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Weapon Software Glitch Hits Close to Home

BOSTON ( TheStreet) -- In July, TheStreet reported a story detailing how an intellectual property dispute between two Boston-area companies uncovered allegations that the CIA bought faulty software for its unmanned aerial weapons program.

Now comes apparent proof the military is, indeed, dealing with software glitches in its unmanned "drones." The New York Times reported that a U.S. Navy drone earlier this month made its way into restricted airspace near Washington, D.C., because operators lost remote control of it for about 20 minutes. The reason for the scary error, according to Navy officials, was a "software issue" that thwarted the drone's automatic homing feature. When operators lost contact with it, the Northrop Grumman (NOC - Get Report)-manufactured drone just kept flying the wrong way.

The news brings to mind the case between Intelligent Integration Systems, a small Boston-based company that specializes in high-speed data-analysis systems, and Netezza (NZ), a larger data-warehouse appliance company in nearby Marlborough, Mass. At issue is the source code behind Spatial, geographic-data-analysis software that can parse and pinpoint map-based information such as hurricane patterns, wireless phone calls and, potentially, people. Intelligent Integration Systems developed the technology behind Spatial, which initially ran on an early version of Netezza's data-warehousing platform, the Netezza Performance Server. Netezza alleges Intelligent Integration Systems was contractually required to develop a new version of the Spatial software for its newer platform, dubbed TwinFin, and sued Intelligent Integration Systems accordingly -- along with terminating its relationship with the company. Intelligent Integration Systems countersued.

The court file contained a series of email messages among Netezza executives indicating the company sold an unauthorized version of Spatial for TwinFin to the CIA for use in its predator-drone program before the software was feasible, tested and deemed accurate. The messages reveal accuracy problems with the software, fueling growing concerns about unmanned aircraft that drop missiles on enemy targets.

According to an analysis by the New America Foundation, a public-policy think tank whose board is led by Google (GOOG) CEO Eric Schmidt, 142 reported drone attacks in Pakistan killed between 1,013 and 1,362 people from 2004 to this year. Of those killed, up to a third were nonmilitants, the report found.

Nobody was hurt by the recent errant helicopter drone near Washington, but the event served to bring the robot weapon scare closer to home.

Meanwhile, courts have been favoring Intelligent Integration Systems. "The Court concludes that IISI was not contractually obligated to make its Geospatial software product work on Netezza's TwinFin appliance [computer]," according to an Aug. 20 ruling by the Suffolk Superior Court in Boston. "Because Netezza thus has no reasonable expectation of proving its claim that IISI breached an obligation under the agreement by refusing to make its Geospatial software operate without error on the TwinFin appliance, summary judgment shall enter for ISSI on Netezza's breach of contract count."

Netezza has been faring well in the market anyway. Shares in the company rose a whopping 30% Friday on news of a strong quarter and an increased revenue growth forecast.

-- Reported by Carmen Nobel in Boston.

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