Iron Man (after helping the repentant super-villain mercenary Force fake his death so that he could retire to a normal, law abiding life) makes a shocking discovery upon examining the former villain's armor: it used Stark's very own armor designs. In an attempt to stop other people from misusing his designs, Stark plans to go about disabling other armored heroes and villains who are using suits based on the Iron Man technology (the designs of which were stolen by his enemy Spymaster, who had gone on to sell them to Justin Hammer, days before his death). With the aid of former employee Scott Lang, who infiltrates a front company of Hammer, he discovers the identities of all those using his designs, although one escapes discovery due to security stopping the download. Tony then sets out on his quest to eliminate the technology using negator packs on their armors to destroy the circuitry.
During the course of the "Armor Wars", Iron Man begins by confronting and defeating Stilt-Man. The Mauler, his next target, surrenders the armor without a fight when confronted without it (as Doyle states, he's paid to fight, plus he could always steal another armor). Iron Man then went after the Controller, but a member of the Controller's cult was killed in the conflict when the Controller had his minions pile on top of Iron Man and a subsequent attack crushed one of the brainwashed attackers.
Stark takes out the Raiders (a gang of crooks using high-tech suits), but upon returning learns that one name is missing from Hammer's database, Stark deduces that the armor user must be the government operative Stingray, as all other armor-wearing individuals (such as Frog-Man or Doctor Doom) can be eliminated by facts or logic. When Stingray rejects Iron Man's request to look at the armour, Stark catches and negates Stingray after an underwater skirmish, only to find out that his negator does not work as Stingray's suit was not based on his technology. As a result, Stark is forced to "fire" Iron Man due to lawsuits by the US Government.
Tony then continues his crusade by taking out The Beetle, but he then targets the S.H.I.E.L.D. operatives known as the Mandroids. While the Mandroids are not criminals, Stark justifies this by saying that if anyone ever got a hold of one armor utilizing his technology, they could simply duplicate the technology and the nightmare would restart. In order to get the Mandroids into a position where he can destroy them, Stark pretends to hand Iron Man (claiming that Iron Man is actually Randall Pierce, a name created by him in the past for such an eventuality) over to S.H.I.E.L.D. and then pretending to discover a bug to explain Iron Man's 'advance knowledge' of the raid after the Mandroids are destroyed.
After successfully negating S.H.I.E.L.D.'s five Mandroids, Stark set his sights on another of his inventions, the Guardsmen who are charged with guarding the supervillain detention center known as the Vault. Forty armors are stationed there, and Tony and Rhodey are forced to break into the facility. Iron Man and Rhodey's actions lead to a small prison breakout when Titania and Mister Hyde take advantage of the chaos (only to be defeated by Steve Rogers in his then-current guise as the Captain). This also leads to a falling out between Stark and Rogers; while agreeing with Stark's motives, Rogers disapproves of his high-handed methods, considering them reckless and dangerous.
The "Armor Wars" have several other tragic consequences for Iron Man. The West Coast Avengers, of which Tony was a member, ask Tony to explain himself, which he does, and to cease attacking armored opponents, which he refuses to do. Tony subsequently violates international airspace (Soviet Union at the time) and attacks both the Crimson Dynamo and Titanium Man. After negating the Dynamo, Tony sets his sights on the Titanium Man but is outclassed due to Tony using his Stealth Armor, thus lacking the power to oppose the Titanium Man in prolonged combat, and because his only remaining negator pack has been destroyed. Having exhausted his weapons, Tony tries to run, only for the Titanium Man to catch him; his attempt to escape cause the death of Gremlin (the pilot of the Titanium Man armor) when his bootjets overheat and finally combust the Gremlin's titanium armor plating.
Iron Man, now considered a murderer, is forced to flee the area and resign as an Avenger. Due to all of his recent renegade antics, the US Government deploy their new armored warrior named Firepower, designed by Stark's rival Edwin Cord, to defeat Iron Man. During the ensuing battle Firepower overpowers and badly injures Stark, with matters made worse when Firepower's armor is revealed to be shielded from Stark's negator packs. Tony fakes Iron Man's demise at the cost of his Silver Centurion armor.
Following that, Edwin Cord uses the Firepower armor to conduct acts of economic terrorism against Stark Enterprises in revenge for Stark having taken the Cord Conglomerate from him. Tony originally does not create a new suit, hoping to put everything behind him and believing that the risks of a new armor being duplicated are too great, but eventually realizes that he has to stop this rampage. Wearing an advanced suit of armor that negates Firepower's original advantages, Stark claims to be a new Iron Man and soundly defeats Firepower in a rematch. Stark makes sure to install security chips that will destroy the armor if duplication is attempted by anyone without proper authorization, concluding that he has a greater responsibility to protect the innocent by using the armor instead of trying to avoid the basic danger it presents by not using it.
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