The movie opens several months after the events in the first Iron Man movie. We are introduced to a man named Ivan Vanko. Ivan's father Anton is slowly dying and telling Ivan his final wishes. Ivan thinks he should have the fame that Tony Stark is enjoying but Anton tells him to ignore that garbage.
All Anton can give Ivan is his knowledge. Ivan then sets about recreating the Arc reactor and begins building his own version of the Iron Man suit. Tony Stark has become a champion for world peace thanks to the Iron Man suit, and has practically solved world peace, or so he claims.
Six months after the end of the first movie, Tony Stark has used his Iron Man armor to bring about a negotiated peace treaty between the major super powers of the world, and his immense popularity with the general public is only furthered when he fulfills his father's dream by reopening the "Stark Expo" in Queens, NY, to showcase all the latest inventions that will benefit the world.
Tony Stark fulfills this dream by flying into the expo and making a gigantic entrance to become the new symbol of world peace. After the event, Stark is contacted by Senator Stern to appear before the Senate Armed Forces Committee. Tony and Happy decide to take a road trip to Washington DC in Tony''s new Audi R8.
There, the hearing is being broadcast on CSPAN, and there Tony's usual brand of humor becomes the center of attention while completely ignoring the fact that the Senate has classified Iron Man as a weapon and that he is under investigation.
While there, he's greeted by best friend James Rhodes, who led the investigation into the events surrounding Iron Man's creation. Rhodes' investigation is taken way out of context by Senator Stern.
Justin Hammer, a rival weapons contractor, gives a presentation about how other countries are making copies of the Iron Man suit, or weapon as they refer to it. Tony gives a rebuttal showing that he is Iron Man and will not part with his armor, and that the "attempts" at copying Iron Man are from Iran, North Korea, and Hammer Industries, and are extremely poor quality.
Back at home, Tony is on JARVIS analyzing the latest prototypes and developments for the Iron Man suit, and Pepper enters and the two start having arguments about the future of Stark Industries.
Tony is telling Pepper that he's making more money off the company's common stock than he ever did as CEO. He decides he's had enough of being the CEO and wants to focus solely on developing Iron Man.
He decides to appoint Pepper as the new CEO and she is stunned. The next day a stunningly beautiful notary public enters to have Tony officially sign the company over to Pepper.
Tony is undergoing fighting training with Happy and performs an illegal move on him, getting it confused with MMA. The notary's name is Natalie Rushman, and he has Happy give her a boxing lesson, and while looking up her bio, Natalie performs a TKO on Happy.
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