Originally published by Space Intel Report on August 13, 2024. Read the original article here.

TUPPER LAKE, NY — Startup space situational awareness data provider NorthStar Earth & Space Inc. is asking for a court injunction to stop Spire Global, the builder/operator of the satellites providing NorthStar’s service, from shutting off the flow of data.

The application, filed Aug. 12 in Ontario’s Superior Court of Justice, describes a deteriorating relationship between customer and provider that began shortly after the four satellites’ Jan. 31 launch.

One of the satellites has failed in orbit after a loss of communications, and the others have suffered on-board problems that deliver far less usable data to NorthStar than stipulated in the two companies’ service-level agreement, NorthStar said.

NorthStar and Spire have a “space as a service” contract.

NorthStar, which has raised some $121 million since 2018 in multiple funding rounds, said it paid Spire about $14.5 million in up-front fees, with Spire responsible for building the NorthStar payloads to NorthStar’s specifications and launching them. Spire owns and operates the satellites.

Spire had said that given NorthStar’s plans for an expanded constellation, the contract could, over time, some $200 million in revenue to Spire.

Multiple in-orbit anomalies within weeks of launch of the four satellites

Three weeks after the Jan. 21 launch by Rocket Lab, Spire told NorthStar that the early images did not meet expectations. Two weeks later, Spire told its customer that it had lost contact with one of the satellites. A month later it was declared definitively lost.

In March, according to NorthStar, Spire gave a presentation that said the satellites’ optical system had not been correctly aligned, that the optical payload showed signs of contamination and that one of the satellites “was damaged with cracks visible in the optical system,” according to NorthStar’s injunction request.

“Spire’s presentation stated that the root cause of the alignment issue could be traced to improper test setup at Spire.”

For NorthStar, these issues meant that “75% of the satellites’ orbits result in images from which no usable data can be extracted.”

Nonetheless, NorthStar said the 25% of orbits that retrieved usable data was enough to continue R&D work the company had lined up with several customers, including the U.S. Department of Defense.

In late May, NorthStar advised Spire that “it was evident that Spire would be unable to achieve the minimum performance requirements” of the two companies’ service-level agreement (SLA).

On June 25, Spire proposed two go-forward options:

Either NorthStar would approve the checkout and commissioning of the satellites, despite their below-SLA performance, and begin to pay Spire the service fees included in the agreement, or NorthStar would make no more payments and the satellite service would be shut off on June 28.

“Neither of the options… were acceptable,” NorthStar said. But the company was in a jam. It could not afford to have Spire unilaterally cut off imagery without threatening NorthStar’s business. “Spire had no right under the agreement to discontinue operating the satellites.”

Spire told NorthStar that it accepted the obligation to replace the defective satellites, but that whereas the agreement said the new spacecraft would be launched 11 months from the inaugural launch, it now would take up to two years.

Spire further said it would deliver five satellites for the cost of three.

NorthStar told Spire that it must build and launch four new sateltweis by Dec. 31, 2024, under the agreement; and that it must continue operating the first group of satellites at no cost to NorthStar.

Spire had told NorthStar that the data service “could be extended,” but on July 1 “informed NorthStar that the data downlinks had been shut off and there was no plan to reinstate the service.”

A notice of contract default, and the threat of ceasing satellite operations

On July 3, NorthStar sent a written notice of default to Spire. Spire responded, the same day, saying that it “intended to cease operation of the satellites… on Aug. 21.”

Its back against the wall, NorthStar on July 29 began paying Spire “commercially reasonable rates” to obtain the satellite data even though it was Spire that should be incurring these charges, NorthStar said.

At this point, NorthStar said, it had lost faith that Spire would not decide again to shut off the data and saw no alternative than to ask the Ontario Superior Court of Justice for an immediate injunction.

NorthStar Chief Executive Stewart Bain, in an Aug. 12 interview, declined to go into any details about the contract that were not covered in the court filing.

He said the company’s shareholders and customers have indicated that the quality of even the limited data from the defective satellites is good enough to continue to back the company.

But none of this will be likely if there is an immediate shutoff of data.

“The harm that Spire will cause if it does not resume providing data to NorthStar will be impossible to repair or quantify,” NorthStar’s court filing said. “While NorthStar believes that Spire is obligated to continue providing the data pursuant to the Agreement, in the alternative, NorthStar is prepared to continue paying commercially reasonable fees in the interim, until a final determination is made on the merits.”

Bain said the court injunction request is likely to be decided this month.

Spire Global did not immediately respond to a request for comment on NorthStar’s court filing.

Originally published by Space Intel Report on August 13, 2024. Read the original article here.