IBM, Oracle End Legal Battle over Executive Hire

IBM has dropped its effort to stop a former Big Blue employee from joining rival Oracle.

IBM has dropped its effort to stop a former Big Blue employee from joining rival Oracle, according to reports.

According to MarketWatch, IBM has dropped its legal challenge to Oracle's move to hire Joanne Olsen, formerly a services manager at IBM. IBM filed suit against Olsen in June in the Supreme Court of New York in Westchester County, the home of IBM headquarters in Armonk, N.Y. IBM claimed Olsen violated a non-competition agreement she had signed with the systems maker.

Oracle and Olsen then filed suit against IBM, claiming unfair competition and asking that the case be moved to California. Oracle filed its suit in a U.S. District Court in California.

Olsen, who began working at IBM in 1979, was offered a position at Oracle on June 4 and left IBM on June 14.

The lawsuits underline the increasing competition between IBM and Oracle. The companies competed already in areas such as the database and middleware markets, but the competition became more spirited following Oracle's $5.6 billion acquisition of Sun Microsystems. However, both sides have dropped their lawsuits in the Olsen case, according to court records.

The heightened competition was blatantly displayed on Jan. 27 at the "Oracle + Sun Strategy Update" event, where Oracle President Charles Phillips put out an open call to IBM employees, particularly experienced salespeople, that Oracle would like to hire them. Phillips pledged to pay them better and treat them better than their present employer.

In a subsequent interview with eWEEK, Steve Mills, senior vice president and group executive, IBM Software Group, said:

"Well, I won't deny that they have the wherewithal to pay people a lot of money if they choose to. Now are you going to pay your whole sales force a lot more money? In which case your cost of goods sold is going to go up. We certainly pay our sales reps competitively. Now, I would take exception to being treated better."

Moreover, IBM officials claim that Big Blue continues to win bids from the combined Oracle/Sun organization. During a July call to discuss IBM's second quarter fiscal year 2010 financial result, IBM chief financial officer, Mark Loughridge, said IBM displaced Oracle in 225 deals amounting to about $225 million in the second quarter. And over the last 10 quarters, IBM displaced Oracle/Sun in 620 deals worth $650 million.