In that case, involving action by the national securities regulator against fundraising by promoters of a new engine, the court commented that -
The Business Plan explained that CME was engaged in the development of a commercially viable engine which, deriving its power solely from magnets within the engine, would have no need for fuel of any kind. The respondent claimed and the primary judge declared that, in representing to potential investors that such a machine could work, CME engaged in conduct which was misleading or deceptive, or likely to mislead or deceive, in breach of s 12DA of the Act.The Court in Australian Securities and Investments Commission v Cycclone Magnetic Engines Inc & Ors [2009] QSC 58 noted that -
For hundreds of years people have been investing time, money and effort in attempts to create a perpetual motion machine. Even though such a machine would violate either or both of the first and second laws of thermodynamics, there has been a continual stream of these "inventions" since at least the twelfth century. Coincident with that has been the quest by the "inventors" for funding to support their creations. There are many examples of funds being raised to sustain these endeavours. There have also been many who have been willing to point out the impossibility of these attempts, sometimes with scathing condescension. On other occasions the would-be inventor is met with bureaucratic intolerance.ASIC alleged that the promoters contravened the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth).
One of the ways in which it has been claimed that a machine can be created, which will require no external fuel input, is through the applied use of very strong magnets. That is the case here. In England the subject was studied during the reign of Queen Elizabeth, with a text on the properties of magnets being published in 1600.
Bishop John Wilkins, in his book Mathematical Magick, discusses the ”difficulty” of achieving perpetual motion, and considers in detail a device consisting of two tilted ramps, an iron ball, and a magnetic lodestone fastened at the top. He determined that the device could not work but concluded: "So that none of all these magnetical experiments which have been as yet discovered, are sufficient for the effecting of a perpetual motion, though these kind of qualities seem most conducible unto it; and perhaps, hereafter, it may be contrived from them.” The interaction among magnets, electricity and the generation of power has been investigated by giants of the field: Coulomb, Ampere, Faraday and Tesla.
In this case, the applicant (ASIC) says that the respondents have, in promoting a machine said to run solely on the power of magnets, engaged in misleading and deceptive conduct and have otherwise breached legislative provisions regulating fund raising by corporations. That simple description might lead one to the quick conclusion that the promotion of a "perpetual motion" machine must fall into the ‘misleading and deceptive’ basket, but looks can be deceptive in more than one way and the statutory remedies are not to be employed without careful scrutiny of what a promoter actually says and does.
The provisions of the Corporations Act 2001 (the Act) which deal with misleading and deceptive conduct are not designed as a complete shield to protect individuals against their own avarice or cupidity. Just as people will continue to play games of chance in casinos (knowing that the odds are in favour of the house) or buy tickets in lotteries (knowing that the chance of winning is one in many millions) so people will continue to chance their money in investments which, to others, appear far too risky. They sometimes adopt the attitude of one of the deponents whose affidavit was relied upon by ASIC – they see the investment as a bit of a gamble.
One of the promoters was asked "just explain to me how that engine works" -
A. .... The magnetic engine works wholly and solely with the attraction repulsion of permanent magnets. The objective of it is to produce an engine that doesn't require external input, either electrical or fuel. It's so that the engine runs purely on the attraction and repulsion of permanent magnets. In its geometric configuration that does not try to challenge perpetual motion but to use mechanical advantage.In the 2010 judgement the Court noted that engineers who gave expert evidence indicated that -
Q. So it doesn't require any input or any source from an external battery system –
A. That’s correct.
Q. -- or any back up electricity or anything like that. It's just a self propelling engine run on magnets; is that right?
A. That's correct.
The proposed permanent magnet motor would comprise a perpetual motion machine.
The aim of using permanent magnets to produce power, to propel motor vehicles or conventional industrial machines cannot be achieved.
... The hope of making an engine that will operate purely on magnets is forlorn. ... The faith in an engine operated purely by magnets has been founded on quasi scientific reports that give an illusion of being erudite but never quite close the loop on being comprehensible.
