inaccurate and that Medis had so informed its author prior to the article's publication and told him not to publish the article."

Microsoft has not yet responded to a request for comment.

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