HP Charges Oracle Left It High and Dry Over Itanium
Oracle has spent a great deal of time and attorney's fees in court the last year and a half, battling with longtime European competitor SAP for weeks in late 2010 and just a week ago concluding a two-years-in-the-making, six-week-long court date with Google.
Both were over copyright infringement, and Oracle was the plaintiff in each. Oracle is batting .500 here, prevailing in the clash with SAP involving stolen software and losing against Google over fair use of Java application programming interfaces in building the Android operating system.
Now the plaintiff is Hewlett-Packard, and the issue at hand is this: Did Oracle violate contract agreements when it decided to stop making new versions of database software for Intel's Itanium processors that HP uses in its servers? HP, fairly sure something is amiss, is asking for damages totaling about $4 billion.
A Different Bit of Drama in This Case
This case, however, has a different aspect of drama to it, in that former HP CEO Mark Hurd directly affects the original deal with Oracle, and now he's a co-president of Oracle. It doesn't help matters that he was forced to resign from HP in August 2010 following a sexual harassment charge involving a contract employee, which won't assuage his overall attitude toward his former employer.
Santa Clara Superior Court Judge James Kleinberg will decide the first phase of the trial on his own. Phase 1 will focus specifically on whether there is a viable contract between HP and Oracle. If Judge Kleinberg decides the original contract stands, a jury then will decide whether Oracle violated the contract, and figure out what damages are due.
On Day 1 of the trial in state Superior Court in San Jose, Calif., HP attorney Jeffrey Thomas contended in his opening statement that Oracle "clearly violated a contract with HP" when it decided it would cease developing new versions of its database software compatible with HP's Itanium-based servers, in which the company has invested many millions of dollars.
Later, in his own opener, Oracle lawyer Dan Wall said that HP is reading too much into the agreement, and that Oracle never told HP it would stay committed to Itanium.
Oracle decided in March 2011 to stop developing software for Itanium, stating that Intel made it clear the processor was being phased out and that it was shifting its main focus to x86 Xeon chips.
HP, however, claims that Oracle had agreed to support for Itanium on a continuing basis, because without the database updates the servers running the chip would become obsolete. HP said that commitment was affirmed when it settled a 2011 lawsuit regarding Oracle's hiring of Hurd.
HP's Thomas said the Hurd settlement clearly committed Oracle to continue supplying its best products to HP, and that those would include Oracle Database updates. "It is impossible to offer best products going forward without porting new versions of those products," Thomas said, according to Reuters.
Oracle's Wall replied that the Hurd settlement was aimed only to settle employment litigation that HP had brought against Oracle. "That agreement was not backed by the kind of painstaking negotiation that takes place over a strategic business partnership," Wall said.
Citing Intel's Itanium phase-out, Wall described the chip as a "declining product. HP is trying to force Oracle to support a technology, Itanium, that Oracle does not believe in," Wall said.
HP's Livermore Called as First Witness
Following opening statements, the court brought its first witness: former HP Senior Vice President Ann Livermore, now a member of the company's board of directors. Livermore was HP's highest-ranking negotiator with Oracle when the Itanium deal was signed.
Livermore testified that Oracle Co-President Safra Catz had "reassured" her that after Oracle bought Sun Microsystems in January 2010 that Oracle's software sales would be "platform neutral." Oracle had not been in the hardware business before buying Sun and had relied on suppliers such as HP, Sun, Dell and others to make the data center equipment powerful enough to run its parallel databases, middleware and business applications.
"She said they were going to continue to support HP," Livermore told the court, adding that Catz repeated the same statement in a larger meeting between executives from both companies. But after Hurd joined Oracle in late 2010, HP became concerned, Livermore said.
"I was concerned that Mark was leaving HP with ill will toward HP. My concern was that he knew our financials. He also knew our dependence on Itanium; he knew lots and lots of things," Livermore said.
Livermore is expected to continue her testimony June 5.
Chris Preimesberger is eWEEK Editor for Features and Analysis. Twitter: @editingwhiz