Lawsuit Over Flawed CIA Drone Code Is Deep Sixed by Settlement

Terms of Agreement “To Remain Confidential”

An explosive lawsuit alleging that Boston-area tech company Netezza Corp. sold computer hardware loaded with “hacked,” faulty software to the CIA for use in the agency’s Predator Drone program has now disappear from public view.

The parties to the lawsuit, which include Netezza and software developer Intelligent Integration Systems Inc. (IISI), announced last week that they had reached a settlement in the case. A day after that announcement, corporate giant IBM closed on a $1.7 billion deal to purchase Netezza.

The breach-of-contract lawsuit, initiated in Suffolk County Superior Court in Massachusetts in November 2009, revolved around a series of claims and counterclaims related to a sophisticated, analytical software program, known as Geospatial, that was developed by Boston-based IISI. The software is capable of integrating at high speeds spatial data, such as maps and visual images, with non-visual data, such as names and phone numbers.

Netezza, in its pleadings, claimed that IISI, per contract, was required to upgrade the Geospatial software code to make it work on Netezza’s new data-warehouse computer platform, called the TwinFin. IISI argued, and the court ultimately agreed, that it was under no such obligation. IISI officials also indicated that such an upgrade effort would be quite challenging and costly.

In the wake of IISI refusing to adapt the Geospatial software to the TwinFin on Netezza’s timeline, IISI asserted in court pleadings that Netezza proceeded to develop a re-engineered, flawed version of the software that was loaded on the TwinFin platform that Netezza allegedly sold to the CIA.

The released details of the lawsuit settlement between Netezza and IISI are vague, and do not clearly address whether the allegedly flawed Geospatial software acquired by the CIA will be fixed or replaced.

Ambiguous Responsibility

In a press release issued jointly by Netezza and IISI on Nov. 10, the two companies state the following:

Netezza Corporation and Intelligent Integration Systems, Inc. (IISi) today announced an agreement to settle all claims involved in the on-going litigation between the companies. Under the settlement agreement, which became effective today, Netezza will have ownership of all products and related intellectual property developed by IISI for the Netezza platforms [computers], including the geospatial product and extended SQL toolkit. IISI has retained the right to continue to develop, manufacture and distribute those products for use on other platforms. Other terms of the settlement were not disclosed and will remain confidential.

IISI, prior to the recent settlement of the case, had a motion for a preliminary injunction pending before the court, with a hearing date on the motion set for early December. If that motion had been granted, Netezza would have been forced to round up and return to IISI all software that Netezza, according to court pleadings, allegedly pirated, re-engineered for one of its new computers (the TwinFin), and then sold to various customers, including the CIA.

That allegedly “hacked” software, in the case of the CIA (which was not party to the lawsuit), is now being used to guide killer drones to their targets in Pakistan and Afghanistan, despite the fact that the modified software doesn’t function properly, according to IISI court pleadings .

From IISI’s summary judgment memorandum pleadings in the case:

Netezza “hacked” (Netezza’s word) into IISI’s Geospatial sourcecode (in violation of the “no reverse engineering provision of the Agreement) and created a version of Geospatial that ran on TwinFin, though very imperfectly, which it delivered to the CIA in October 2009, and which the CIA accepted.

Big Blue Deal

IBM announced in September of this year that it planned to acquire Netezza, a publicly traded company that employs some 500 people, in a deal valued at $1.7 billion. That acquisition closed on Nov. 11, one day after Netezza and IISI made public the confidential lawsuit settlement.

In October, prior to the acquisition being finalized, IISI and Netezza had agreed to a “stipulation regarding disclosure” that was filed with the court.

“The parties … agree … that between now and the closing of the acquisition of Netezza by IBM as announced publicly on Monday, September 20, 2010, … Netezza Corporation will not disclose to IBM any copies of IISI [software] source code, binary code, object code, installation scripts or specifications,” the stipulation agreement states.

The stipulation agreed to by Netezza and IISI created a temporary firewall between IBM and Netezza designed to assure that Netezza did not share information about IISI’s Geospatial software with IBM prior to Big Blue finalizing its purchase of Netezza.

Although the terms of the lawsuit settlement, as outlined in the press release, leave open the question of whether the CIA will continue to use the re-engineered Geospatial software (which, according to the court pleadings, produces calculations that are a little off, from 1 to 13 meters”), it is made clear that IBM now owns the Geospatial software developed by IISI for Netezza’s computer platforms.

So it would appear that IBM, along with the CIA, behind a firewall of secrecy, will determine the fate of the allegedly flawed drone code and, by extension, the lives that may be hanging in the balance.

Stay tuned ….

Court Pleadings

Netezza Complaint

IISI Answer and Counterclaim

IISI’s Memorandum of Law in Support of Motion for Summary Judgment

Judge’s Ruling on Motion for Summary Judgment

IISI’s Memorandum of Law in Support of a Motion for a Preliminary Injunction

Stipulation Agreement between Netezza and IISI Related to IBM’s Pending Acquisition of Netezza

NOTE: Links to various other court documents/exhibits filed in the pending lawsuit between Netezza and IISI lodged in Suffolk County Superior Court in Boston can be found in the previously published stories in this series.

Past stories on this case:

US Government Attorney Writes Narco News Over CIA Drone-Code Story

CIA Drone-Code Scandal Now Has A Big Blue Hue

Legal Battle May Force CIA to Return Drone Code to Sender

Judge Rules Against Company that Allegedly Sold “Hacked” Code to CIA

Tech Firm Claims Its Software “Hacked” in CIA’s Quest for Drone Code

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