Oracle Fraud Claim vs. HP in Itanium Case Rejected by Judge

 
 
By Jeffrey Burt  |  Posted 2012-01-31
 
 
 

Oracle suffered a setback in its struggle with Hewlett-Packard over Intel's Itanium platform when a judge in California threw out its claim that HP fraudulently kept information away from Oracle that would have kept the software giant from signing a deal to settle a legal dispute between the two companies.

Oracle and HP have swapped lawsuits against each other over Oracle's decision in March 2011 to stop making software that would run on Intel's high-end Itanium chip platform. HP executives argued that the move was a ploy by Oracle to force businesses to move away from HP's Itanium-based systems and that it violated an agreement the two companies had worked out to settle their dispute over Oracle's hiring of former HP CEO Mark Hurd in 2010.

As part of that settlement, the two companies agreed to continue to work together to benefit the 140,000 or so joint customers. HP executives claimed Oracle's decision to end support for Itanium-and other moves by Oracle-violated that agreement.

Oracle officials accused HP of fraud, saying that during the negotiations, HP failed to disclose plans to hire Leo Apotheker as CEO to replace Hurd and Ray Lane as chairman of the board of directors, moves that Oracle executives claim would have kept them from signing the agreement. Apotheker was a longtime CEO of Oracle rival SAP; Lane was a former Oracle president.

However, in his 21-page ruling Jan. 30, Judge James Kleinberg, in San Jose, Calif., ruled against Oracle's fraud claims, saying that the "alleged fraud did not prevent Oracle from participating in the negotiations" between the two companies to settle the issues over Oracle's hiring of Hurd "or deprive Oracle of the opportunity to negotiate."

Kleinberg also rejected requests from both companies to seal particular documents that they argued could harm them and their customers if made public.

Oracle and HP had been longtime partners, but that relationship began to deteriorate when Oracle bought Sun Microsystems in 2010. The deal included Sun's SPARC hardware business, putting it in direct competition with HP in the high-end server market. It was further damaged when Oracle hired Hurd after he was forced to resign as HP's CEO.

Oracle later claimed that HP's hiring of Apotheker as CEO and Lane as board chairman further poisoned the relationship. Apotheker was fired as HP's CEO last year for reasons unrelated to the Oracle lawsuit.

When Oracle executives announced their decision to no longer support the Itanium platform, they claimed they were told by Intel engineers that the chip maker was planning to end development of Itanium. The claim drew sharp rebukes from Intel officials, who said they have a development road map for Itanium that stretches through the end of the decade.

However, Oracle also said that HP failed to disclose that it was paying Intel $88 million a year to continue developing the Itanium platform, another issue that would have kept it from signing the Hurd settlement had it been disclosed.

HP officials claimed Oracle's Itanium decision was a cynical attempt by Oracle to bolster its own SPARC server line by forcing companies running Oracle enterprise applications on HP's Itanium-based Integrity and NonStop server lines to choose between the two companies. Some users have tried to convince Oracle to reverse the decision, noting the cost of migrating their Oracle workloads off HP servers and onto new platforms.

In court documents, HP also claimed that Oracle, even before making its Itanium announcement, was making it difficult for joint customers to stay with HP. The tech giant claims that Oracle in December 2010 hiked licensing fees for Oracle software running on Itanium systems, essentially doubling the licensing costs for joint customers.

 


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